There was a time when Ofo was everywhere. Its bright-yellow bicycles dominated the roads of Shanghai and Beijing. Anyone could pick a up from almost any street corner by scanning a QR code and leave it anywhere after use. The advertisements had famous Chinese celebrities. It was a symbol for the young and the urban cool.

Within a span of two years, Ofo, backed by the Alibaba Group, has seen many rivals come and go. Some went under, some were taken over. No.1 Bicycle, for instance, stopped its services in February, while Bluegogo ended up joining hands with ride-hailing giant Didi Chuxing after suffering severe financial pressure.

The struggle is real

But Ofo remained strong, garnering a valuation of US$2 billion. It had bike fleets in over 20 countries, including France, Australia and the US.

Till last year. In December, Ofo’s chief executive Dai Wei told employees in an internal letter that the company is battling “immense” cash flow problems and disbanding the firm has been considered as an option.

“The whole of this year we’ve borne immense cash flow pressures. Returning deposits to users, paying debts to suppliers and keeping operations running,” the 28-year-old said in the letter posted on social media by Ofo’s head of public relations.

“It has meant turning every renminbi into three,” Dai said, referring to China’s currency. He confessed that he had thought “countless times” about ways to resolve the issues, “even of dissolving the company and applying for bankruptcy”. But he was determined to fight. “As pressures mount we must endure, as difficulties grow we must find ways to overcome them.”

Following the news, Ofo users started lining up at its offices in Beijing’s high-tech hub known as Zhongguancun to demand the return of deposits paid to use the service. They had given either 99 yuan ($14.30) or 199 yuan.

The latest blow

The latest sign of trouble for Ofo is a news report by China Entrepreneur Magazine that says the company has dismissed its entire international business department, affecting jobs of over 50 employees. It reportedly plans to focus on its native China market. Ofo’s overseas expansion started towards the end of 2016, with Singapore being the first stop. By next February, it had launched 1,000 vehicles in Singapore, and in December 2017, it had entered 20 countries.

Talking about the employees of the international business department, Jeremy Chen, the division’s general manager, is quoted by the magazine as saying, “Those dismissed could take new jobs in other divisions of the company, but will only receive half of their salaries until April or May.”

What went wrong

Most experts say costly battles for market share have spelled doom for the Chinese bike-sharing companies.

“It now appears bike sharing is the stupidest business, but the smartest brains of China all tried to get in,” confessed Wu Shenghua, founder of now bankrupted bike-sharing firm 3Vbike, to Reuters in an interview. “It really now seems ridiculous.”

Another big reason is the additional challenges in operations, like capital investment, inventory tracking, and maintenance and repair.

What’s interesting is that Hellobike, another China-based bike-sharing startup, has recently secured millions in a funding round, led by Primavera Capital and Ant Financial.

It remains to be seen how 2019 will turn out for the sector, which is struggling for financial oxygen.