End of the road for Gobee.bikeTop News | Charlotte Luo 11 Jul 2018
Hong Kong's first cycle-sharing company, Gobee.bike, has ceased operations.
That is sparking concerns other bike-sharing firms are also in danger of failing. Yet one of the other five operators had in fact already offered to take over Gobee's bikes and customers.
Gobee.bike was launched in April last year. At last count it had about 350,000 people registered - 80,000 of them active users - and more than 10,000 machines.
Citing mounting costs, Gobee announced yesterday it was going into voluntary liquidation. "Our decision is purely due to our financial situation," chief executive Raphael Cohen said. "After over a year in service we unfortunately have not been able to make the service profitable, and the financial cost of maintaining the bikes in best condition has proven to be too high for us to sustain the business."
Cohen promised to repay users their HK$399 deposits. They have until August 10 to collect refunds. But current users will not recover their balances. They can, however, continue using bicycles until July 17. Bikes will be locked after that date.
Founded in Hong Kong by foreign entrepreneurs Cohen and Claude Ducharme, Gobee.bike organized a pre-launch seeding round led by Swiss Founders Fund. And Gobee raised US$9 million (HK$70 million) last August in a funding round to expand its bike rental service overseas.
The funding round was powered by Grishin Robotics, an Internet Of Things fund, with participation of Alibaba's Hong Kong entrepreneurship fund. But operations in France and Italy ended in February due to the high cost of maintenance.
In Hong Kong, some bikes were found thrown into a river in Sha Tin during the month it was launched in Hong Kong. Then many bikes were vandalized, such as rear lights being smashed.
At the same time, many bikes were not being parked properly, and some users abandoned the bikes throughout the SAR.
Lawmaker Ted Hui Chi-fung said yesterday that the government had failed to shape regulations for the bike-sharing industry, allowing the machines to be "stolen, damaged, and illegally parked."
Hui noted that many major cities have bike-sharing schemes, with people welcoming them as a means of clean and healthy transport.
He called on government officials to review the situation quickly.
Gobee.bike and the other five bicycle-sharing operators provide more than 24,000 machines in Hong Kong, though more than half have come under Gobee. These are in addition to machines provided by traditional bike-renting shops.
HobaBike was founded last July with 3,000 bikes. Its founder, Joseph Sung Yin-bong, said he offered to buy Gobee's bikes when he heard of the financial struggle a few months ago. "If the bikes go to waste it's against the environmental concept of a bike-sharing business," he said.
But Gobee had not responded to his offer, Sung added.
Economist Kwan Cheuk-chiu warned that more bike-sharing companies could shut in Hong Kong in the near future as the supply and demand situation had not yet been balanced.
Limited demand and high maintenance costs made it difficult for companies to survive, he added.
He noted that transportation in Hong Kong is relatively comprehensive, so the demand for shared bikes is not so big.
Biking is generally a leisure activity for people over the weekends, Kwan added. He also said that bike maintenance requires a large staff, which opened the way for losses.
On that, he said that about 20 of 40 bike-rental startups in the mainland have gone bust. Sung said HobaBike has not yet broken even, though he expects it to within two months.
A spokesman for another operator, Loco Bike, said the Gobee closure will obviously have a considerable impact on the business. But Loco would not expand excessively. Instead, it would be maintaining high usage rates for bikes.
Osman Mohammed Arab and Wong Kwok-keung of RSM Corporate Advisory (Hong Kong) have been appointed as provisional liquidators of Gobee.bike. Their audit of assets will naturally include bicycles scattered around the SAR.