"China Announces Tougher Regulations on Didi Chuxing... Considering Delisting from US Stock Market"

Record Highest Fine Expected
Consideration of Business Ban in Specific Sectors

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] The Chinese government is expected to impose unprecedentedly stringent regulations on its largest ride-sharing company, Didi Chuxing.

On the 22nd (local time), Bloomberg News, citing sources, reported that "regulations under consideration include fines, bans on operations in certain business sectors, and management intervention through state-owned institutions acquiring shares," adding that "delisting from the U.S. stock market is also being reviewed." However, the outlet noted that whether this will actually lead to delisting remains uncertain.

Following this news, Didi Chuxing's stock price closed at $10.20 on the New York Stock Exchange, a sharp drop of 14.14% compared to the previous trading day.

Previously, regulatory pressure from the Chinese government intensified shortly after Didi Chuxing's successful initial public offering (IPO) on the U.S. stock market last month. The Cyberspace Administration of China (CAC), the country's top internet security regulator, launched an official investigation citing serious violations of personal data protection regulations and also removed the Didi Chuxing application from domestic app stores.

Bloomberg reported that regulatory authorities imposed a record fine of 18.228 billion yuan (approximately 3.1 trillion KRW) on Alibaba Group, China's largest e-commerce company, earlier this year, and it is expected that Didi Chuxing may face an even larger fine.

According to sources, prior to Didi Chuxing's IPO, authorities were concerned about the company's inadequate personal data protection measures. Specifically, it was revealed that government officials' ride records were included in the company's recently disclosed statistics.

The CAC did not publicly oppose Didi Chuxing's IPO but instead requested improvements to personal data protection measures before the IPO. Sources said that while Didi Chuxing's management recognized the government's concerns, they judged that the authorities did not prohibit the IPO itself and thus proceeded with it.

However, Didi Chuxing appeared to take a low-profile stance, refraining from issuing press releases or internal announcements at the time of the IPO, seemingly mindful of regulatory concerns.

Some speculate that Didi Chuxing may have rushed its IPO ahead of the Chinese government's implementation of new cybersecurity laws. These laws allow regulatory authorities to suspend operations of certain IT companies handling "state secret information" if their security measures are deemed insufficient.

It is analyzed that Didi Chuxing proceeded with the IPO in advance out of concern that the company's corporate value would decline once the law took effect.

This content was produced with the assistance of AI translation services.