Ofo only ordered over 80k bicycles from its manufacturing partner Shanghai Phoenix so far this year. This is far short of the anticipated 5 million bikes per year the two companies have planed one year earlier, local media is reporting.
The two companies reached a 5-million-bike deal in May last year, at the peak of China’s bike rental battle. The purchase order promised to bring a profit of about RMB 40 million ($5.79 million) for Phoenix, but the company’s announcement shows that only 37.23% of the order is completed.
Update: Ofo has responded to our report: “Ofo aims to promote the sustainable development of bike rental as well as the whole supply chain of this industry. Some cities have placed a ban on putting more new bikes and ofo is going to cooperate with these local governments. But as existing bikes are entering the three-year retirement period, there will more demands for bike replacement, which will form a sustainable and long-term growth for the industry.”
Shanghai Phoenix is just one of ofo’s partners. Flying Pigeon, another reputable bike brand in China with over 80 years of history, had also expected to churn out around 5 million bikes per year for ofo, the company told TechNode in May of last year. The Beijing-based startup also inked a strategic partnership with bike producer Fushida for a 10 million bike per year deal earlier this year.
China’s bike manufacturing industry, which has seen a continuous decline in the past two decades, recorded a quick surge thanks to the country’s tough bike rental war. Since the number of bikes on streets is a critical factor in winning the bike-rental battle, companies raced to form partnerships with bike makers. At the heyday of the competition, makers could churn out 10 bikes in 16 minutes.