Chinese bike-sharing service Mobike announced today to scrap deposit requirements nationwide in China, as well as to add e-bikes to its bike fleet that colours China’s street corners with their iconic light orange touch.
Mobike asked its customers to pledge a deposit of RMB299 (US$45) before granting bike access. It’s archrival, Ofo, still requires 199 in deposit in most of the cities it operates with as of now.
All deposits already paid will be refunded, according to Mobike, which means, since Mobike claims 200 million users in China, the company will be refunding around $90 million (RMB600 million).
This is the first major step that Beijing-based Mobike took after it was fully acquired in April by Meituan-Dianping for $2.7 billion, the Chinese on-demand services giant who recently filed with Hong Kong Stock Exchange to raise $6 billion.
The Mobike app will also be integrated into Meituan’s lifestyle e-commerce app which is one of the most popular super apps in China, giving Mobike a wider access to potential riders.
Trend towards deposit-free
Apart from Mobike, Ant Financial-backed Hellobike has also proposed an end to user deposit. In March, the company announced to roll out its deposit-free service in all 180 Chinese cities where it operates.
Didi Chuxing, China’s largest ride-hailing company, has also been leveraging on deposit-free service to tap into the bike-sharing space. In January, Didi rolled out a deposit free platform where users could access bikes of its self-owned brand Qingju and startup Bluegogo.
Sacrifice of independence
Ofo seems to be alone in bucking the deposit-free trend. Although the company once allowed users in 25 cities to ride without paying deposits, until June, free rides on yellow bikes are over in all these cities.
The bike-sharing unicorn’s obsession with deposit fees may be as a sign of its cash woes. Ofo is said to have outstanding bills worth $234 million (RMB 1.5 billion) according to a report by local media Caixin Weekly.
This year, Ofo raised only one live-saving round of $866 million in debt and equity capital from a group of investors led by Alibaba, while back in 2016, the company was one of the most sought-after startups as it had raised five rounds of financing in a single year.
Amid the increasingly burdening cash crunch, Ofo founder and CEO DAI Wei has reportedly turned down the acquisition offer from its investor Didi Chuxing.
CHENG Wei, head of Didi Chuxing, offered Ofo an approximately $1.35 billion acquisition, or half of the acquisition price for Mobike. CHENG also demanded the position of Ofo chairman, according to KrASIA parent company, Chinese biztech media 36Kr citing people familiar with the matter.
In an internal meeting in May, DAI told staff to fight until the end and the company is indeed fighting to keep its independence. It created a B2B unit in April this year to generate a revenue from ads. The unit claimed to have generated $15.6 million (RMB 100 million) in just two months.
Editor: Ben Jiang
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