China's Cyber Security Review Office on July 2 initiated an investigation into the country's ride-hailing giant DiDi Chuxing on national data security, national security and public interest concerns. It may take another 45 working days or longer to conduct an examination on projects entering the special review process.New user registration applications will not be accepted until the review comes to an end to avert further risks, the office said. Didi said it would cooperate with government organs, conduct an all-around examination of cybersecurity risks and continue to improve its network security system and technical capabilities. Didi Global will be added to S&P Dow Jones' global equity indexes on July 12 following the U.S. stock market debut of the Chinese ride-hailing company. The shares of the Beijing-based company jumped nearly 16 percent on July 1, a day after its debut, the biggest U.S. listing by a Chinese company since 2014. But the company's shares lost roughly 10 percent of its value inpre-market trading. Didi nets $4.4b from NY float, but faces challenges American depositary shares of Chinese ride-hailing giant Didi Global Inc ended their first trading day on the New York Stock Exchange 1 percent higher at $14.14 on July 1, giving the company a market value of about $68 billion, but also sparking talk of a tough business environment ahead. The Beijing-based company raised $4.4 billion from its IPO of about 317 million ADS, or about 10 percent more than originally planned, according to an updated filing.That made it the second-largest US listing by a Chinese company on record, after Alibaba Group Holding Ltd. But experts said the listing size is lower than what some people had expected, suggesting the company may have faced some challenges, and might even encounter regulatory risks, going forward. Didi's IPO followed a strong revenue performance in the first quarter of this year, with ride-hailing services resuming their operations against a background of a receding COVID-19 pandemic. Its revenue more than doubled to 42.2 billion yuan ($6.53 billion) in the first three months of this year from 20.5 billion yuan a year earlier. More importantly, it reported a profit of $95 million in the period, marking progress for Didi which had historically been unprofitable. Didi, which was founded in 2012, said in its IPO prospectus that it has 493 million annual active riders, and 41 million average daily transactions. It began expanding internationally in 2018, and the company now operates in 14 countries outside of China, including Brazil and Mexico. Didi said it will invest approximately 30 percent of the proceeds raised from the IPO to boost its technological capabilities, including shared mobility, electric vehicles and autonomous driving technologies. About another 30 percent will be used to grow its presence in international markets, and 20 percent in introducing new products and expanding existing offerings for consumers, Didi's prospectus said. Cheng Wei, founder and CEO of Didi, said in 2020 that in the next 10 years, Didi will optimize software and hardware simultaneously and rapidly iterate products and services, with the aim of achieving fully autonomous driving by 2030. Gu Dasong, executive director of transportation and development research center at Southeast University, said it will still take time for Didi to further improve its profitability while maintaining steady growth; and in the international market, it has to compete with the likes of Uber. Didi is the latest big-ticket Chinese corporate to have listed in the US stock market bucking the recent trend of some US-listed Chinese firms delisting to return home to list on domestic bourses instead. This year, like Didi, 28 other Chinese firms have made US IPOs, and raised $7.6 billion in the first six months, according to Refinitiv data. Chinese ride-hailing giant Didi Global Inc said on July 2 it will actively cooperate with relevant government departments in a cyber security investigation and comprehensively sort out network security risks. The comments came after the Office of the Central Cyberspace Affairs Commission said it has launched a probe into Didi to protect national security and public interest in accordance with the nation's laws. The Cyberspace Administration of China (CAC) said on July 4 it has notified app stores to remove Chinese ride-hailing platform Didi Chuxing due to "serious" violations of laws and regulations regarding the collection and use of personal information. The CAC asked the Beijing-based company to strictly follow legal requirements and seriously rectify existing problems to effectively protect the users' information in a notice. The Chinese internet watchdog initiated a cybersecurity review into Didi on July 2 and blocked new user registration. The company's shares edged down 5 percent following the announcement. During the investigation period, Didi's app has stopped new user registration, the office said.Didi said under the supervision and guidance of relevant departments, it will comprehensively sort out and investigate network security risks, and continue to improve the network security system and technical capabilities. The probe came shortly after Didi raised $4.4 billion in its IPO on the New York Stock Exchange earlier this week. China has stepped up inspections on apps that were widely used in the country in response to netizens' concerns about excessive personal information collection. The CAC in May released two batches of lists, containing a total of 138 mobile applications for rectification, most of which were accused of collecting personal information irrelevant to their services. However, Didi was not included in the May lists. Three more applications were placed under a cybersecurity investigation on July 5 after Chinese ride-hailing giant Didi Global faced the same probe. The Cyberspace Administration of China, the country's top internet watchdog, announced on July 5 that it has launched a cybersecurity probe into Boss Zhipin, a mobile recruitment app, and truck-hailing apps Yunmanman and Huochebang in accordance with laws and regulations to prevent data security risks, safeguard State security and protect public interests. Boss Zhipin, which is operated by Chinese tech company Kanzhun, said it will actively cooperate with government agencies in the security investigation, with comprehensive screening of security risks. "We'll continuously enhance our cybersecurity awareness and effectively implement our enterprise's responsibilities and obligations," the company said. Full Truck Alliance Co, which runs Yunmanman and Huochebang, gave a similar response to the probe on July 5, saying it will conduct a thorough security review and further improve its cybersecurity system and technical capabilities during the investigation period to protect national security and public interests. During the investigation, the three apps must halt the registration of new users to prevent expansion of security risks, the administration said. Zuo Xiaodong, vice-president of the China Information Security Research Institute, said the security investigations of these enterprises reflect the country's measures to strengthen the prevention of cybersecurity and data security risks. "The moves showed China has attached great importance to security issues. When finding security risks or potential problems, it will take action as quickly as it can, because cybersecurity means national security," he said. Zhao Zhanling, a lawyer from Beijing Yunjia Law Firm, said the probes are an implementation of the Cybersecurity Law and the National Security Law as well as a regulation on cybersecurity investigation. After the Data Security Law, which was passed last month, takes effect in September, "such probes may be conducted in a regular manner with the country's increasingly high attention to cybersecurity," Zhao added. |
