January 10, 2018 7:02 am JST

Chinese ride-hailing giant Didi moving into bike sharing

Taxi titan will take over failed service Bluegogo, sharpening competitive edge

SHUNSUKE TABETA, Nikkei staff writer

China's failed bike-sharing service Bluegogo gets a new lease on life under the country's No. 1 car-hailing service company Didi Chuxing. © Reuters

BEIJING -- Chinese ride-hailing leader Didi Chuxing will make a full-scale entry into the bicycle-sharing business, following an agreement to effectively take over management of the failed startup Bluegogo.

Under the agreement announced Tuesday, customers of the Bluegogo bike-sharing service operator Tianjin Luding Technology will be able to convert their deposits and leftover funds into coupons for Didi's ride-hailing and bike-sharing services. The Bluegogo operator collapsed in November amid intense competition. Didi said it will inherit neither Bluegogo's assets nor its debts.

The company holds a stake in the operator of bike-sharing venture Ofo, a company called Beijing Bikelock Technology, and offers Ofo services in its mobile app alongside taxi-hailing and ride-sharing functions. With Bluegogo effectively under its wing now, Didi will roll out a service combining the two bike platforms.

Bluegogo launched in November 2016, offering a bike-sharing service in urban centers such as Beijing and the Guangdong Province cities of Shenzhen and Guangzhou, and making inroads in the U.S. as well. At its peak, it had a ridership of 20 million, but heated competition stymied its revenue goals, and its deteriorating financial state caused it to collapse at about a year old.

Tianjin Luding commented Tuesday that it was confident the bike-sharing market would reach new heights under Didi.

China had about 70 companies running bike-sharing services as of July, with more than 16 million shared bikes deployed nationwide, according to central government statistics. While the user count has surpassed 130 million, fierce price competition has driven a number of mid-tier businesses to failure. This has led to trouble, including cases of users being unable to reclaim their deposits.

As the competition continues to heat up, ridership is also growing. By 2020, the number of bicycles used for such services is expected to roughly double to the range of 30 million to 32 million. The market could grow to as much as 88 billion yuan ($13.4 billion) in scale, by some calculations.

Didi snagged the top spot in China's ride-hailing market through moves such as mergers with major domestic players and the purchase of the local arm of U.S. titan Uber Technologies. It boasts more than 450 million users, and has more than 21 million registered drivers. It got a $4 billion injection from investors including Japan's SoftBank Group at the end of last year.

The Chinese giant is hurrying to expand overseas. Didi has formed a web of strategic partnerships, including with India's Ola; Grab, headquartered in Singapore and operating throughout Southeast Asia; Estonia-based Taxify, which offers lifts in Europe and elsewhere, and Dubai's Careem, which runs in the Middle East and North Africa. It aims for bike-sharing to form part of its eventual comprehensive range of public transport offerings.

SoftBank Group Corp.

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