Ofo Tires of Overseas Markets, Readies for China Price War

(Yicai Global) July 26 — Chinese bike sharer Ofo has waged war on rivals by slashing prices in its home market as founder Dai Wei winds down overseas operations.

Bikelock Technology has slashed its annual subscription fee in China’s mainland by half to CNY99 (USD15) until the end of the month, financial news site Securities Daily reported, adding that the Beijing-based firm is offering users up to CNY50 cashback for inviting friends to sign up.

The bike-sharer is sowing the seeds for a comeback through the new round of price cuts, said a source close to the company.

The aggressive approach to the domestic market is in stark contrast with continued retreats seen overseas over the past month, especially in Europe. The company’s signature yellow bikes have been taken off the streets of cities across the continent and are now only available in London, Paris and Milan. The retreat follows withdrawals in Australia and Germany led by Chief Executive and new Head of Global Business Dai.

Ofo and Mobike Technology hold a combined market share of over 90 percent in China’s vast shared bicycle-sharing sector but both have suffered serious financial pressure in recent times due to the high costs especially for maintenance. The lack of a clear profit model in the sector as well as positive cash flows makes it difficult for bike-sharers to embrace independent operations. Shutting down under-performing businesses in foreign markets appears to be a key component of Dai’s plans to focus on refining management and operations in key markets to add commercial value.

Relevant sources from the Ofo’s China headquarters continue to stay silent on the successive market exits. “We are not familiar with nor clear about the specifics”, a company source said in response to the media.

Editor: William Clegg