Bike-sharing startup is on the verge of bankruptcy
836 views · Published 30 December 2018 · 3:28 · Indexed 6 October 2026
Channel: AP Archive · 2018 · News & Politics
(25 Dec 2018) After four years of rapid growth, a pioneering Chinese bike-sharing technology company is on the verge of bankruptcy. Beijing-based Ofo is being sued by its manufacturers over unpaid bills totalling millions of US dollars. Its founder and Chief Executive Officer, 27-year-old Dai Wei, was recently put on a court-sponsored blacklist and barred from taking a high speed train or vacation. More than 13 million people have applied for a deposit refund, of which each individual refund concerns anywhere between 99 Chinese Yuan (14.36 US dollars) and 199 Yuan (28.86 US dollars). As the online refund queue piled up, hundreds stepped out to claim refunds in person outside Ofo's Beijing headquarters last week. Local resident Li (no first name given) who works in a public service institute told the Associated Press, "There were so many people that day," adding, "it took me more than two hours just waiting outside, almost three." Sponsored with heavy venture capital backing, Ofo and other technology startups have flooded Chinese cities in the past few years with colourful, unlocked bicycles, which riders can track using smartphones. But the Ofo's and other companies' bikes soon contributed to chaos in the busy city, as they piled up on sidewalks and blocked pedestrian access on certain roads. Some of the bikes were also trashed by vandals, while other users took the bikes and locked them at home. As a result of sabotage as well as poor maintenance, many of the bikes were removed from the streets to yards where wheels were separated from the bike frames and parts. The bike-sharing business in the Chinese capital reportedly quickly turned into a cost-cutting conflict between competing companies. You Tianyu, Vice President of Research at high technology think tank iYiou said he believes the shared bicycle model isn't working. "I don't think the shared bicycle model is a big enough market, and the investment amount from the capital side and the speed of investment entering the market requires for it to be a huge market," You told the Associated Press. "I think these two are contradictory," he added. Riders have also complained about poor quality. "Ofo is just so hard to ride, and (the bikes) easily get broken. It happens all the time that the locks cannot be opened, there are all kinds of problems, chains breaking, too. Generally it is just not as good as other bikes," said Wang Qi, a student who used to ride Ofo. Local resident Zhao Bin, however, said that Ofo is "convenient and cheap" and added he would not be applying for a refund as he supports Ofo. Ofo is not the only company facing reactions from angry users demanding deposit refunds; Togo, one of the earliest car-sharing companies has the same problem, with media reports saying customers stormed their Beijing headquarters a week ago to demand deposit refunds of 1,500 yuan ($218). The troubles of Ofo and other companies appear to have left some officials worried, with the Chinese Ministry of Transportation on Friday saying they were "highly concerned" about the situation. Ofo has declined to comment. Find out more about AP Archive: http://www.aparchive.com/HowWeWork Twitter: https://twitter.com/AP_Archive Facebook: https://www.facebook.com/APArchives Instagram: https://www.instagram.com/APNews/ You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/0f51f786e1b548cf1795213c0c1bea65
