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Sharing Economy

Didi merges bike-sharing operations

Electric-powered and human-powered bike-sharing businesses now one unit

Founded in 2012, Didi Chuxing has grown into China's top provider of ride-sharing services.

BEIJING -- China's biggest ride-hailing service Didi Chuxing has merged its two bicycle-sharing businesses to help boost the efficiency and competitiveness of its app-based transportation services, Nikkei learned on Tuesday.

The move to integrate Didi's bike-sharing businesses, one involving human-powered transport and the other focused on electric-powered pedal-assist bikes, has resulted in the establishment of a new "two-wheel business department," said one source who was not authorized to speak on behalf of the company.

Boasting an overwhelming presence in the country's ride-hailing market, Didi is seeking to dominate the micro-mobility space by beefing up its bike-sharing operations where users can locate and unlock bicycles using an app on their smartphone.

Didi is hoping that integrating management of the two units will improve efficiency and also facilitate better cooperation between local governments and bicycle manufacturers.

Entering the bike-sharing business in 2018 by effectively taking over the operations of Bluegogo, a bike-sharing service that went under in 2017, Didi currently provides an e-bike-share service in Hangzhou, the capital of Zhejiang Province, and Shenzhen, a major city in Guangdong Province adjacent to Hong Kong.

Bike-sharing services, a major feature of China's sharing economy, are also struggling, with fierce price competition causing profits to fall below expectations, and abandoned bikes cluttering city streets becoming a social issue. Some companies have also been unable to pay back users' deposits, and a number have fallen into insolvency.

"Yesterday's investments are just today's sunk costs and added defensive investment may still be preferable to costly surrender," said Brock Silvers, managing director of investment company Kaiyuan Capital in Shanghai.

"China's slowing economy now faces increasing pressure to produce corporate earnings and this new financial seriousness could also be driving Didi's investment," Silvers added.

Founded in 2012, Didi has grown into the country's top provider of ride-sharing services through mergers with other domestic players and the acquisition of Uber Technologies' Chinese business.

The Chinese company partnered with Toyota in ride-hailing last year, and in the development of e-Palette, a self-driving car that also doubles as a shop on wheels. The two companies have also conducted tests on connected cars.

In March, Softbank's founder and CEO Masayoshi Son told CNBC in an interview that his company would invest an additional $1.6 billion in Didi, acknowledging that the Chinese ride-hailing giant had not yet turned profitable.

Didi, which has raised a total of $20.6 billion in investment according to data compiled by Crunchbase, is also reportedly considering an initial public offering.

Nikkei staff writer Coco Liu contributed to this article.

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