(Yicai Global) June 5 -- Bike-sharer Ofo has hit back at recent reports of large-scale layoffs stemming from a cash crunch at the firm, known for its iconic yellow bikes.

There have not been any internal reports of major job cuts at Ofo operator, Bikelock Technology, a source at the Beijing-based company told Yicai Global, adding that personnel numbers have only fallen to 2,800 at present from 3,000 at the end of February.

The company had allegedly embarked on a plan to streamline operations amid a liquidity squeeze, tech news portal Huxiu reported insider sources as saying yesterday, adding that half of jobs at the firm's headquarters would go, along with some 60 percent of its 80-person supply chain workforce.

The source denied reports that Chief Operating Officer Zhang Yanqi had left the company, stating that he will drive the enterprise's blockchain efforts. The departure of Senior Vice-President Nan Nan has been confirmed, as Huxiu reported, though the decision was due to personal reasons

Yu Xin, cofounder of Ofo, took to social media to refute other claims that the firm's overseas business would be dissolved as part of a drastic reorganization, while describing the firing reports as rumors pushed by behind-the-scenes forces. Company Director Yang Xun, who was also reported to have left Ofo, responded online saying that he was still with the firm.

Ofo and Mobike Technology hold a combined market share of over 90 percent in China's vast shared bicycle-sharing sector but both have suffered serious financial pressure in recent times due to the high operational and maintenance costs. 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.

Ofo has this year experienced a breakdown in relations with key investor Didi Chuxing, operator of Chinas largest car-hailing firm. The enterprise neglected to tell Didi that it had used its bikes as collateral for a CNY1.8 billion (USD280 million) loan from Alibaba Group Holding in March, before rebuffing a takeover attempt from Didi in late April. Didi's own recent shared-bike market entry further adds to the fierce competition in the sector. The company is also dealing with the resignation of three executives this year, further adding to operational pressures.

During the early development stage of sharing bicycles, founding teams and even investors believed that they could recover costs and make profits through rent collection. However, this has not been the case. Bike sharers can barely make profits solely on rents and several bicycle companies have unveiled deposit-free and free-to-ride models for a large range of products. "The shared bicycle business mode can work out but it has an excessive value, says Chen Yuying, former CEO at Guangzhou Yueqi Information Technology, the operator of Xiaoming Bike. "With lack of management, the deposit-free mode is hard to sustain in first- and second-tier cities and the runoff on deposits is also severe."

Editor: William Clegg