Broken bicycles, crowded sidewalks, frustrated users: What began a few years ago in China as an environmentally friendly mobility hype on two wheels is increasingly becoming an economic disaster. The fierce competition among rental companies in the People’s Republic now threatens to throw the industry pioneer Ofo off track.
For two years, orange, yellow and blue wheels have been found everywhere in China’s metropolises. The two big providers Ofo and Mobike presented millions of them in front of office buildings and subway stations, always trying to outdo their competitors. Ofo launched in 2014, Mobike 2016.
Alibaba as an investor
For Mobike paid off – Ofo, however, is about to go bankrupt. When launched, the provider was able to convince Chinese and foreign investors, including the Internet giant Alibaba. As recently as March last year, Ofo raised $ 850 million (approximately € 749 million) in investments to expand its international business. In the meantime, the startup was worth over two billion dollars.
Suretyship recoveries in the hundreds of millions
But Ofo with its 200 million customers is no longer running smoothly. Around eleven million customers are currently demanding their bail – putting the provider in trouble. A total of about one billion yuan (about 127.7 million euros) is currently being reclaimed from bail money. At the beginning, 99 yuan had to be deposited at the time, meanwhile there are 199. Some also deposited more money to pay for the bicycle use right away.
Ofo makes no secret of being in financial trouble. In a letter to employees, founder Dai Wei wrote in December that he was thinking about filing for bankruptcy.