Mobike raised its rates for bike rentals in a number of cities across the country on Monday, expanding fare increases that had been implemented in Shanghai and Beijing earlier this year, the company said.

Why it matters: Chinese bike-rental firms are hiking rental fees to bolster profitability following a prolonged period of huge losses and major cash flow constraints in the industry.

  • Mobike’s efforts to shore up monetization started at the beginning of the year as part of a broader profitability push for parent company Meituan, which also struggled with profitability prior to the second quarter this year.
  • Apart from Mobike, Alibaba-backed Hellobike and Didi’s bike-sharing arm Qingju also raised their fares this year. In June, Hellobike doubled the rates for bike rentals in Beijing from RMB 2 (around $0.28) to RMB 4 an hour, priced in 15-minute intervals.

Details: Mobike riders will be charged RMB 1.5 the first 15 minutes, up from RMB 1, and RMB 0.5 for every additional 15-minute increment, according to a Chinese media report.

  • Under the new rule, the fare for a one-hour ride adds up to RMB 3, drawing complaints from riders who said they would consider alternative transportation like the bus or subway, which charge similar fares.
  • One Weibo user using the handle “Likeavirgin” hasn’t ridden a bike since fares rose earlier this year and is now considering purchasing a bike.
  • Another Weibo user, “Yigongchang,” said the fare hike ahead of winter was badly timed for the low season when rider numbers will dip.
  • The price increase will not apply to users who bought into its discount program, which charges flat rates for unlimited rides on a monthly, quarterly, or annual basis. These users will continue qualify for two-hour rides free of charge but will need to pay RMB 0.5 for every additional 15-minute increment.

Context: Meituan, China’s food delivery and local services giant, acquired Mobike for RMB 18.1 billion in April 2018.

  • Following the acquisition, Mobike shuttered many of its international offices in March to focus on the China market.
  • Meituan is gradually phasing out Mobike bikes on the street and replacing them with new units under the Meituan Bike brand.
  • The bike rental subsidiary contributed RMB 4.6 billion ($655 million), or over half of Meituan’s adjusted net losses in 2018. A March report from equity firm China Tonghai Securities said that Mobike will continue to be loss-making until 2021.

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Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com. More by Emma Lee

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