Kala Danche (卡拉单车) is back in business. As you may recall, last week we reported that the company had lost over 75% of their bicycles in less than 20 days of operation. Because of that, their only investor made a quick exit, taking all the user deposits with him and triggering a cascade of questions about user deposits on China’s leading bike-rental platforms.
However, according to the Legal Weekly(in Chinese), they may be back in business. As Lin Bin, the founder of Kala tells the story, after the news went viral, many of the residents of Putian, a Tier 4 city in Fujian where Kala’s failed launch took place, started looking for the bikes and gave the company information about where they were located. Since then, they claim to have recovered 70% of the total number of bikes with only 5% damaged. The founder even claiming that investors from Beijing, Shenzhen, and other big cities are now approaching him.
It’s no surprise that Kala’s story has taken off. O2O bike-rental is super hot right now, with local media covering every possible angle, from the guy who was put in administrative detention for 3 months and fined RMB 1000 to needles being put into bike seats and bike-rental being the “magic mirror that reveals goblins” ( 照妖镜 zhaoyaojing) of Chinese society. However, Lin Bin is quick to point out that, for Kala, their problem was management and lack of consumer education.
Many people in Putian did not put them back properly, attached their own locks, took them back to their home in the suburbs, or decided to “vent their anger”. Lin Bin chalks this up to a lack of proper management on the founding team, not necessarily an inherent problem with Chinese character. This offers some lessons, but also raises many questions.
The lessons are obvious: understand what you’re getting into before launch, do your research, understand the market, and be prepared to address possible problems quickly. However, the questions about this story are a bit more troubling: if the problem was indeed management, why are investors showing so much interest? Could this all be a publicity stunt on the part of Kala or other stakeholders?
Publicity and PR stunts are no strangers in China where the relationship between media and businesses is usually transactional and exists in what many Western journalists would consider very gray areas. Whether or not this is one such case is yet to be seen, but we here at TechNode are taking this entire saga with a very big grain of salt.