The bank is also an investor in Full Truck Alliance, another US-listed tech company under investigation by the Chinese data watchdog.HONG KONG - Chinese medical data group LinkDoc Technology Ltd has shelved plans for an IPO in the United States following Beijing's clampdown on overseas listings by domestic firms, according to three sources with direct knowledge of the matter. Chinese ride-sharing giant, Didi Chuxing, launched on the New York Stock Exchange on June 30, quickly raising $4.4 billion-the largest initial public offering (IPO) of a Chinese company since Alibaba in 2014.It is the first known Chinese firm to pull back from its IPO plans since the crackdown began last week with an investigation by China's cybersecurity regulator into ride-hailing giant Didi Global Inc just two days after it made its New York debut.īeijing said on Tuesday that it would strengthen supervision of all Chinese firms listed offshore, a sweeping regulatory shift that triggered a sell-off in U.S.-listed Chinese stocks. But the launch apparently surprised Chinese regulators, who reportedly thought they had put the brakes on by warning the company not to move ahead with the IPO. When Didi’s stocks began trading as scheduled, Beijing reacted quickly, announcing that it was cracking down on the company’s cybersecurity practices and prohibiting the company from accepting any new users in its mostly China-based market. New Chinese regulations rolled out in the wake of Didi’s disastrous launch mandate cybersecurity reviews to ensure the safety of user data before Chinese tech companies will be allowed to go public overseas. On July 2, the Cyberspace Administration of China announced that it was placing Didi under investigation over data security concerns and ordered app stores to remove Didi, preventing the company from acquiring new users. After the measures were announced, the company’s freshly issued stock tumbled more than 30 percent in four days. The State Council also announced a set of new cross-border data security regulations.ĭidi indicated that it had no knowledge that such a crackdown was coming.Ĭommentators believe this is a strong signal of China’s intent to “discourage listings of Chinese tech companies in the United States,” which some see as “the last brick of the digital Berlin Wall” separating the Chinese internet from the global internet. The regulations will apply to any Chinese firm with more than 1 million users. Those companies that exceed this threshold will be “required to undergo a cybersecurity review,” including potential ramifications of data transfer for Chinese national security ( including “risk of supply chain interruption” and the risk of data being “maliciously used by foreign governments”), before conducting an IPO in markets outside China. The new audits and restrictions are expected to affect primarily foreign data use. This set of rules comes on the heels of China’s Data Security Law, which promised additional oversight of data sharing and hefty punishments for those who breached cross-border data transfer rules. This includes sharing information with foreign law enforcement authorities.
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