(Yicai Global) July 26 -- Ofo is slashing prices in its home market, sowing the seeds for a comeback, according to a source close to the company, as founder Dai Wei winds down the Chinese bike sharer's overseas operations.
Ofo's owner, Alibaba-backed Bikelock Technology, is halving its annual subscription fee in China's mainland to CNY99 (USD29) until the end of the month, financial news site Securities Daily reported, adding that the Beijing-based firm is also offering up to CNY50 back for inviting friends to sign up.
Ofo and archrival Tencent-backed Mobike Technology, which have a combined China market share of over 90 percent, have both suffered serious financial pressure due to high costs, especially for maintenance. The lack of a clear profit model in the sector as well as positive cash flows makes it difficult for bike-sharers to embrace independent operations.
At the start of this month, Beijing-based Mobike Technology said it will no longer require deposits from customers in China and will return those it already holds, possibly worth up to USD1 billion, ratcheting up pressure on Ofo and others.
Ofo's more aggressive approach to the domestic market is in stark contrast with continued retreats seen overseas over the past month, especially in Europe. The company's signature yellow bikes have been taken off the streets of cities across the continent and are now only available in London, Paris and Milan.
The retreat follows withdrawals in Australia and Germany spearheaded by Dai, who is chief executive and the firm's new head of global business. Shutting down under-performing offshoots in foreign markets appears to be a key part of his plans to focus on refining management and operations in key markets to add commercial value.
Ofo's head office continues to offer little on its successive market exits. "We're not familiar with nor clear about the specifics," a company source told the media.
Editor: William Clegg