Action Investments Limited – Breaking News - What Didi's US exit tells us about China

HONG KONG - May 23, 2022 - PRLog -- A majority of shareholders voted on Monday to stop trading the firm's shares via the New York Stock Exchange.

The company says the delisting is key to completing a cybersecurity review to relist in Hong Kong and resume normal operations in China.

The move comes as China's major technology companies face intense scrutiny at home and abroad.

Beijing has been pursuing a wide-ranging crackdown on the industry, from slapping e-commerce firm Alibaba with a record fine to ordering social media giant Tencent to suspend the roll out of new apps.

It ordered Didi to be removed from app stores last year and launched an investigation, citing data collection concerns, days after the firm moved forward with its New York listing, reportedly against authorities' wishes.

In recent weeks, faced with slower economic growth, regulators' attitudes have appeared to be softening with the country's Vice Premier Liu He saying to tech executives that the government supports the development of the sector.

But Washington has also been pushing for more accountability from Chinese companies. The US market regulator, the Securities and Exchange Commission (SEC), last year finalised rules to remove firms from US stock exchanges if they do not make their auditors' books open to inspection.

They will also have to disclose whether they are owned or controlled by a government entity.

The SEC has said it has the same requirements for all US-listed foreign companies and of the more than 50 jurisdictions it has worked with to gain access to firms' accounts only two have failed to comply: China and Hong Kong.

"It is a legitimate request to make sure that their accountings are credible and would not hurt investors," said Nina Xiang of China Money Network. "But the devil is in the details. Chinese regulators want to know what kind of auditing will be done and if it means sensitive data can be passed onto the US government."

Companies like Didi are caught in the middle of the clash.

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