Chinese bike-sharing pioneer Ofo denies filing for bankruptcy
- News about a bankruptcy filing followed a rash of lawsuits over unpaid bills filed by Ofo’s suppliers
Chinese bike-sharing services pioneer Ofo, which has been slapped with lawsuits over unpaid bills by suppliers, has denied a report on Wednesday that it applied for bankruptcy.
“It’s totally false reporting,” Ofo said in a statement.
The denial was made in response to a report by Chinese news portal Jiemian, which cited anonymous sources as saying that a big securities institution was involved in Ofo’s plan to file for bankruptcy.
Citing data from Ofo’s balance sheet, the report said the Beijing-based bike-sharing firm had total debts of 6.5 billion yuan (US$932.9 million) from “around half a year ago”.
Ofo said it will pursue legal action to protect its rights. “Jiemian’s story seriously harmed Ofo’s reputation and brand,” the company said.
The report was published more than a week after Dai Wei, Ofo’s founder and chief executive, removed himself as the start-up’s legal representative amid a rash of lawsuits over unpaid bills. Bike suppliers Shanghai Phoenix Bicycles and Tianjin Flying Pigeon Cycle Manufacturing as well as logistics services providers Best and Deppon Logistics are among the firms that have recently sued Ofo.
Those lawsuits reflect the challenge of slowing demand for bike-sharing services in the world’s second-largest economy.
The once rapid growth in the industry has cooled down, with the number of bike-sharing users in the country forecast to grow 14.6 per cent in 2018, a steep drop from 600 per cent growth last year, according to a report by market research firm iiMedia.
Slower growth has further intensified competition, with dozens of players now whittled down to three main ones – Mobike and Ofo, and Shanghai-based Hellobike – but none have turned a profit yet.
Whether the remaining bike-sharing operators can stay independent is an open question because the industry continues to burn cash, which requires abundant capital.
Earlier this month, Hellobike said its bigger rival Ofo had proposed a merger between the two companies. That deal would make the combined entity the dominant player in the market.
Ofo and Hellobike are both backed by Alibaba Group Holding affiliate Ant Financial Services, the operator of Alipay. Ant Financial owns 36 per cent of Hellobike, while Ofo said in March that it secured US$866 million in a round of funding led by Alibaba.
New York-listed Alibaba is the parent company of the South China Morning Post.