Ofo to Exit Australia, a Non-Priority Market
Qiu Zhili
/SOURCE : Yicai
Ofo to Exit Australia, a Non-Priority Market

(Yicai Global) July 13 -- One of China's two biggest dockless bike operators will wind up its Australia operations since the country was not included in a recent list of priority overseas markets.

Bikelock Technology, better known as Ofo, will collect its bikes in warehouses over the next two months, the Beijing-based company said. Ofo started a pilot project in Adelaide nine months ago after securing the city's first license to run a shared-bike platform.

The company unveiled plans on July 6 to focus its overseas strategy on rapidly growing or already large markets, bringing in much-needed foreign revenue. Under the plan, founder and Chief Executive Dai Wei will take direct responsibility for the next phase of the company's overseas business, with a focus on significant markets such as the US, Singapore and France.

Alibaba-backed Ofo is not the only one peddling out of Australia's streets. A combination of geographical, cultural and regulatory factors has made the Island Continent barren soil for dockless bikes.

The country's own Reddy Go also announced its retreat from the Sydney market this week, citing "regulatory factors," and offered free cycles to members. Singapore's oBike likewise pulled out of Melbourne after defaulting on user deposit refunds in the middle of last month.

The withdrawals are largely a consequence of few users and low use. Australia has the lowest shared bike use worldwide, with each machine taken for a paltry 0.3 trips a day on average in Sydney, compared with two to six trips in other countries, a study released in May by Queensland University of Technology found.

Tyranny of Distance

Customer bases and demographic characteristics constrain the frequency of dockless bike journeys in Australia. Distances between commercial, residential and industrial districts mean bikes cannot be distributed over large areas as in China.

Several cities have adopted bruising sanctions and an iron-fisted policy to standardize the parking of shared bicycles. Melbourne doles out fines of AUD3,000 (USD2,225) to operators whose units clog up streets.

A coalition of six Sydney districts last December started requiring 'geo-fence' parking area that work like dog radio collars to keep bikes in permitted areas. Melbourne and other cities have also proposed similar regulations. Firms must remove any two-wheelers parked dangerously within three hours, and disperse units. Australia's scarce human resources means the rules greatly increase labor costs for bike businesses.

Social problems affecting shared bikes in Australia are also identical to those in China such as vandalism and illegal parking. Bikes have been left by the sea, in parks, thrown onto rooftops, railroad tracks and riverbeds. Of the 1,200 machines oBik rolled out in Melbourne, 15 percent to 20 percent were vandalized.

Editor: Benedict Armour

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Keywords: Shared Bike , OFO , Australia