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 More by Emma Lee

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