Bike-sharing firm ofo planning to exit South Korea: Sources

Chinese bike-sharing giant ofo launched its app for Busan residents in January, but has been struggling with persistent complaints from users regarding bike access and management.
Chinese bike-sharing giant ofo launched its app for Busan residents in January, but has been struggling with persistent complaints from users regarding bike access and management.PHOTO: OFO/FACEBOOK

Move appears to be part of global strategy to retreat where conditions prove unfavourable

BUSAN • Less than a year after entering South Korea, Chinese bike-sharing giant ofo is preparing to pull out of the Korean market in a move that appears to be motivated by shifting market priorities, according to people familiar with the matter.
 

Ofo recently began preparations to suspend its operations in South Korea, putting most of its Korean employees on a "suspension" as part of a general layoff, an industry source with knowledge of the start-up's affairs told The Korea Herald.

"Though it has yet to completely terminate its business here, ofo Korea is in the process of letting go of most of its workers, putting them on a 'task suspension'," the source said on Tuesday.

Beijing-based ofo is the world's first and largest "station-free" bike-sharing company, with a major presence in China.

Users can ride and park ofo bikes anywhere, without having to find a docking station. The bikes are activated and paid for - a 30-minute ride costs about US$1 (S$1.36) - through a mobile app.

As of Tuesday, the ofo mobile app was still available for download on South Korea's Google Play store.

  • OFO IN NUMBERS

  • Total number of ofo bicycles in operation globally. -  15m

    Countries the bicycles are in, including Singapore. - 22

    Number of cities it serves. - 300

    Number of users worldwide. - 250m

In Busan, the bikes could be unlocked as usual via the ofo app, according to citizen reports.

While the exact reasons have not been verified, ofo's apparent exit from the South Korean market appears to be part of a global strategy to retreat from countries and cities where business conditions are proving to be difficult or less profitable.

Last month, international media reported that the Chinese company had begun to dramatically reduce its United States operations, reorienting its focus on markets with bigger profitability potential.

It has also reportedly pulled out of Germany, Australia and Israel, as well as scaled back operations in Britain.

It officially entered South Korea in January this year, kicking off its services as a small-scale pilot in the country's second-largest city Busan, under the vision that its dockless shared-bike system would help relieve traffic congestion and crowded public transits.

HERE TO STAY

In Singapore, our first international market, we have seen bike-sharing grow at an incredible pace. In just over a year, more than 27 million rides have been completed on an ofo bike. Our licence application submission to the Land Transport Authority to operate a fleet of 80,000 bikes a few weeks ago is a strong demonstration of our continued commitment to Singapore.

OFO SINGAPORE, saying it remains fully committed to the Singapore market.

South Korea had been ofo's 21st market of entry, and a place in need of a new mobility service to solve the "last-mile mobility" problem - getting people from their homes to public transit locations that are not within easy walking distance.

With aims to tackle this mobility gap, ofo launched its app for Busan residents in January, deploying around 2,000 yellow bikes in the city. By June, the service had recorded some 15,000 usage cases.

Despite the growth, the Chinese bike-share service has been struggling with persistent complaints from users in Busan regarding bike access and management.

For instance, some users would hide or lock up the shared bikes with private locks, even when they were in a "returned state". At other times, the bikes would not be parked in the locations pointed to by the GPS-based map.

Some bikes were broken but were still left in circulation, raising safety concerns.

On top of these issues, ofo may have viewed South Korea as a market with low growth potential considering the high barriers to expansion.

The Chinese start-up had not yet expanded its services to the capital city of Seoul, where a majority of the population resides.

In Seoul, ofo would have had to compete head to head with a government-run public bike rental system, called Ttareungyi, which is already widely used by residents.

As of June, ofo said it had some 15 million bikes in operation in more than 300 cities in 22 countries, including Singapore, and was serving 250 million global users.

 

In a statement to The Straits Times yesterday, ofo Singapore said it remains fully committed to the Singapore market.

"In Singapore, our first international market, we have seen bike-sharing grow at an incredible pace. In just over a year, more than 27 million rides have been completed on an ofo bike.

"Our licence application submission to the Land Transport Authority to operate a fleet of 80,000 bikes a few weeks ago is a strong demonstration of our continued commitment to Singapore."

THE KOREA HERALD/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on August 09, 2018, with the headline 'Bike-sharing firm ofo planning to exit South Korea: Sources'. Print Edition | Subscribe