BEIJING • Asia's shared-bicycle sector is undergoing a pronounced contraction that has edged out smaller players and slowed down rapid overseas expansion by some of its biggest platforms, the Financial Times (FT) reported yesterday.
This month, Alibaba-backed start-up ofo announced it would close its six-month-old operations in India, as well as in its two Australian sites, Sydney and Adelaide, within two months.
The news comes as the company plans to scale back its operations in four regions - Japan, South Korea, Singapore and Hong Kong - because of a cash crunch, according to Chinese business magazine Caixin.
The retreat is an abrupt reversal from its initial plans to place 20 million bikes in 20 countries by the end of last year.
"Our focus now is on our priority markets and moving towards profitability," ofo said in a statement. "We are communicating with our local markets about our plans."
Over the past two years, the Asia-Pacific bike-sharing sector has enjoyed an influx of investment, allowing as many as 60 platforms to build up bike fleets and subsidise rides in an effort to outbid competitors, FT reported, citing research firm IDC.
Mobike and ofo, China's largest platforms, raised nearly US$2 billion (S$2.7 billion) last year alone. The explosion in shared bikes has been most apparent in China, where at their zenith, rows of colourful machines jostled for limited footpath space.
However, their ranks have been trimmed in recent months by a number of closures, as smaller start-ups find their financial resources quickly drained by heated competition and bike thefts, reported FT.
Earlier this month, Hong Kong-based start-up GoBee went bust, citing financial losses, the report said.
A European expansion flopped after 60 per cent of its bike fleet was damaged or stolen within the first four months of the service's launch.
Chinese start-up Bluegogo, which once had 20 million riders, was one of the first major platforms to go belly-up last November.
Surviving platforms have hung on by winning the backing of China's biggest tech giants.
In March, ofo secured US$866 million in funding from backers including Alibaba and Chinese ride-hailing service Didi Chuxing.
A month later, ofo's main competitor, Mobike, was fully acquired by food services giant Meituan Dianping in a US$3.7 billion deal.