![]() ![]() exchanges as well as those already listed. But the prospect of China creating a new layer of regulatory review for foreign IPOs and Beijing’s willingness to torpedo the value of Didi, one of its brightest homegrown tech stars, has cast a cloud of uncertainty over companies seeking to sell shares on U.S. Since 2000, hundreds of Chinese companies have used that strategy- the so-called variable interest entity model-to raise capital on foreign bourses even if they operate businesses in sensitive sectors, such as the Internet, in which Beijing forbids foreign ownership.ĭetails of those changes remain forthcoming. On Wednesday, Bloomberg reported that the China Securities Regulatory Commission plans to let regulators block Chinese companies from listing overseas even if they sell shares through an offshore affiliate. ![]() The State Council, China’s top executive body, issued a brief but sweeping statement vowing new rules for overseas listings and stricter supervision of cross-border data transfers. investors were to decamp for the long July 4 weekend and one day before China would celebrate the 100th anniversary of the nation’s communist party. China adopted a new cybersecurity law in June, but the measure was vaguely worded, and it remained unclear how it would be implemented.Īnd so Didi officials pressed ahead with plans to go public in New York, eventually settling on Wednesday, June 30-three days before U.S. And in any case, the CAC had never derailed the overseas listing of a Chinese company, and technically didn’t have the power to do so. But in the weeks before the IPO, according to the Wall Street Journal and Financial Times, officials from the CAC raised questions about the security of Didi’s network, expressed concern about the sensitivity of information displayed on its mapping function, and cautioned the company to delay its listing until it could conduct a thorough internal security review.ĭidi says it never received an explicit warning from the agency-and that it didn’t divulge customer data to U.S. In the state-owned media, commentators clamored for government to “rectify” the nation’s influential tech sector.Ĭhina’s cybersecurity watchdog, the Cyberspace Administration of China (CAC), hadn’t played a prominent role in the spring crackdown. In November, President Xi Jinping had personally scuttled the IPO of billionaire Jack Ma’s Ant Group, and now China’s antitrust regulator, the State Administration of Market Regulators, was grilling leading Chinese tech companies, including Didi, about unfair competitive practices. Didi’s long-suffering venture investors, among them Masayoshi Son’s Softbank Group, urged seizing the moment to take the company public.Īnd yet China’s political landscape was fraught. The Chinese economy was rebounding from its bout with COVID-19, lifting Didi’s revenue with it. ![]()
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