Expansion plans in the United States is being scaled back by Chinese bike-sharing startup Ofo.
The firm says that it was is in the process of laying off staff throughout the country even though it is less than a year that the firm had launched its services in the country.
“As we continue to bring bikeshare to communities across the globe, Ofo has begun to reevaluate markets that present obstacles,” Andrew Daley, head of Ofo North America, said in a statement on Thursday.
He added that instead the company will “prioritize growth in viable markets.”
Operational in more than 30 cities in the US, about 120 people had been employed by the company.
Cities like San Diego and Seattle would be the places where the company would still continue its operations primarily because these places have lesser degree of regulatory issues.
There was no comment by the company on how many of its employees it was planning to lay off or how many had bene laid off already. it also refused to comment on the cities it was stopping operations in. the company had already stopped operations in Chicago earlier this month because of alleged regulatory hurdles.
US ride-hailing giant Uber is also providing some stiff competition to the Chinese startup. In April this year, Uber had acquired Jump Bikes – which is a dockless electric bike sharing firm.
The downsizing of Ofo in the US is a part of its global retreat strategy.
The dockless bike-sharing company was serious about international expansion, Ofo COO Zhang Yanqi had told the media in an interview in July last year. And the company was operational in more than 20 countries by the end of 2017 which reflected the seriousness of the comments by Yanqi.
But now the company has announced the winding up of its business from the markets of Australia, Germany and Israel because of high operational costs.
In China, the company is amongst the leading players in the segment despite a fierce and expensive rivalry with the likes of Mobike and Hello Bike.
Ofo is amongst the first of a series of companies that came up with the business plan of bike-sharing that are now ca common sight in on the streets of Beijing. The bikes are allowed to be locked and unlocked anywhere with the help of smartphone app which means that the trouble of returning the bikes to the company dese not lie with the users.
The Chinese companies were hailed to be game changers by analysts and companies like Ofo saw fast and quick.
Companies like Ofo and Mobike rose to valuations of over a billion US dollars with investments coming thick and fast. An additional $866 million was secured by Ofo in March this year in a round of fundraising which was led by Chinese tech giant Alibaba .
At one point in time it appeared that Mobike and Ofo would continue their costly rivalry. There was a time when both the companies together reportedly occupied 90% of the dockless bike rental market in China.
However, their positions were dislodged with the arrival of new players in the segment.
Mobike was acquired in April by online services startup Meituan Dianping which doused anticipation of a merger of the company with Ofo. The segment got further crowded after the launch of a bike-sharing service by Chinese ride-hailing leader Didi Chuxing in January this year.
(Adapted from Money.CNN.com)