[Asia Economy Intern Reporter Kim Se-eun] Didi Chuxing's electric vehicle subsidiary, known as the "Chinese Uber," has ultimately filed for bankruptcy after failing to overcome financial difficulties.
According to Chinese corporate information site Tianyancha on the 14th, Beijing Judian Chuxing Co., Ltd. (BJCT), Didi Chuxing's electric vehicle subsidiary, filed for bankruptcy with the First Intermediate People's Court on the 11th. BJCT was established with capital investment from Didi Chuxing and electric vehicle specialist Li Auto (Li Xiang) at a 51 to 49 ratio.
In addition to its core ride-hailing brokerage business, Didi Chuxing has actively pursued the production of electric vehicles dedicated to ride-hailing in collaboration with several Chinese automakers. At the end of 2020, it unveiled the D1, the first van-type electric vehicle exclusively for ride-hailing, in cooperation with BYD (比亞迪·BYD), China's largest electric vehicle company. Furthermore, it raised expectations by forming business partnerships with major overseas automakers such as Volkswagen and Toyota.
Didi Chuxing has implemented a strategy specialized in manufacturing "commercial" electric vehicles. While other companies mainly target individual consumers, Didi Chuxing differentiated itself by appealing to corporations and individual drivers operating on its ride-hailing platform.
Amid this, analyses suggest that the bankruptcy of Didi Chuxing's subsidiary was caused by the overall worsening of management conditions due to intensified all-around pressure from Chinese authorities.
Previously, despite Chinese authorities' attempts to block it over concerns about big data leakage, Didi Chuxing proceeded with its listing on the New York Stock Exchange in June last year. As a result, it became subject to unprecedented internet security reviews and regulatory scrutiny. At that time, Didi Chuxing's market share in China's internet ride-hailing sector, which had exceeded 90%, plummeted to 70% after the regulations. As this situation persisted, Didi Chuxing voluntarily delisted from the New York Stock Exchange after one year.
Meanwhile, last month, the Chinese government imposed a fine of 8.026 billion yuan (approximately 1.5 trillion Korean won) on Didi Chuxing for violating the Cybersecurity Law, Data Security Law, and Personal Information Protection Law. This amount corresponds to 4.3% of Didi Chuxing's total revenue last year.
According to foreign media, this fine is the largest imposed by Chinese authorities on tech companies following Alibaba and Meituan.
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