Uber-Slayer Didi Is Moving to Shake Up Chinese Bike-Sharing

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  • The ride-hailing giant enlists Bluegogo and starts own service
  • Decision diverges from its past practice of backing Ofo

Didi Chuxing became China’s reigning car-hailing service by pummeling Uber into submission. Now it wants to do the same in bike-sharing, joining an increasingly pitched battle between arch-foes Mobike and Ofo.

Didi declared it wants to become a “comprehensive” platform for bike-sharing, co-opting struggling No. 3 player Bluegogo and starting its own two-wheeler service. That’s a departure from a previous strategy of championing Ofo against Mobike, which is backed by social media giant Tencent Holdings Ltd. Didi’s now willing to work with other cycling services despite offering its own line, it said in a statement.

The world’s largest startup after Uber Technologies Inc. is delving deeper into a fiercely fought transport arena. Meituan Dianping, the online giant that became the world’s fourth-largest startup last year, has ventured into taxi and car-sharing. Mobike said in December it would get into vehicle rentals. But supporting Ofo’s rivals could drive a wedge between the two companies.

“In a sense it’s competing with Ofo directly, but it remains to be seen how willing Didi is to dive into a capital intensive market,” said Li Muzhi, a Hong Kong-based analyst at Arete Research Services. “Didi is trying to increase its addressable market and boost user reliance on its platform to collect data. That’s especially important now that more rivals are coming in.”

Didi’s decision has the potential to alter the dynamics of an industry in which some of China’s largest companies have a vested interest. From Tencent to Alibaba Group Holding Ltd., they covet the payment, location and behavioral data generated by millions of commuters who use their phones to pay for rides daily. Mobike’s and Ofo’s investors were said to initiate talks about a potential merger last year -- the first step to ending a costly war of subsidies -- but it’s uncertain how Didi’s move into bike-sharing could affect discussions.

Ofo, which has raised funds at eye-popping valuations and is now rapidly branching out overseas, faces an uncertain future if key investor Didi no longer deems their relationship exclusive -- particularly since biggest rival Mobike and Didi share a backer in Tencent. 

Ofo declined to comment. In its corner is Jack Ma’s Ant Financial, which also backs rival Hellobike.

For now, Didi said it’s looking forward to working with other bike-sharing services, of which there’re over a dozen. Under an agreement, Bluegogo will retain its brand, deposits and debt. But users have the option of converting Bluegogo deposits into Didi coupons of equivalent value.

“DiDi looks forward to working with more of our partners to support the sustainable growth of ride-sharing industry,” it said in a statement.

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