South East Asia

Mobike And Ofo Deny Mismanaging User Deposits

Shared bike giants Mobike and Ofo deny they used 6 billion yuan ($909 million) of user deposits to support their rapidly expanding businesses. Anonymous sources also allege that both bike sharing companies are suffering from money mismanagement and struggling to pay bike manufacturers.

According to China-based news source Caixin, Ofo said in a statement it has always had measures in place to guarantee the safety of users’ deposits, and those customers can get their money back without any problems.

Mobike’s said the allegations were “erroneous reports,” adding it maintains the lawful right to protect its own interests while calling for the bike sharing industry to always put users’ interests first.

China’s shared bike industry is now dominated by Mobike and Ofo, with competitor players including Wukong, 3Vbike and Bluegogo shutting down. These companies have become a source of concern for regulators, with users complaining they have not been able to have their deposits refunded.

The Ministry of Transport said last month that China will work on policies to better manage the problem and “take proactive measures” to prevent risks. In May, the ministry and the People’s Bank of China released a report stating these deposits must strictly separated from other funds to avoid misuse.

While there is speculation that the bike sharing industry will end up in a monopoly to avoid costly competition, both Mobike and Ofo insist they won’t merge. At a recent public event, Wang Xiaofeng, CEO and co-founder of Mobike, dismissed this idea once again, saying “I don’t think there is any possibility of a merger.”

Instead, Wang said, his company will focus on differentiating its products and improving its brand connections with users — two key elements he believes will help the two bike sharing firms avoid a merger.

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