Didi chinabased keep linkdoc us ipotimes11/10/2023 ![]() ![]() But earlier this year, Didi clawed itself out of the red. The losses likely reflect Didi’s investment in emerging technologies, like self-driving ‘robo taxis,’ that have yet to hit the market. In its IPO prospectus, Didi reported net losses of $1.6 billion in 2020, $1.5 billion in 2019, and $2.3 billion in 2018. Didi’s ride-hailing business in China accounts for 90% of all revenues, and, as of the fourth quarter of 2020, Didi was responsible for 88% of all ride-hailing trips taken in the country.īut that stranglehold on the market hasn’t guaranteed profitability. This year, Didi reported that it has 493 million annual users and 15 million drivers across 15 countries, though China is its chief market by a wide margin. He named it Didi Dache, directly translated to ‘honk honk taxi,’ and says he thought of integrating yellow cabs with smartphones after waiting in a cab line on a frigid evening in Beijing. Nearly ten years ago, Cheng Wei left a cushy executive role at Alibaba with an idea to start a ride-hailing firm. “In my view, they are preparing for further deterioration in the relationship with the U.S.” ‘Honk honk taxi’ market,” says Clement Chan, a managing director at professional services firm BDO. “The Didi experience definitely signifies that the Chinese government is starting to look closely at the various possible implications of Chinese companies listed in the U.S. Beijing’s crackdown on Didi, and Wall Street’s swift recoil from Chinese stocks in response to it, raises the question of whether the world’s two largest economies will remain financially integrated or ‘decouple’ in this realm too. 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. ![]() China adopted a new cybersecurity law in June, but the measure was vaguely worded, and it remained unclear how it would be implemented. ![]() 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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