Ofo Put Millions of Yellow Bicycles on China's Streets for Anyone to Ride and Took a Small Deposit to Make Sure They Came Back. At Last Count, More Than Fifteen Million Riders Were Still Waiting for the Deposit.
Ofo was founded in 2014 by Dai Wei, a Peking University graduate, and began on that university's campus. The idea was simple enough to fit on a sticker. A yellow bicycle stood on the pavement, unattended. A rider paid through an app, cycled wherever they were going, and left the bicycle there for the next person. There were no docks, no stations, and nobody watching.
The arrangement rested on two assumptions. The first was that the public would treat a bicycle it did not own as a bicycle it did not own. The second was that the company would do the same with money it did not own. As a precaution, riders paid a refundable deposit, 99 yuan at first and later 199. Neither assumption survived.
The Growth
Investors found the model persuasive. Didi Chuxing became one of ofo's largest shareholders in 2017. Alibaba had put in $343 million by March 2018 for a stake of roughly 12 percent, at a valuation of at least $2.8 billion. The bicycles spread to city after city at home and then abroad, on the theory that whoever put the most bicycles on the street would win the street.
The Public Response
The public adapted quickly. In early 2017, China Daily reported that two nurses in Beijing had been detained for five days after they were caught unlocking rental bicycles on which they had fitted their own padlocks. In the same report, Beijing Television described a man found with an ofo bicycle whose signature yellow had vanished under a coat of black paint, and to which he had added a baby seat. He was reported to earn more than 10,000 yuan a month, well above the city's average salary. The bicycle had not been stolen out of need. It had been adopted.
What was not taken was often simply abandoned. Local authorities cleared bicycles blocking pavements into vacant lots, which filled until they became the aerial photographs everyone remembers. By November 2017, a lot in Xiamen held thousands of shared bicycles from ofo, Mobike and Bluegogo, in multicoloured heaps. The public had been trusted with the bicycles, and the bicycles ended up in a municipal lot.
The Deposits
In May 2017, as Chinese regulators prepared rules requiring bike-sharing deposits to be held in designated bank accounts, Caixin reported the view of a Beijing financial regulator: "Bike-sharing companies do not own the deposit money." Dai Wei had said in March that his company had not used "a single penny" of its deposits.
The funding ran out in 2018. A company that had been planting bicycles across the world began pulling them out, cutting its Asian operations from seven markets to four and retreating from others.
In December 2018 the refund queue opened in earnest. Within days about 11.7 million people were waiting online, and the South China Morning Post put the total owed at no less than 1.16 billion yuan. Hundreds more queued in person outside the company's Beijing headquarters, on the theory that a person standing in a lobby is harder to ignore than a number in an app.
The Debtor
Also in December, it emerged that Beijing's Haidian District People's Court had placed Dai Wei and the company on its list of judgment defaulters. Logistics suppliers had sued over unpaid bills, including 20 million yuan owed to Hangzhou Huodi Logistics and 8 million to Kerry Logistics. Dai was barred from first-class flights, from seats above second class on high-speed trains, from golf and from luxury hotels. The man who had asked a nation to leave its property unattended now needed a court's permission to go on holiday.
The Refund Portal
By late 2019 ofo had cut its staff from about 6,000 to about 200, and more than 15 million users were still waiting. 36Kr calculated that at 3,500 refunds a day, clearing the queue would take about twelve years. Ofo then offered a quicker route: users could recover their deposits in fragments as cashback on purchases made through partner shopping sites. Sixth Tone found that 58 yuan of tea returned 5.07 yuan, and that choosing this route meant giving up every other claim.
In 2020 the app stopped renting bicycles and became a shopping platform. Sixth Tone estimated that recovering a single 99-yuan deposit required spending around 11,500 yuan. In November 2021 ofo briefly offered refunds to users who persuaded friends to join or top up their accounts, and withdrew the feature after criticism in state media.
The deposit was introduced so that ofo would not have to trust its riders. It turned out to be the one part of the system that required riders to trust ofo. The bicycles were padlocked, repainted and impounded. The deposits, which were never left on the pavement, are the part nobody has managed to take home.
Filed from public reporting:
- China Daily — "Bike sharing: Too good to last?"
- Global News — "Chinese 'bike graveyards' reveal cracks in country's booming bike-share industry"
- Caixin Global — "China to Roll Out Tougher Rules on Bike-Sharing Deposits"
- Caixin Global — "Alibaba Discloses Increase in Ofo Stake"
- South China Morning Post — "Bike-sharer Ofo has nearly 12 million users waiting for deposit refunds – more than the population of Belgium"
- Caixin Global — "Ofo Founder Blacklisted by Court Amid Debt Woes"
- Sixth Tone — "Want Your Ofo Deposit Back? It's Going to Cost You"
- Sixth Tone — "Ofo Wants Users to Invite Their Friends Into Its Debt Pit"
