Bike firm Ofo sued for $26m over service fees

Local | Sophie Hui and Cindy Wan 19 Oct 2018

In another warning to shared bike businesses in Hong Kong, major operator Ofo from the mainland has been sued for HK$26.5 million in outstanding fees.

One of its business partners, Leading Asia Industry, filed a writ to the High Court, claiming Ofo (HK) failed to pay nine months of service fees, totaling US$3.38 million.

It wants Ofo to pay the outstanding sum and an annual interest rate of eight percent.

According to the writ, the plaintiff agreed to provide import and export services to Ofo, and Ofo agreed to employ the plaintiff as its agent to handle import and export matters in Shanghai from last year. Ofo had paid the plaintiff for the first 11 months of its services. However, it failed to continue doing so from December last year.

The plaintiff therefore filed a writ to claim the money it is owed.

There were six bicycle-sharing operators in Hong Kong: Gobee Bike, HobaBike, oBike, LocoBike, Ketch'Up Bike and Ofo., Hong Kong's first bike-sharing company, launched in April last year, but ceased operations in July this year. It once had about 350,000 people registered - 80,000 of them active users - and more than 10,000 bikes.

Users have already had their deposits repaid.

After its closure, five companies remain in the field.

Upon its establishment in 2014, Ofo started as shared campus bikes at Peking University. Following its success on campus, it started expanding to other mainland cities in the beginning of 2016, and even reached cities in the United States, Britain and Singapore by year-end.

The bikes arrived in Hong Kong in 2017 and could be found in Tseung Kwan O, Sheung Shui, Fan Ling, Tai Po and even some parts of Kowloon.

Vowing to dominate the market, Ofo initiated a price war to compete with the five other shared bike operators. While the rent of other shared bikes ranged from HK$5 to HK$6 per hour, Ofo charged just HK$3.

And just like other shared bike companies in the city, Ofo was also accused of blocking roads and taking advantage of public space.

The company claimed to be the biggest operator with over 10 million shared bikes in over 250 cities worldwide.

Ofo has withdrawn its overseas business from India, Israel, Australia, Germany, the United States, Spain, Korea and some other countries this year, even though it secured US$866 million in investment from Alibaba Group Holding in March.

At least six mainland shared-bike operators have shut down one by one since last June.

And in Hong Kong, Gobee Bike collapsed in July since it failed to profit after a year in operation.

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