While coping with fierce competition, Chinese bike-sharing giant ofo has been contending with disputes over unpaid debt, rumors of mass layoffs, and senior management shuffles in recent months.
And on Tuesday, hundreds of ofo users formed a long queue outside the company’s headquarters in Zhongguancun in Beijing, demanding immediate refund of their deposits.
Local media reported that as of Tuesday night, the number of refund applications has exceeded 10 million. Each user had to pay the bike-sharing operator at least 99 yuan (US$14.37) as deposit before they could rent the bike service, and the amount has been raised to 199 yuan (US$28.88) since 2017.
Assuming the average amount of deposit is 150 yuan for each user demanding refund, the company would need over 1 billion yuan to meet the demand for refunds.
On its official account on Chinese social media platform Weibo, ofo asked users to be patient and pledged to settle the deposit refunds, adding that all applications, regardless of whether they’re requested online or in person, will be processed in chronological order, depending on the date when the user signed up for the service.
The latest run is believed to have been triggered by news that the bike-sharing operator had been ordered by Beijing Court to pay a service fee of over 8 million yuan, plus overdue interest, to its logistics service provider Kerry EAS Logistics.
Previously, ofo had been sued for arrears by nine logistics and manufacturing suppliers. It has also downsized its operation in overseas markets, amid rumors of layoffs and possible acquisition by Chinese ride-hailing giant Didi Chuxing.
In October, Chinese news website Jiemian reported that as of March 2018, ofo’s debt reached 6.49 billion yuan, of which user deposits amounted to 3.6 billion yuan.
After an explosive growth driven by venture capital, China’s bike-sharing sector has seen companies burning money to support their aggressive expansion and help them survive intense competition in recent years.
Many cash-strapped operators have been winding down their businesses. According to a survey by China Consumption Association released this March, 34 out of 70 shared bicycle platforms in the country have gone bankrupt.
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