After reports of scaling down its business and firing employees in India, Chinese bicycle sharing behemoth Ofo has finally decided to close its operations in the country. This comes as a surprise to many as the Alibaba-backed firm had demonstrated lofty ambitions for India.
According to a Business Standard report, Ofo is shutting down its operations as it is a part of the company’s global strategy to shrink the footprint.
The company has around 30 employees in India.
Rajarshi Sahai, director of public policy and communications, Ofo, clarified that the firm wants to leave the country on a positive note. He also added that even though India is a difficult market it does not mean it has no potential in the segment.
The company launched its operation in the country in November last year and had been operating in cities such as Chennai, Indore, Delhi, Ahmedabad, Coimbatore, and Pune. Operations in Coimbatore were shut in June.
The firm is planning to wrap up all operations across the cities within the next 60 days.
The growth of Ofo in India was only an exaggeration?
Ofo, however, did not clarify the actual reason of shutting its operations in the country where it came with brewing confidence. Since its launch, the Beijing-based firm had tried to gain exposure in the country via tie-ups with municipal corporations, integrating Paytm for payments, among others.
Ofo claimed that it had completed 1.1 million rides within four months of operations in India. But, such claims seem to be an exaggeration.
Ofo is a billion dollar valued company, operating in 250 cities across 21 countries. It claims to have over 200 million global users. Thus their move to wind up definitely raises serious questions.
Challenge for other players in bike sharing segment
The move is also an alarming call for other global and local players in this space such as Meituan-backed Mobike, Ola Pedal, Zoomcar PEDL, Mobicy, and Yulu.
As of now, the bike sharing model has been welcomed by users as well as the government to control traffic congestion and pollution.
The biggest threats for bike-sharing business in India is lack of infrastructure along with a tepid response from investors.
India is incompetent in properly planning or executing the mapping of the bike sharing model in congested traffic networks such as Delhi, Chennai, Bengaluru, and Pune. This is where Ofo tried hard to find stable ground.
Meanwhile, India may not ready for such models at this fast pace. Being one of the biggest markets for the bike sharing model, China has been facing issues such as oversupply where piles of unused bikes lie on the streets.
Besides India, Ofo has reportedly fired over 50 per cent of their employees in Singapore and have been shutting down operations in Australia as well.