The USD 589 M fundraising scandal behind China’s straddling bus revealed

The founder of China’s once known high tech transportation solution – the straddling bus dubbed as Batie – was arrested on Sunday for illegal fundraising.

The straddling bus or the Transit Elevated Bus (TEB) was once a popular concept. Huaying Kailai, the company which invested in the bus, said that it was a significant original China invention. TIME praised it as “The 50 Best Inventions of 2010”.

Photo from Sohu.com
Photo from Sohu.com
Photo from Sohu.com
Photo from Sohu.com

The so-called revolutionary transportation invention was aimed at solving city traffic problems. In May 2010, Batie came into public view at the 13th Beijing International High Tech Expo. It claimed that each vehicle could carry 1,200 passengers to reduce 25 to 30 percent of the main road congestion. It also claimed that the time taken for construction of the bus was about one-third the period of a subway construction, and would only cost one-tenth of subway construction costs. Thereafter, it garnered the attention of several international media outlets including BBC, CNN, CNBC which reported on it. The world had seen the project as a potential solution to solve mega city traffic jams.

According to public reports, Huaying Kailai sold a series of financial products in order to raise funds for Batie. The lowest price of its financial product was sold at RMB 1 million (USD 147,267) with an annual return rate of 12 percent. Huaying Kailai raised more than RMB 4 billion in total.

Photo from Sohu.com
Photo from Sohu.com

The public raised questions of Batie being a financial fraud shortly after a quick test run in Qinhuangdao located north of Beijing last August. Soon, the bus’ fake patents were exposed. Last November, state media China Central Television (CCTV) pointed out that Huaying Kailai was suspected of illegal fundraising.

Photo from Sohu.com
Photo from Sohu.com

Bai Zhiming, known as the “father” or founder of the straddling bus, was reported to be under police investigation. According to CCTV, the fundraising fraud sucked more than USD 589 million from 40,000 individual investors.

In end June, the Qinhuangdao government requested for the removal of the straddling bus test line so that the road will return to its normal condition.

(Top photo from Sohu.com)

Is China’s straddling bus a traffic revolution or financial scam?

A couple of days after its first road test, China’s Transit Elevated Bus (TEB) was reported by Chinese media to be a mere stunt, used by its creator to collect money.

According to a report by Chinese newspaper Nanfang Metropolis Daily last Friday, an investment company called “Huaying Kailai” has been raising a fund for the TEB since May, three months before the bus’s test run. The fund size is between RMB 50 million to 100 million (USD 7.5 million to 15 million), with an expected annualized return of 12%.

In March, Huaying Kailai was listed by the Beijing Administration for Industry and Commerce as a “counterfeit company”, a form of scam investment where a company imitates the presentation of an official mainland-based corporation, in order to lure investment.

The president of Huaying Kailai, Bai Zhiming, is also president of TEB Technology, the manufacturer of TEB.

The legal guarantor for Huaying Kailai’s fundraising for the TEB is an enterprise called the “China Build Enterprise Association”. The China Build Enterprise Association was also founded by Bai, and it was declared an illegal association by the Chinese authorities in April.

From the above information, the report by the Nanfang Metropolis Daily concluded that the TEB project seems like a scam to fool investors.

Follow-up reports on Monday seemed to have confirmed this.

Huaying Kailai’s parent company, the Huaying Group, signed an agreement with the port of Zhoukou, a city of central Chinese province Henan, to build a TEB manufacturing base in December 2015. The Huaying Group planned to invest RMB 10 billion, and launch its first TEB in 2017. The construction of the base has not yet even started.

Technologically, the idea of TEB is also difficult to be realized.

“The TEB is apt to turn on its side due to its heavy weight and a high center of gravity; skybridges will be a restriction to the TEB; vehicles underneath the TEB will be at risk when the TEB is turning; and the TEB will be unfit for most crossings in China due to its big turning radius,” said Cheng Shidong, a division director at the Institute of Comprehensive Transportation of the National Development and Reform Commission, Tencent Tech reported on Monday.

In fact, even the first road test of the TEB was a diminished version. According to the agreement between TEB technology and the government of Qinhuangdao, the test track was planned to be one kilometer long. But it was finally reduced to 300 meters because of “unsatisfactory road conditions”.

(Top photo from Epaper.hljnews.cn)

Fresh on the street! China’s traffic straddling bus hits the road

The long-awaited and much-debated Transit Elevated Bus (TEB) had its first test run on Tuesday, driving on a 300-meter long track in Qinhuangdao, Hebei Province.

The TEB – sometimes described online as a straddling bus – is an elevated subway-like electric bus. It runs above the road with a hollowed out design that allows other vehicles to run underneath, as long as they are no taller than two meters.

Though a straddling bus is supposed to consist of four carriages, this time it had only one compartment tested. It is 22 meters long, 7.8 meters wide and 4.8 meters high with 55 seats and 20 raised handrails. In addition, the compartment is equipped with LCD screens and dynamic maps.

Photo from New China TV
Photo from New China TV

The straddling bus has quite a few appealing merits:

1. It curbs traffic jams. A straddling bus does not occupy room on the road, it occupies room above the road. With more people choosing to take straddling buses, there would be fewer vehicles on the road.

2. It protects the environment. Straddling buses do not burn oil, as they are powered by electricity. Engineer Song Youzhou said that with each straddling bus capable of carrying 1,200 passengers, one straddling bus equals to 40 common fuel cell buses – and that’s 2,640 tons of carbon emissions reduced per year.

Photo from New China TV
Photo from New China TV

3. It is fast. Song said that the straddling bus can run as fast as 60 km per hour with an average speed of 40 km per hour. In comparison, buses in general run at 15 to 20 km per hour in big- and medium-sized cities in China, according to Song’s data.

4. It’s not too expensive. While building a mile of subway in Beijing costs RMB one billion (USD 150.82 million) on average, a mile of track for straddling bus costs less than RMB 120 million – that’s one fifth the cost of a subway.
But however good it sounds, if it cannot be put into practice, it’s nothing but an armchair strategy. On the one hand, government bodies like the National Development and Reform Commission and the Ministry of Communications must set standards, and create an environment for building, running, powering and controlling straddling buses. On the other hand, unanticipated problems may potentially arise, such as conflicts caused by job losses of bus and taxi drivers.

More importantly, how would it feel like when you’re humming to yourself, happily driving along the road, and then all of a sudden, a humongous steel monster zooms over your head? It’s too early to say what the public reaction would be like.

QQ图片20160803153401_meitu_1
Photo from New China TV

Nevertheless, it is still exciting to think that this bus – with its sci-fi appearance and elevated boarding stations – might be able to run on China’s roads not too far in the future.

(Top photo from Shanghaiist.com)