National action needed as Ofo, once a sharing-economy star, battles for survival

By Hu Weijia Source:Global Times Published: 2018/12/23 19:50:29

As Chinese bicycle-sharing services provider Ofo teeters on the brink of bankruptcy, we think it is necessary to help the company survive.

Once a star among sharing economy start-ups, Ofo has tumbled. Dai Wei, the founder and chief executive of the company, has been put on a blacklist for unpaid bills.

The company is struggling with immense cash flow problems, but its business model - praised as one of China's four great new inventions besides high-speed railways, mobile payments and e-commerce - is still valuable.

With its yellow dockless bikes, the company offers a convenient service to about 200 million users globally and makes a positive contribution to solving urban traffic and commuting woes.

Many of those 200 million users have gotten accustomed to living in the sharing economy. Although some people are seeking a return of the deposits they paid to use the Ofo platform, they're still trying to ride the company's bicycles.

It doesn't look like those people really want the company to fail.

The sharing economy is a significant digital trend dominated by start-ups. Most emerging industries must go through a trial-and-error process on the way to commercialization. Certainly, there are many defects in Ofo's business model, but it would be regrettable if the company has no opportunity to learn from its mistakes and correct them.

China is quickly taking a global lead in developing digital economy. It needs to be very cautious in imposing a "death sentence" on a leading sharing-economy start-up because of a temporary setback.

The e-commerce sector in China survived the blow of being hit by counterfeit problems. Why can't we be more patient when dealing with the cash flow problems of the bike-sharing industry?

The key issue is how to help Ofo survive, instead of turning a blind eye to its struggles or even encouraging its bankruptcy. The government can coordinate relevant parties to throw the start-up a lifesaver.

Digital industries are quickly re-shaping China's economy, but the government sometimes lags behind when it comes to encouraging innovations in management. As Ofo's difficulties mount, we must find ways to overcome them, however hard that is.

Some global giants such as South Korea's Samsung had government support in their infancy. The Chinese government shouldn't shy away from direct intervention into tackling Ofo's crisis if necessary.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON ECONOMY

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