China is targeting more technology groups after Didi’s crackdown

Beijing has expanded its crackdown on technology platforms, targeting more U.S.-listed companies after ordering the removal of Didi Chuxing’s shared travel group from Chinese app stores in a move that dropped technology stocks.

The China Cyber ​​Administration announced Monday that it is investigating Boss Zhipin, an online recruitment company, and Chinese truck transport applications Yunmanman and Huochebang, which merged in 2017 to form Full Truck Alliance Not Allowed platforms register new users while they are being researched.

The CAC announcement mentioned alleged violations of China’s national security and cybersecurity laws, without providing details.

Regulatory crackdown sent tremors through Asian markets on Monday. The Japanese group SoftBank, whose Vision Fund is a large Didi investor, fell 5.4%, while the Internet groups Alibaba and Tencent fell 2.9% and 3.7%, respectively. in Hong Kong.

Didi’s shares fell 5.3% on Friday, two days after the company was listed on the New York Stock Exchange get up $ 4.4 billion in the largest listing of a Chinese company in the United States since Alibaba in 2014.

The crackdown by the Chinese cybersecurity regulator against Didi and others was a new offensive for the country’s technology companies, citing cybersecurity regulations that were not used until now. China’s financial and competition watchdogs have already controlled companies such as Ant Group and Alibaba, two pillars of the billionaire Jack Ma’s Internet Empire, and the Meituan e-commerce group.

Like Didi, Full Truck Alliance and Boss Zhipin traded in New York in June, grossing $ 1.6 billion and $ 912 million, respectively.

The three technology groups are industry leaders in China and are backed by Tencent, China’s most valuable technology group, which has he avoided the worst of normative repression.

The CAC said investigations were underway under new cyberspace procedures enacted on June 1 that strengthened oversight of companies operating critical information technology infrastructures that could affect national security.

“[Chinese] statements from regulators in recent months make it clear that the primary responsibility of companies is to ensure data security before going abroad, ”said Kendra Schaefer, a technology analyst at Trivium, a Beijing-based consultancy. “The message is: companies are welcome to go public overseas as long as their domestic home is in first order.”

The crackdown began on Friday when the CAC announced it was investigating Didi, telling the company to stop registering new users and drivers for its application.

Sunday, the CAC he ordered Didi’s withdrawal of Chinese app stores. The company responded that it would “decisively implement” the demands of the authorities.

The latest crackdown came when 34 Chinese companies hit a record $ 12.4 billion in New York floatations in the first half of 2021. However, more than two-thirds of Chinese groups have fallen below their initial public offering price.

U.S. regulators have intensified scrutiny of Chinese companies listed in the country afterwards Luckin Coffee it fabricated hundreds of millions of dollars in sales in a scandal that fueled long-standing fears about audit standards and transparency.

Under a law passed in December, Chinese companies were listed on U.S. stock exchanges face the threat of retiring unless they give access to U.S. authorities instead of auditing, which is prohibited by Beijing.