Why did the Chinese Government Ban the ride-hailing firm Didi?

Alan Joseph Alan Joseph
Jul 8, 2021 3 min read
Why did the Chinese Government Ban the ride-hailing firm Didi?

The Chinese Government had been hunting down the tech giant Alibaba for a long time in the country and has also ensured to remove Jack Ma from his board member position. The Government and the regulatory authority have recently removed a tech company from the app store of China soon after it was listed on the NYSE. Let’s look at why China had banned Didi.

Didi – Latest News
About Didi
Why was Didi Banned in China?
Didi’s response on the Ban
Chinese regulators on overseas listed companies
FAQ

Didi Ban – Latest News

The shares of the company, Didi had seen a fall of around 20% as the Chinese Regulators had removed the application from the app store in China. The company has been all over the news in regards to the troubles in China.

The mobile application is said to have been collecting various information from the customer and this is considered to be the major reason for tightening the restrictions on the mobile application.

The company had been listed on the New York Stock Exchange but just after some days of the listing the Government of China had accused Didi of cybercrime and have suspended the new registration of customers on the app.

About Didi

Didi is a Chinese based vehicle hiring company that was started in the year 2012. The company has its headquarters in Beijing and has more than 550 million users and tens of drivers associated with it.

The services provided by the company include transportation services, social ride sharing, taxi hailing, bike sharing, social ride sharing etc. which are app-based services. They also provide services such as on demand delivery services, automobile services which include leasing, sales, financing, maintenance, electric vehicle charging, co-development of automobiles with automakers, etc.

In the year 2016, the company had acquired the Uber in China and has established a prominent space in the industry.

Why was Didi Banned in China?

The Chinese regulators have conveyed that the app posed a cybersecurity risk for the customers and that is one of the major reasons to remove the mobile application from the app store. The regulators have also accused the company for have collecting and using the personal information of the customers illegally.

Some experts have estimated that the crackdown on Didi by the Chinese regulators is an attempt to prevent the data and information of the Chinese companies to be leaked outside. The company was listed on the New York Stock Exchange in month of June 2021.


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Didi’s response on the Ban

The shares of Didi have been falling since the tightening of regulations from the Chinese authority. The investors of the company have been clattered and this has happened within a week since the company had gone public in the United States.

Didi Share Price
Didi Share Price

Didi is enormously reliant on its home market and has more than 300 million active users in the country. The company has conveyed that they are working with the regulators in order to comply with the rules and regulations and towards working to make certain changes to the application.

Chinese regulators on overseas listed companies

The Regulators of China has stated that they would increase the regulations that they have laid down on the overseas listed companies. The country will start regulating a keeping a periodic check on the information such companies are sending and receiving across the borders. The motive is said to ensure that the Chinese consumers are safe from cybercrimes or the leak of personal information.

The Government has made a strict order to punish certain illegal activities by the companies such as fraudulent share issuance, market manipulation, embezzlement, etc. The regulators have conveyed that the securities fraud was prominent in the overseas market.

Conclusion

However, the company has conveyed that the customers and the drivers who had already downloaded the application won’t be affected due to the crackdown and also the company has stated that it expects a hit in its revenue generation in the country.

FAQ

When was Didi Chuxing founded?

Didi Chuxing was founded in 2012 by Cheng Wei, Zhang Bo, Wu Rui.

Why did China ban Didi?

China's internet regulator banned Didi's, saying it illegally collected users' personal data.

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