SINGAPORE – China’s internet watchdog proposes ride-hailing service giant Didi Ltd.
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Two other US-listed tech companies are investigating listings in Hong Kong as Beijing compiles cybersecurity investigations into the companies, people familiar with the matter said.
The China Cyberspace Administration, which began a data security review of apps run by the three companies in July, cracked down on the idea in a recent conversation with Didi executives at the logistics platform Full Truck Alliance. Ltd.
and online recruitment company Kanzhun Ltd.
, people said. All three companies went public in June, after raising about $7 billion in total.
People said officials hope to provide the findings after the investigation ends next month.
In recent years, listing Chinese high-tech companies doing business abroad in the country or Hong Kong has become a national priority. Beijing is concerned that data-rich companies may pose political or national security risks by responding to US regulatory agencies. There is less confusion for companies and their investors.
Listing in Hong Kong makes it easier for mainland Chinese investors to invest in and profit from the growth of these rapidly expanding companies. US listed companies such as Alibaba Group Holding Ltd.
and Baidu Ltd.
For the last two years, we have been seeking shares in the city.
The Wall Street Journal previously reported that Chinese officials plan to propose a new rule banning companies with large amounts of sensitive consumer data from being published in the United States.
Days after Didi’s release in the United States, the cybersecurity review is part of a broader crackdown on China’s Internet industry that has hit tech giants Alibaba and Tencent Holdings. Ltd.
Over the past year, Chinese regulators have cracked down on features characterized by monopolies and unfair practices in the domestic consumer Internet industry and introduced new rules governing data protection and public listings abroad.
China’s Cyberspace Administration, Didi, Kanjun and the Full Track Alliance did not respond to requests for comment.
The Full Truck Alliance, which provides Uber-like services to the Chinese truck industry, is already looking for a service in Hong Kong, the two people said. One said the listing could happen as early as next year and the decision was taken before the review began. The company thought it would open up opportunities closer to the domestic market for investors who are familiar with its business.
Chinese Internet companies seeking listing in Hong Kong are in line with broader trends over the past two years. Didi initially intended to list on the Hong Kong Stock Exchange, but later abandoned the plan because it did not meet the exchange’s requirements, the magazine previously reported.
On July 2, Chinese regulators announced a cybersecurity investigation into Diddy, a move triggered by the company’s hasty public offering on the New York Stock Exchange. At the time, cybersecurity regulators warned the company to postpone listing until it was able to conduct a thorough internal security review, the magazine reported.
Less than a week after Diddy, the Full Track Alliance (also known as Manban Group) and Kanjun investigations were announced. During the investigation, all three companies were barred from registering new users.
As part of the cybersecurity review, officials spent nearly two months investigating companies, mainly in the area, people familiar with the investigation said. They asked senior executives, collected emails and internal communications, and tracked how companies store and use user information, he said.
He said some of Didi’s research focused on the decision-making process behind the company’s public offering.
Regulators have found little evidence to support the claim that companies pose a national data security risk by listing in the United States and giving US regulators full access to review audit documents. People said they didn’t.
Beijing’s campaign to attack domestic tech companies has already discouraged global investors from funding Chinese Internet startups, prompting a wave of Chinese tech companies refraining from listing in the US. Shares of Full Track Alliance are down about 10%, but Kanjun’s stock market is nearly flat on the Nasdaq stock.
—Raphael Huang contributed to this article.
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Chinese regulators move Didi to Hong Kong list
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