Overseas ambitions over for troubled ofo amid cash crunch
Updated 14:34, 12-Jan-2019
Nicholas Moore
Troubled bike-sharing platform ofo has dismissed its entire international business division, winding down an era of ambitious expansion overseas after a terrible 2018 that has left the company on the brink of bankruptcy.
According to China Entrepreneur Magazine, Jeremy Chen, general manager of ofo's international business department, has dissolved the division and offered staff severance packages that involve 50 percent wage cuts for transfers to domestic departments. Alternatively, the 50 or so employees are being asked to leave by January 10.
At its peak, ofo's bike-sharing services were available in 250 cities in 21 countries worldwide, spread across Asia, Europe, the U.S. and Australia. The company claimed that its bikes had been ridden 10 million times in its overseas markets, as ofo fought with rival Mobike for a foothold in destinations beyond China.
However, despite raising hundreds of millions of dollars in investment, 2018 saw the company hit by a cash crunch that forced the retreat of thousands of yellow bikes from overseas markets.
Despite rapid expansion and success in Chinese markets, ofo and Mobike both encountered numerous challenges in overseas markets. Mobike quit Manchester last year, citing vandalism, while cities like Singapore enforced bike-sharing companies to obtain licenses and abide by strict regulations to prevent mass piles of unused bikes on street corners.
Rolling out in smaller cities like Norwich and Sheffield in the UK also meant ofo's business model was even more financially unviable than in hugely populous urban areas like Beijing and Shanghai.
Speaking to CGTN, a former employee of ofo's international division who wished to remain anonymous said the department's dissolution “had been a long time coming”, with many staff already leaving in 2018.
Last month, China's Ministry of Transport asked ofo to speed up its refund process, following requests from millions of users for their money to be returned. As queues formed outside the company's headquarters in Beijing, ofo's founder and CEO Dai Wei conceded that he had considered filing for bankruptcy on several occasions.