Didi Rolls Out Deposit Free Bike-Sharing Service, Escalating The Already Fierce Competition

Instead of acquiring the beleaguered bike-sharing startup Bluegogo, Didi announced it’s simply hosting Bluegogo’s operation.

By KrASIA Writers on Tue Jan 09 2018

Writer: Yang Lin

Editor: Zhao Xiaochun

Didi Chuxing announced today it will launch a bike-sharing platform. Users will have access to bikes of beleaguered bike-sharing startup Bluegogo and a yet-to-launch self-owned brand without paying a deposit. Whether the deposit will be needed to use ofo bikes is yet-to-know.

Deposit-free bike-sharing service:

Image credit to 123rf.com.cn.

The push for the deposit-free bike-sharing service comes as the public concern about the potential misappropriation aggregates. Several bike-sharing brands are said to have misappropriated a total of tens of billions of RMB.

In China, most bike-sharing brands allow users to access their services after paying a deposit of ¥99 to ¥299 (around $15.22 to $45.99).

As bike-sharing startups are vulnerable to changes in the fast-evolving market, some have experienced cash woes. That is why users of beleaguered Bluegogo, Kuqi Bikes, and Xiaoming Bike had difficulties when claiming their deposit back.

Relationship with Bluegogo:

Image credit to 123rf.com.cn.

At the same time, Didi denied the speculation about its acquisition of former China’s third-largest bike-sharing startup Bluegogo, claiming it’s  just hosting Bluegogo’s operation. Commuters can access Bluegogo’s bikes via Didi’s app.

According to Bluegogo, Didi is not responsible for its deposit return, but Didi has proposed a policy starting from Jan 17, 2018,  which allows Bluegogo users to exchange their deposit for Didi vouchers.

Relationship with ofo:

The two top players namely Ofo and Mobike lead the competition in the bike-sharing industry.

In the embattled bike-sharing market in China, Didi-backed ofo and Tencent-backed Mobike are leading the competition, while Alibaba-backed HelloBike and Youon may have the potential to twist the situation.

Didi, China’s No.1 ride-hailing company, has long sought to expand its reaches in the bike-sharing industry. Following its investment in ofo’s three financing rounds, Didi is now ofo’s largest shareholder.

At the same time, it is no secret at all that a split has appeared between Didi and ofo.

This November, Didi recalled a couple of its top executives from ofo. An insider from Didi told KrASIA that there was not any sign of that sudden adjustment. He thus concluded that a serious rift would have existed between the two companies since then.

Read more at Didi Acquires The Beleaguered Bike-Sharing Startup Bluegogo, Possibly Challenging Its Former Partner Ofo

Following a clear announcement into the bike-sharing market, Didi is reported planning to place 6 million bikes in cities including Beijing, Guangzhou, and Shenzhen in 2018.

Pressure from China’s regulators:

Image credit to 123rf.com.cn.

Aart from the fierce competition, another obstacle that Didi is facing when entering the bike-sharing market probably comes from China’s regulators. Since last September, several major cities including Shanghai and Shenzhen have banned bike-sharing startups to place new bikes around, as existing bikes have already caused problems like parking mess.

To get the nod from regulators, Didi plans to solve the parking mess with technical solutions. Meanwhile, its push for the deposit-free services will possibly help reduce the pressure from regulators.

Competition escalates:

Image credit to 123rf.com.cn.

With Didi entering the bike-sharing market, the battle for the dominant place is likely to escalate.

China’s bike-sharing app users are accustomed to vouchers, free trials, and discounts. The new player in the field, Didi, is indeed confident in providing those to acquire users. With its latest funding round, the ride-hailing company has raised its cash reserves up to $12 billion.

Seeing players in the field come and go, it would be natural to wonder about the future of these bike-sharing companies.

Will the increasingly fierce competition result in mergers between top players?

Or will more minor startups bite the dust like Kuqi Bikes and Xiaoming Bike did last year?

Although answers to those questions are yet to know, what is already foreseeable is 2018 will see a major shakeup in the bike-sharing sector.