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Sharing Economy

Meituan Dianping backpedals on bike-sharing

Chinese company plans 'sale or abandonment' of some Mobike operations abroad

Mobike's shared bikes are parked around a car in Beijing, in April 2017.
Mobike's shared bikes are parked around a car in Beijing, in April 2017.   © Reuters

HONG KONG -- Chinese online services provider Meituan Dianping apparently lost its appetite for bike-sharing despite the company's $2.7 billion takeover of Chinese startup Mobike last year.

Wang Xing, CEO of the Hong Kong-listed company, told analysts in an earnings call Monday that Meituan will focus on its core food delivery business in 2019 and bolster efforts to reduce losses caused by other initiatives such as bike-sharing.

"We will be more disciplined on when and where to locate our capital," he said.

Wang's comments came amid media reports that Mobike laid off employees in Singapore, Malaysia, Thailand, India and Australia last week. The bike-sharing startup began expanding into foreign markets in 2017.

Though Meituan executives did not confirm Mobike's reported retreat, they did say that their bike-sharing business has an overseas restructuring plan that "includes the sale or abandonment of the selected entities in 2019," without elaborating further.

Since Mobike's acquisition in April 2018, the bike-sharing business produced a loss of 4.6 billion yuan ($680 million), more than triple its revenue contribution of 1.5 billion yuan, the company's financial statement shows.

Meituan also wrote down Mobike's brand value by 1.4 billion yuan and booked a one-time charge of 358.8 million yuan for its overseas restructuring.

Mobike's shrinking global presence is the latest indicator of challenges facing China's bike-sharing industry, where rapid expansion has led to huge financial burdens. Chief rival Ofo, backed by Alibaba Group Holding, also halted its international expansion in recent months, with founder and CEO Dai Wei telling employees that the mounting pressure of paying back suppliers and customers forced him to consider a bankruptcy filing.

Meituan on Monday reported revenue of 65.2 billion yuan for 2018, up 92.3% from the prior year. Analysts had estimated revenue of 64.7 billion yuan, based on a Reuters survey.

Meituan suffered a greater loss than the prior year. The company reported an adjusted net loss of 8.5 billion yuan last year, a nearly 200% surge from 2017, with the bike-sharing business playing an important role.

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