“Chinese Uber” is yielding to Beijing’s pressure. It will leave the US stock exchange

photo: TINGSHU WANG / / Reuters

Just a few months after its debut on Wall Street, Didi announced that it intends to leave the US stock exchange and debut on the Hong Kong stock market. “Chinese Uber” is yielding to pressure from Beijing, which feared that the Americans might obtain sensitive information from the company. Data security is one of the pillars of national security, believe the authorities of the Middle Kingdom.

Didi Global made its debut on the New York Stock Exchange on June 30 this year. It raised $ 4.4 billion from investors, and its peak capitalization exceeded $ 80 billion a day after the IPO. The investors’ joy, however, lasted very shortly, because it quickly turned out that the company was censored in Beijing. Chinese Uber decided to list in the US despite pressure from Chinese authorities that the company was expected to undergo a “cybersecurity review”. As there could be only one result of such a study – the company collects a lot of data considered sensitive – it is no wonder that Didi’s managers wanted to accelerate their debut in order to raise money from investors, hoping that they would get away with it, because Beijing would recognize that “the milk has already spilled”.

They badly miscalculated. A few days after the company’s debut, Chinese authorities ordered the removal of more than 20 of its applications from sale. They also banned Didi from accepting new users. It was argued that the company was illegally collecting and using personal data. In the last several months, Beijing has tightened its control over the private sector, especially companies from the technology sector, and introduced new regulations regarding private data.

The services of the “Chinese Uber” are used by several hundred million people a year outside the Wall. The company has their telephone numbers (in China assigned to their first and last names) and data on travel routes, i.e. frequently visited places – home or work addresses. According to The Wall Street Journal, users themselves share information such as gender, age and place of employment. In turn, over a dozen million drivers provide Didi with data about their car, their criminal past or their bank account. Cameras and microphones in cars record user conversations. In addition, the company collects information on road traffic.

Not only are these data in the hands of a private company, but it also decided to debut on the US stock market. Beijing considers data to be a key asset without which there is no national security. The Chinese authorities are afraid that the US stock exchange regulations will force the Chinese companies listed there to pass data (also on the scope of “cooperation” with state authorities) to the Americans.

Business from Behind the Wall is quite comfortable with accounting rules, which is absolutely not befitting public companies. Until now, the Chinese tried to avoid the US regulator’s auditing of their documents. In the end, however, this downfall must come to an end. Yesterday, the SEC (the regulator of the US market) finalized work on the implementation of regulations passed last year by the US Congress, according to which a company that has not been audited for three years in a row may be removed from the trading floor. It is impossible not to read Didi’s decision as a pre-emptive move. It is also worth noting that “financial decoupling” enjoys support in both Beijing and Washington.

Didi announced on Thursday that it would leave the NYSE and make its debut on the Hong Kong Stock Exchange, without providing a rationale for the decision. The current capitalization of the company exceeds $ 37 billion. – since its debut 5 months ago, the share price has dropped by 44%.

Bloomberg

Didi’s authorities ensure that the stocks on the US stock exchange “will be convertible into freely transferable shares of the company on another internationally recognized stock exchange.”

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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