China's big Uber rival to launch its own bike-sharing service

Bike sharing in China highlights hurdles of doing business
Bike sharing in China highlights hurdles of doing business

Didi Chuxing is plowing head first into China's bike-sharing wars.

The Chinese ride-hailing giant announced Tuesday that it has struck a deal with a struggling startup -- Bluegogo -- and will soon unveil its own bike-sharing service.

Valued at more than $50 billion, Didi already dominates the Chinese ride-hailing market after pushing Uber out of the country. Now, it's seeking to use its financial clout to take a big role in another transportation sector.

But it will be entering a very crowded field.

Related: China's bike-sharing frenzy has turned into a bubble

Bike sharing in China is dominated by two big startups, Ofo and Mobike, which are each valued at well over $1 billion. There are also dozens of other smaller firms in the market, including Bluegogo.

Supply in the industry has quickly outstripped demand. Several companies have already gone out of business, while others have been forced to merge as funding becomes scarce.

Mountains of discarded colorful bikes have piled up across China, prompting officials to limit the number of bikes in some cities.

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But entering the fray "makes sense considering that Didi is actually competing with bike-sharing companies in the field of transportation," said Xue Yu, an analyst with research firm IDC.

Mobike is already pushing into Didi's patch: it launched its own car-sharing service in southwest China last month.

Related: China's 'dockless' bike sharing could be coming to a street near you

Didi isn't entirely new to bike sharing. It's a lead investor in Ofo, whose service it integrated into its app last year.

The deal with Bluegogo breathes life into the startup, which was on the brink of collapse a few months ago.

Didi will offer bikes under its own brand, as well as the services of Ofo, Bluegogo, and possibly other partners in the future.

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