Chinese bike-rental companies are taking an indirect path to revive their businesses — replacing old bikes with new ones. Didi this week replaced 10,000 used bikes in Beijing with 3,000 new ones in an effort to refresh its brand image while complying with the government’s restrictions. However, it was immediately reprimanded by the municipal government for violating rules.
According to a report by Beijing Youth Daily, 3,000 new Qingju bikes were introduced to Xierqi, an area in Beijing home to the headquarters of Chinese internet giants such as Baidu and Didi.
Didi, which owns bike-rental services Qingju and Bluegogo, said it had removed 10,000 old Bluegogo bikes from the area a month earlier after being granted permission from the Zhongguancun administrative committee to better meet demand and help relieve traffic in the area. Xierqi belongs to Zhongguancun Technology Park.
However, Didi did not obtain approval from the Beijing Transport Bureau, which banned in August new shared bikes. The government body castigated the company in a Weibo announcement released Thursday afternoon for introducing new bikes without permission and promised punishment for violating relevant rules and “disturbing the normal order of the market.”
A Didi spokesman explained in a statement sent Thursday that there is not much service life left in the old bikes and that it is in a negotiation with the local government to offer more choices to local commuters.
The move marks the debut of Didi’s own brand in the city’s bike sharing market, a major step following the company’s high-stake investment into Ofo in late 2016. Chinese media reported that Didi was Ofo’s largest institutional investor following several rounds of funding totaling $370 million in early 2017.
Didi’s acquisition of Ofo reportedly did not go smoothly. Ofo management was seen as resistant to the takeover; three Didi executives reportedly stepped down from their posts in November 2017, fewer than five months after being assigned to roles at the startup. Ofo faced reports of mounting debt, office closures, and massive layoffs over the past few months.
Facing friction at Ofo, Didi planned to expand and influence the market using its own brand. It will deliver 2 million new Qingju bikes to major cities in a bid to take on Meituan, which acquired Mobike in April 2018, reported 36Kr. However, it has made little progress due to bans in Beijing, Shanghai, and Guangzhou on bike-rental firms from introducing new bicycles beginning August 2017, as the major cities were choking on the millions of bicycles left over from the bike-rental boom.
Didi is not the first company struggling to retain the market amid tight regulatory control. Hello Transtech replaced some of its bicycles in January 2018 after obtaining transport bureau permission, looking to maintain a presence in Beijing, a vital market where rivals Mobike and Ofo continue to grapple.