With 377 million active users per year in China and services in 16 other countries, Didi Chuxing has been celebrated in China as a local technology champion. It defeated its American rival, Uber, and bought the company’s Chinese operations in 2016. Promises to use its data banks to unlock traffic and develop driverless car technologies made its executives icons then. that Chinese officials called for building a more innovative economy.
The delisting is likely to heighten investor concerns over what appears to be growing hostility by Chinese authorities to domestic companies that list shares on foreign stock exchanges. China’s taming of internet giants accelerated last year after regulators thwarted an IPO by Ant Group, the fintech giant and Alibaba’s sister company.
Like Didi, Ant had carried out a stock listing despite a history of regulatory problems. Other companies that may have viewed the boiling US stock market as an easy way to raise funds are now likely to be content with Chinese capital markets.
Beijing’s sudden crackdown on Didi rocked the company’s new Wall Street shareholders. A Wall Street listing, like Alibaba’s record-breaking 2014, was once viewed in China as the ultimate validation of a company’s business achievements. Since its successful IPO this summer, Didi’s share price has fallen by about half.
In a spate of criticism against Didi, Chinese regulators followed his list of megabucks with several regulatory slaps. Concerned that the listing means that Didi could transfer sensitive data about Chinese runners to the United States, regulators forced the company to suspend the registration of new users two days after the IPO while they were initiating a cybersecurity review of its practices.
Shortly after, officials ordered downloads of Didi’s main consumer app to stop, before expanding the block to include 25 other company apps, including its ridesharing app, financial app and its application for corporate clients. At the time, he said the suspensions were due to problems with the collection and use of personal data, without giving further details.
Even before his registration, Didi was struggling to avoid regulatory scrutiny. In late March, regulators in the southern city of Guangzhou ordered it and nine other companies to compete fairly and not use consumers’ personal data to charge them higher prices.