Didi’s research increases the risk of regulatory exposure to Chinese IPOs in the US

On Friday evening in Beijing, just before the opening of the business in New York, Didi Chuxing received a dangerous phone call from a well-known Chinese supervisor.

The Cyberspace Administration of China, which oversees the Internet, warned of a global response to the popular Uber team that within an hour, it would happen ordered the public to stop sign users, according to someone who is well versed in the subject.

Didi sections, which three days earlier had has launched its first $ 4.4bn public offering – the largest in the US this year, fell 5% when traders remembered the shock.

After re-ordering that Didi and two other Chinese companies have registered with the US in recent weeks to be removed from the Chinese retailer, the supervisor on Monday announced the investigation to determine if companies have violated the law on the collection and use of personal information.

The incident has cast doubt on the billions of pounds in New York’s plans lists and Chinese companies, as Beijing begins to implement various laws to protect the amount of what is considered essential to its national security.

Consultants of Chinese IPOs in the US and investors have expressed China’s idea of ​​waiting until Didi announced publicly that they would publish their research and ask if the company would expect significant damage. “It looks like they’re fighting,” said a bag manager in Hong Kong. “People are questioning whether Beijing is angry with the big foreign policy.”

According to a person close to Didi, two Chinese regulators urged in the weeks before the registration that the company had delayed the IPO until it reviewed its data security.

The CAC and China Securities Regulatory Commission have separately discussed with the company whether to consider Hong Kong as such other registration sites in New York. As part of China, Beijing sees Hong Kong as more secure than the US.

But Chinese authorities did not have permission to ban the company from being registered abroad.

The man said a security investigation announced Friday, just two days after Didi’s letter, as well as a ban on the store, was a “punishment” for ignoring security warnings.

Didi did not immediately respond to a request for technical information to reduce its listings and to review data security.

On Monday, the state-run Global tabuloid claimed that Didi posed a threat to the security of Chinese citizens, especially since it was owned by SoftBank and Uber of Japan.

“For companies like Didi… China needs to be more vigilant about their information security to protect personal and international security,” the newspaper reported.

In China, financial commentators captured the movement of a Didi’s show, noting that the company had misjudged the risks that would arise at the end of the deadline.

Didi ran a short-term IPO approach, according to a number of stakeholders. The show lasted just three days, during which time the bookmakers “ran”, according to one fundraiser.

A manager of one of Wall Street’s banks that sponsors the IPO said his list was short because it was so important and added that Didi could not anticipate legal issues. The company and its banks had assurances from Chinese lawyers that they were “fully integrated”, he said.

“Before the IPO, Didi did not know the concept of the CAC,” Didi said.

“The CAC seems to be under the control of the political parties to take action against Didi at this time,” said Xiaomeng Lu, director of geotechnology at the political consultancy Eurasia Group.

The CAC promoted cyber security monitoring systems that were introduced last year and have not been used publicly. According to the guidelines, companies must be committed to reviewing their earnings and determining whether their services are critical to national infrastructure. It is not known if Didi asked for a re-examination of his IPO.

Lu said the CAC would wait for a new data protection law to take effect in September, which would be a useful tool to address Didi’s concerns.

The horse company has never shared anything with the U.S. authorities, a person close to Didi said. But the US has always wanted to reach out Chinese company research, Beijing denies on the grounds that the content was confidential.

In December, the US government enacted a law which gives Chinese companies that do not comply with the requirements of the audit three years before being removed.

Some in the market were skeptical time wasted. “Despite China’s security concerns, the US view is that Beijing has completely reversed its destructive Didi after consuming US women’s money,” researchers from the Gavekal Dragonomics research team wrote on Monday.

Financial banks that are he pays a fine on China’s list in the US fears that regulatory pressures could lower new IPOs. “This is now a danger that is impossible, impossible and impossible to navigate,” said an official at Wall Street bank.

However, some said the rewards are still a threat to many companies. “Chinese names are still IPOs in the US if they can,” said a senior banking officer at a US bank. “What they’re afraid of is being forced to go to an IPO in Shanghai, and then not getting any money in China.”

Report by Hudson Lockett and Tabby Kinder in Hong Kong by Sun Yu, Christian Shepherd and Yuan Yang in Beijing