January 28, 2022

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Why did Didi leave "Chinese Uber" Wall Street?

Why did Didi leave “Chinese Uber” Wall Street?

The American adventure of Didi Chuxing, also known as the Chinese “Uber”, lasted for half a year. After months of tensions with Chinese authorities over its Wall Street debut last June, the technology company announced on Friday its plans to withdraw from the New York Stock Exchange and prepare a new stock offering on the Hong Kong trading floor.

The company confirmed in a statement that its board of directors has already approved the decision and that it will call a meeting of shareholders to vote. His proposal suggests that titles withdrawn from the US stock exchange be convertible “into freely tradable shares of the company on another internationally recognized stock exchange”.

They also gave permission to begin the steps necessary to qualify for another IPO, this time in Hong Kong. The former British colony’s market recently became a haven for several big Chinese tech companies already listed on Wall Street — Baidu, Trip.com or soon Weibo — in the face of Sino-US tensions, Beijing’s increased oversight of the sector or fear Washington will take steps to be excluded from its market.

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With around 400 million active users in China and services in 16 other countries, Didi Chuxing within a few years has become one of the Asian giant’s brightest tech companies, especially after defeating its big rival, Uber, in 2016.

On June 30 of this year, the company debuted in New York and raised about 3900 million euros, making its market value 70 thousand million euros. But just two days later, the Chinese authorities announced that an investigation had been opened against the company “to protect national security and the public interest.”

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Wall Street

The company raised around 3,900 million euros in its debut

Similarly, they pulled their app and 25 other apps associated with the company from Chinese virtual stores and prevented them from registering new users. Since then, its stock value has plummeted nearly 45%.

Media such as the Wall Street Journal indicated that the Chinese government asked the company to postpone its plans to go public in order to clarify several issues in advance, but Didi ignored those calls and moved on.

In Didi’s case, state media pointed to the problem of large amounts of data about national transportation infrastructures or about the flows of people and vehicles that the combined transportation app deals with.

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The company promised to cooperate with the investigations and correct the problems in it, although it warned that the measures taken may harm its income.

Beijing’s actions against the company are part of a broader campaign it launched a year ago against the country’s major tech companies to curb potential monopolistic practices, ensure proper use of the data it collects and prevent it from falling into foreign hands.

In fact, shortly after the Didi investigation began, Beijing announced similar investigations against other Chinese companies with a similar business model that had also been rolled out to the public in the United States in the previous months.

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For its part, Washington is not easing pressure on Chinese companies either. The country’s regulatory authorities on Thursday announced the adoption of an amendment to their regulations that would allow them to take out of their portfolio companies that do not audit with certified auditors, something that is happening with almost all Chinese companies.

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The regulation, which derives from a law voted in December 2020, requires a state-listed company to have its accounts certified by a firm authorized by the independent accounting organization PCAOB. Companies have the end of 2022 to catch up.