ofo has been ordered to be pulled out from Nantong only one day after they placed roughly 500 bikes on the streets

Bike-rental startup ofo has been ordered to be pulled out from East China’s Nantong city by local chengguan (城管; refers to “city management” departments) for cramming onto the sidewalks, only one day after they placed roughly 500 bikes on the streets, local media is reporting.

This is not the first time that bike-rental services have been put on hold at the local level. Similar cases have happened in cities of Zibo, Tai’an, Shaoxing, and Deyang over the past few months, as competition among bike-rental firms has been expanding from Tier 1 to Tier 2 and 3 cities.

Bike-rental firms recently found their bikes temporarily seized or their operations suspended by local authorities as they put their bikes into service without obtaining approval.

Nantong Chengguan Bureau held urgent talks on April 29 with a general manager in charge of ofo’s East China operations, pointing out some of the problems associated with ofo’s services such as no approval from local authorities, no satellite positioning function installed on its bikes, as well as no availability of maintenance, dispatching and technical staff.

Also Read: Bike-rental startup ofo lands series D+ backed by Alibaba’s Ant Financial

An officer at Nantong Chengguan Bureau said they welcome bike-rentals in the city, adding that ofo can resume their bike-rental services in the city as long as they go through all the formalities required.

As the draft guidelines for the bike-rental sector in Tier 1 cities such as Beijing and Shanghai require that rental bikes should be equipped with smart locks and the satellite positioning system, ofo, which originally did not plan to use such locks on their bikes, has been gearing up to replace its old combo lock with a new BeiDou smart lock on its old-version bikes in Beijing and Shanghai. In this case, ofo seems to pin their hopes on putting its old-version bikes in some lower-rung cities in an effort to save on lock replacement costs.

According to an industry insider, the launch of bike-rental services in a new city involves multiple links including the local chengguan bureau and other departments such as urban construction bureau, transportation authorities or even water conservancy administrations. And it has not been defined as to which department should manage the bike-rental services since most of the local cities have not come up with measures for the emerging sector.

TechNode has reached out to ofo for comment, but did not receive a reply before publishing. We will update when we get a response.

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