Didi Chuxing has had to temporarily put plans for an IPO in Hong Kong, scheduled for this summer, on hold. According to several sources, the Chinese Uber would not have been able to meet all the requests of the Cyberspace Administration of China (CAC) in terms of cybersecurity.
Not only is the prevention of data leaks abroad, already pointed out recently by the CAC, not satisfactory, but the applications of the Didi group will remain absent from application stores. Without the endorsement of the powerful CAC and its freely accessible applications, an IPO is unthinkable for Didi Chuxing and its shareholders.
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Didi’s descent into hell
This is a new blow for the company which still has big projects in China, but also internationally. Compared to Uber on a regular basis since then, it has stood out in the creation of a viable autonomous driving division, valued last year at $6 billion. Its American equivalent, which was not profitable enough, had ended up selling all of its autonomous technologies to Aurora. Clearly representing a future for Didi, it had announced a program allowing it to put 1 million autonomous taxis on the roads of China by 2030. A promising model which has attracted many international investors, even pushing it to hire a listing on the New York Stock Exchange, to the detriment of Shanghai or Hong Kong. A choice which will not be at all to the taste of the Chinese regime and which will sign the beginning of the problems for Didi Chuxing.
Didi has launched a fleet of self-driving cars on the streets of Guangzhou in China. Photography: Didi.
As the company prepares for a historic IPO, the State Administration for Market Regulation (SAMR), China’s antitrust authority, has launched an antitrust investigation. Not enough to slow Didi down in its IPO in the United States, which took place on June 30, 2021. A few days later, the SAMR will ban its services from Chinese application stores, officially for illegal data collection.
Shortly after, the CAC will burst into Didi’s premises, accompanied by representatives of the Ministry of Transport, Natural Resources, Public Security, in charge of internal security in China, and State Security, the civilian branch of intelligence and counterintelligence. Sanction that Didi should have expected, the Middle Kingdom being in an unprecedented wave of repression of digital companies.
Cornered, having lost 30% of its users, the company will gradually bend under the pressure imposed by Beijing. Revising its ambitions downwards, it will abandon its plans to set up in Europe. A departure of Jean Liu, co-founder and president of Didi will even be considered, then denied. Finally, on December 3, 2021, the company will announce its withdrawal from the New York Stock Exchange, for ” prepare its listing in Hong Kong “.
Jean Liu, President of Didi Global. Photography: World Bank/Flickr.
Now, if the regime is satisfied with a return to the right path, all is not forgotten. Data processing at Didi Chuxing is still a problem, especially its transfer outside of China. The CAC has not yet issued any new sanctions following this new review. It remains to be seen whether it will be satisfied with the current situation, or push the Chinese Uber again.