It continues to be a bit of bumpy road for anyone who has tried to ride China’s bike-sharing explosion to fame and fortune.
Recently, Chinese social media has been running wild with reports that Bluegogo (小蓝单车), once the country’s third-largest shared bike service, has run into some serious financial difficulties. The company has reportedly managed to burn through 600 million yuan ($90 million) in investor funding since its founding last November, and is refusing to refund users their deposits.
Apparently, even with 20 million users and 700,000 bikes deployed across the country at its peak, Bluegogo is finding it impossible to turn a profit in an industry that has come to terrorize and characterize China this year.
Along with complaints from users about not being able to get back their 99 yuan deposits, rumors have been swirling on Chinese social media that Bluegogo’s youthful CEO Li Gang has fled the country. On Thursday, Li denied these rumors in an open letter, claiming that he had never left China and had been busy “fighting on the front lines,” trying to undo the effects of a “curse” the company had placed on itself with an ill-timed promotional campaign.
Li explained that Bluegogo had encouraged users to locate and ride certain bicycles which had had their icons changed on the mobile app from bikes to tanks. This campaign was in effect in Beijing on June 4th this year and users could look on their phones and see tank icons parading through the streets of China’s capital, heading toward Tiananmen Square.
The fallout from this advertising accident cost Bluegogo a large investment and possible acquisition, Li said, casting it as the beginning of the end for his company.
He went on to explain that Bluegogo’s operations were to be taken over by another bike-sharing startup. Meanwhile, the company’s headquarters have been locked and abandoned.
Prior to Bluegogo, Cool Qi Bike had the unenviable honor of being China’s third-biggest bike-sharing company before it too found itself in dire financial straits in September with users storming the company’s Beijing offices, demanding that their deposits be refunded.
While China’s two leading shared bike apps, Mobike and Ofo, continue to raise funding, expand their services to different cities around the globe, and rake in the Pokebucks, other smaller companies are finding it hard to compete in an industry where users pay next to nothing (or sometimes, actually nothing) for their products, which they then leave parked haphazardly so that they are picked up by city authorities and thrown into a vacant lot.
Now, where did I park my bike? pic.twitter.com/2cAQB21igt
— Shanghaiist.com (@shanghaiist) November 16, 2017
Earlier this year, a pair of smaller shared bike startups made headlines for going out of business only a few months after launching their services. Unable to operate because most of their bicycles had already been stolen.