Didi Chuxing Decides to Move to Hong Kong After NYSE Delisting... "Is This the End for Didi?"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] China’s largest ride-hailing company Didi Chuxing has decided to delist from the New York Stock Exchange. Some predict that other Chinese companies may also disappear from the New York market due to regulatory pressure from the government.

According to Bloomberg on the 23rd (local time), Didi Chuxing held a shareholders' meeting at its headquarters in Haidian District, Beijing, on the evening of the 23rd local time to vote on the delisting from New York, passing the proposal with 96% approval. The vote was conducted on a one-share, one-vote basis. Major shareholders including Didi Chuxing’s management, SoftBank, Uber, and Tencent, who hold about 48% of the shares, reportedly accepted Didi Chuxing’s plan.

The delisting decision was virtually anticipated since Tencent’s initial public offering (IPO) in New York in June last year. Chinese regulators have opposed Didi’s listing on the New York Stock Exchange, citing concerns that Didi’s vast user data could be exposed abroad.

At that time, Didi Chuxing raised $4.4 billion through the listing, the largest since Alibaba Group in 2014. However, afterward, Chinese authorities imposed comprehensive pressure by forcibly removing the company from app stores and conducting cybersecurity investigations. In response, on December 3 last year, Didi Chuxing announced on Weibo, the Chinese version of Twitter, that it would "immediately begin the process of delisting from the New York Stock Exchange" and "simultaneously start preparations for listing in Hong Kong."

After delisting from the New York Stock Exchange and pursuing a listing on the Hong Kong Stock Exchange, the company plans to allow existing shareholders to convert their shares. However, since the listing procedures in Hong Kong are more stringent and require further discussions and cooperation with regulatory authorities, as well as a review of Didi Chuxing’s data systems by the authorities, it may take several months before the Hong Kong listing is completed.

The report observed that Didi Chuxing’s exit is unlikely to be the last. Shortly after Chinese internet regulators began reviewing Didi Chuxing, they also started investigating Full Truck Alliance (Chinese name Manbang), listed on the New York Stock Exchange, and Kanzhun, which operates the recruitment platform Boss Zhipin and is listed on Nasdaq. At the end of last year, the government announced stricter regulations on Chinese companies seeking overseas listings using the so-called Variable Interest Entity (VIE) structure, similar to Didi Chuxing. At the same time, the United States is pushing to implement a new law from 2024 that will delist foreign companies that do not transparently disclose accounting information to regulatory agencies.

Meanwhile, Didi Chuxing was founded in 2012 by Cheng Wei, a former Alibaba salesperson, and surpassed the world’s largest ride-hailing service to become the number one in the domestic market. After fierce price competition between the two companies, Didi Chuxing acquired Uber’s China operations in 2016.