Gobee.bike going out of business amid financial troubles

July 11, 2018 14:39
Gobee.bike co-founder and CEO Raphael Cohen (inset) says the company is halting its operations due to losses and high bike maintenance costs. Photos: China News Agency, Internet

Gobee.bike, Hong Kong’s first station-less bicycle sharing company, which allows people to rent and drop off a bicycle around the city through a mobile app, is putting an end to its operations as it seeks to cut its financial losses.

The firm will go out of business starting next week, according to a message posted on the startup’s Facebook page.

That means that the company has decided to pull the plug after operating for only a little more than a year, having launched its service in April 2017, becoming the first such casualty in the local bike-sharing industry.

In the announcement, Gobee.bike co-founder and chief executive Raphael Cohen said the firm hasn't been able to make a profit since its service was launched, and that the cost of maintaining the bicycles in best condition is getting too high to sustain the business.

The company has stopped accepting new payments from Tuesday and current users can arrange for deposit refunds, the Hong Kong Economic Journal reports.

Use of its bikes will go on until July 17, after which they will be locked up, according to Cohen, who noted that a provisional liquidator has been appointed to assist the firm in its market exit.

Cohen revealed that he had tried to sell the company or have it merged with a competitor over the past six months, only to see such efforts fruitless.

The entrepreneur expects the bike-sharing industry in Hong Kong to undergo consolidation as the market is too small and highly competitive.

The market will see only one or two operators left in the future, says Cohen, who is a Frenchman residing in Hong Kong. 

In a reply to a question as to what the company will do with its bikes, estimated to be more than 1,000, currently in the market, Gobee.bike said it is yet to make a decision as the firm has entered the winding-up process.

It has three options for the bike assets: sale, recycling or donation, the startup noted.

Commenting on Gobee.bike’s decision to exit, Ken Ching, founder and chief executive of bike-sharing service provider LocoBike, said it is overexpansion that led to the demise of Gobee.bike.

Cheng claimed that his own firm achieved operational break-even three months after it began services, with about 3,000 bikes being offered to consumers at the moment and that the company found no need for additional financing.

Kenneth Chau, who founded Ketch'Up Bike last year, also believes Gobee.bike had expanded too fast. Coupled with the problem of huge maintenance cost, a shutdown may have been inevitable, he suggested.

Chau stressed that the business model of bike-sharing is workable under proper management, including data sharing among different platforms.

Meanwhile, as Cohen announced that Gobee.bike customers will get their deposits back within a month after it shuts down but not the unused credit balance in their accounts, which he advised should be used up as soon as possible, the Consumer Council called such an arrangement unreasonable, asking the company to refund the latter to its users as well.

The watchdog said it received eight complaints about Gobee.bike’s exit and 11 related inquiries as of 5 pm Tuesday, while the Customs and Excise Department said it received two complaints.

Lawmaker Elizabeth Quat Pui-fan from the Democratic Alliance for the Betterment and Progress of Hong Kong urged the government authorities to get involved if Gobee.bike fails to handle its bikes properly after withdrawing its service, and hold the company legally responsible if needed.

Quat also called on the government to devise a policy or introduce a licensing system to enhance regulations on the bike-sharing market.

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