Mobike gets a name change as Meituan ramps up consolidation efforts

Bike-sharing firm Mobike will move all of its services to the Meituan platform, as the parent firm seeks to consolidate its various businesses under the flagship brand.

As part of the move, Mobike will be renamed Meituan Bike, Meituan-Dianping said on Wednesday.

Analysts said the move will help Meituan to integrate its ride-sharing, food delivery, hotel bookings, travel and entertainment ticketing businesses.

Wang Huiwen, co-founder and senior vice-president of Meituan, said in an internal letter that the company would offer shared bike services only through the Meituan app in the future.

"Mobike's services will be fully integrated into the Meituan app. It (Mobike) will become a business unit of the company's location-based service department," said Wang, who will also be the president of the unit.

Li Junhui, an internet industry analyst and senior research fellow at the China University of Political Science and Law in Beijing, said: "User numbers on the Meituan app will increase substantially after the name change and help Meituan garner more users for its other consumption scenarios.

"Though the Mobike brand will gradually fade away, it is not a bad ending for it, considering that it had achieved considerable business success in the past," he said.

The name-change will also have synergistic efforts for the group's other businesses like bicycle's mud guards made from recycling waste materials from disposable food boxes as they stand to gain through closer cooperation with the bike-sharing services.

In April last year, Meituan took full control of Mobike. However, Meituan incurred a net loss of 28.8 billion yuan ($4.25 billion) in the first half of 2018, mainly due to acquisition-related costs.

"Mobike lost money because of the irrational competition and huge expenses incurred in the initial stage of operations, something that weighed on Meituan's balance-sheet.

"However, from a long-term perspective, the business could be profitable for Meituan if it takes a rational approach," he added.

During the third quarter of last year, Meituan managed to bring down its losses from new businesses, including bike-sharing. The loss rate dropped from 76.4 percent in the second quarter of 2018 to 37.4 percent in the third quarter.

During the past few years, bike-sharing frenzy swept across China, but the sector faces an uncertain future recently, as companies started facing cash crunches.

"Even though supervision has been bolstered and the number of bikes is decreasing, there is still robust market demand. Startups could avoid the dilemma that Ofo faced through rational management."