A splash of color as rent-a-bikes are parked under a viaduct in Hangzhou, the capital of Zhejiang Province. /VCG Photo

The two biggest players in the industry – Mobike and ofo – have received at least four rounds of financing totaling six billion yuan (882.7 million US dollars). While many predict the two rivals will eventually merge, like their predecessors in the car sharing business, investors say they will have to wait and see.

"The usual way in the business is like this: First it's about products, trying to get rid of the opponents with better products. If that won't work, then we try to scare the opponents to death with huge financial resources. If that doesn't work out either, we talk peace with them. I think we are still in stage one now," said GSR Ventures Partner, Zhu Xiaohu.

A recent KPMG report shows that China's venture capital investments totaled 31 billion US dollars in 2016, and a great part of that was invested in the sharing economy. Sharing businesses generated 3.5 trillion yuan of transaction volume last year, according to government figures.

The fierce competition between ride-hailing service providers cooled down last year with Didi Chuxing buying rival Uber's business unit in China. /VCG Photo

Still, few companies in the sharing economy have reported profits so far, not even car-sharing king Didi.

"If you look at it from the perspective of generating profits, then yes, there is a huge bubble. But if you look at internet businesses, the online to offline business, the video websites and the e-commerce businesses, they are no different, they've absorbed even more investment than the sharing economy. Many entrepreneurs and investors nowadays are just trying to get in and become a number one player in some small city, and then wait to be bought by bigger players and cash out. If they can get real money by selling their business, it is not a failure for them," said Independent TMT Analyst Wei Wuhui.