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Ride-hailing giant Didi Chuxing is still waiting for a final ruling from Chinese authorities, one year after Beijing shocked the market by initiating an unprecedented cybersecurity investigation into the company on national security grounds.
US-listed companies Full Truck Alliance and Kanzhun, which were subject to a similar review by the Cyberspace Administration of China (CAC) days after it initiated an investigation into Didi on July 2 last year, were both allowed to resume user registrations last week.
The CAC, however, has remained silent on whether and when Didi’s dozens of apps can be restored to Chinese app stores, allowing the company to sign up new users. The ride-hailing firm has suffered huge business losses since last July.
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Daily active users of Didi plummeted in April by about 70 per cent from the time the investigation began, according to a person familiar with third-party tracking data on Didi. The person declined to be identified because the information is not public.
Didi Chuxing cannot file an application to list in another public market until Beijing recognises the completion of its business rectification measures. Photo: Reuters alt=Didi Chuxing cannot file an application to list in another public market until Beijing recognises the completion of its business rectification measures. Photo: Reuters>
Part of that user decline for Didi reflects the impact of China’s rigid Covid-19 lockdowns, which have discouraged travel, the person said.
Didi, which has not published recent business operations data, declined to comment.
The Beijing-based company has been trying to satisfy regulatory requirements over the past year. Didi told investors in May that it had to delist from the New York Stock Exchange (NYSE), less than a year after raising US$4.4 billion from its initial public offering, as a necessary step to apply for permission from Chinese authorities to resume normal business operations.
Didi has said it will not seek to go public in another market until it completes business rectification measures.
The company, whose shareholders voted to delist from the NYSE last month, started trading on the over-the-counter market (OTC) on June 13. The Post reported last week that its 26 suspended apps are expected to be restored “soon”.
China, according to report by The Wall Street Journal in early June, was concluding Didi’s cybersecurity review and was preparing to lift a ban on adding new users.
There has been no official update about that inquiry’s progress from Chinese authorities because the process remains shrouded in secrecy. The South China Morning Post reported earlier that Didi had angered the CAC by forcing its way to a US IPO, without obtaining the internet regulator’s full endorsement in a “deliberate act of deceit”.
Cheng Wei, Didi’s founder and chief executive, and company president Jean Liu Qing have both retreated from public view since the investigation began. Liu also made her social media posts inaccessible on Chinese microblogging service Weibo.
The firm’s board members, including Tencent Holdings president Martin Lau Chi-ping and Alibaba Group Holding chairman and chief executive Daniel Zhang Yong, have quit amid the saga. Alibaba owns the Post.
In the quarter ended December last year, Didi posted a 171 million yuan (US$25.51 million) loss and a 12.6 per cent year-on-year decline in revenue. Didi’s full-year net loss widened to 49.3 billion yuan, while its total revenue was up 22.6 per cent.
Beijing’s punishment of Didi has also thrown a spanner in the works of other Chinese tech firms planning to list in the US, as any company holding the data of more than a million mainland clients, is now subject to a cybersecurity review.
The tough enforcement measure has also dealt a blow to investor confidence in Chinese tech stocks, with Didi’s valuation plummeting. Its latest trading price on the OTC market is US$2.95, which is a fraction of its debut IPO price of US$14.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.
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