(Yicai Global) Nov. 24 -- Zhu Xiaohu, a key investor in Chinese bike-sharing giant Beijing Bikelock Technology Co. (Ofo), has reiterated that a merger with counterpart Beijing Mobike Technology Co. would be the best choice for both companies going forward in an interview with Yicai Global.
The bike-sharing industry has already reached a point of saturation in major urban markets with both firms enjoying roughly equal market shares.
"The trend is very clear. China's internet era has proven that it is impossible to bring down a rival firm when there are only two players dominating a market. At this point, a merger is the best choice for the two companies," Zhu told Yicai Global. He also stressed that reaching an agreement would not be easy and an additional fight is necessary.
Competition between the two bike-sharing companies has been incessant. Ofo has put into service over 10 million bicycles in more than 180 cities in 17 countries, while Mobike operates over 8 bikes million in more than 180 cities around the world, according to both firms. The pair remain divided on the use of Internet of Things technologies in their smart locks.
Mobike and Ofo have become the two biggest players in the bike-sharing market in China and have maintained rapid growth on a national scale, leading to very limited opportunities for late-comers to the market. Other players have experienced operational difficulties and are teaming up to deal with challenges.
Bluegogo, run by Tianjin Luding Technology Co, officially exited the bike-sharing market earlier this month, while Changzhou Youon Public Bicycle System Co. [SHA:603776] and Hellobike have agreed a merger. Deer Bike, 3Vbike and Wukong Bike have all ceased services, while Coolqi Bike and Xiaoming failed to return deposits to users in a timely manner.
The mergers between ride-hailers Didi Chuxing and Uber, and between Meituan and Dianping in the food-delivery sector reflected similar market situations to that of the bike-sharing sector. However, it does not mean that a similar merger will occur in the industry. Zhu still remains coy on the possibility adding, "Let's wait and see."