After Didi Fiasco, China Imposes Cybersecurity Reviews on Foreign IPOs
Chinese ride-sharing giant, Didi Chuxing, launched on the New York Stock Exchange on June 30, quickly raising $4.4 billion—the largest initial public offering (IPO) of a Chinese company since Alibaba in 2014. But the launch apparently surprised Chinese regulators, who reportedly thought they had put the brakes on by warning the company not to move ahead with the IPO. When Didi’s stocks began trading as scheduled, Beijing reacted quickly, announcing that it was cracking down on the company’s cybersecurity practices and prohibiting the company from accepting any new users in its mostly China-based market. New Chinese regulations rolled out in the wake of Didi’s disastrous launch mandate cybersecurity reviews to ensure the safety of user data before Chinese tech companies will be allowed to go public overseas.
On July 2, the Cyberspace Administration of China announced that it was placing Didi under investigation over data security concerns and ordered app stores to remove Didi, preventing the company from acquiring new users. After the measures were announced, the company’s freshly issued stock tumbled more than 30 percent in four days. Didi indicated that it had no knowledge that such a crackdown was coming.
