Photo/Shetuwang

May. 7 (NBD) -- China's dockless bikeshare company ofo purchased far less bicycles from Shanghai Phoenix Imp. & Exp. Co., Ltd. than what had been agreed by those two sides.

In May last year, Shanghai Phoenix Enterprise Group Co Ltd (Shanghai Phoenix) announced that its holding subsidiary Shanghai Phoenix Imp. & Exp. Co., Ltd. had inked an agreement with ofo to supply at least 5 million bicycles in 12-month period to the latter.

However, according to the filing Shanghai Phoenix submitted to Shanghai Stock Exchange Saturday, the real supply stood at approximately 1.78 million bicycles, less than 40 percent of the contracted amount.

With regard to the reasons behind the gap, Shanghai Phoenix explained in the same filing that ofo cut down the purchasing amount considering tighter regulations over bike-sharing businesses and the actual market demand.

Despite the lagging-behind supply, Shanghai Phoenix spoke highly of its cooperation with ofo, saying that in addition to the supply order, the cooperation further lifted up Shanghai Phoenix's brand image and market influence in the bicycle industry as well as improved the company's capacity utilization efficiency and operational performance, hence positive effects for the company.

By press time, Shanghai Phoenix couldn't be reached for comments concerning its future cooperation with ofo.

Economist Song Qinghui said to NBD that the bike-sharing industry was not as prosperous as before and started to go downhill. The decline in purchase order would deliver a blow to Shanghai Phoenix and other bicycle makers and exert negative influence further on upstream and downstream enterprises along the chain of bicycle manufacturing, Song noted, adding that the bicycle industry would experience hardship in a certain period of time.

Amid fierce competition, the majority of bike-sharing companies were suffering big losses and hadn't turned a profit, Song further explained. Song held that enterprises of shared bikes can make a profit only through business merger which would increase companies' strength in withstanding risks, expand their life cycle and enlarge the profit space. Business merger will promote the healthy development of sharing economy, Song concluded.

Email: gaohan@nbd.com.cn