BY SILVI WRITER
Mobike, the pioneer in China’s bike-sharing sector will shut down most of its foreign markets, months after rival Ofo began winding down its international division.
The move shows China’s bicycle-sharing business, after years of rapid growth and aggressive expansion overseas, are withdrawing from the international market due to capital crunch, observers said.
“Mobike’s international business is undergoing rationalization to improve efficiency,” the start-up said in a statement Monday. “This will result in the closure of some markets, particularly in certain Asia countries.”
The decision came as its parent company Meituan plans to further narrow the operating loss of Mobike.
Mobike has lost 4.55 billion yuan ($680 million) since April 4, 2018, when Meituan, the app that aspires to be the “Amazon for services,” bought it out. That compares to the 1.5 billion yuan ($220 million) the bike service generated in revenues over the same period, notes Meituan’s earnings latest report.
In recent years, Mobike, Ofo and other startups flooded Chinese cities with bright, candy-colored two-wheelers unlocked and tracked using smartphone apps. Two years ago, Mobike began expanding into overseas markets, bringing its signature orange bikes first to Singapore, then Europe, the Americas, and other countries and regions.
Backpedaling from foreign markets is also consistent with Meituan’s long-held strategy to focus on China. The Beijing-based firm earns most of its income by ferrying food and providing travel-booking services inside its home country, and international expansion never seemed to be in the cards, said TechCrunch.
After years of rapid growth, China’s bicycle-sharing business is entering a new era of stable development. The players concerned are shifting their focus from aggressive market expansion to improving their functionality and customer experiences across all their offerings, said China Daily.
Due to a capital crunch, they had to scale down, or even withdraw, some of their services, the newspaper said.
“The bike-sharing sector is now going through a downsizing phase, requiring better operational capabilities as well as more investment in high-quality products,” said Raymond Wang, a partner at consultancy Roland Berger.
A report released by the State Information Center in February this year showed that the sharing economy sector has generated more than 2.94 trillion yuan in transaction volume in 2018, up 41.6 percent year-on-year.
The report noted the sharing economy sector has entered a new stage where quality matters more than the speed at which it expands.
In the next three years, its annual growth rate is expected to remain steady at 30 percent, slower than previously estimated, but signaling more sustainable development nevertheless, it said.