Didi to be slapped with $1.28 billion fine as Beijing wraps up yearlong probe
After a year's worth of regulatory pain and billions in losses, Beijing’s probe into Didi has culminated in an 8 billion yuan ($1.28 billion) fine.
Chinese authorities are planning to fine Didi over 8 billion yuan ($1.28 billion), according to the Wall Street Journal, or about 4.7% of its $27.3 billion total revenue last year, bringing an end to Beijing’s yearlong probe on the Chinese ride-hailing giant.
- Didi will be allowed to restore its main apps to mobile stores and lift a freeze that prevented the company from adding new users to its platform. The company will also be allowed to move toward a listing in Hong Kong.
Last July, Beijing ordered Didi to be removed from app stores in China over “security risks,” just days after the company was rumored to have ignored regulators’ objections and forged ahead with a monster of an initial public offering in New York. Valuing the company at $68 billion, Didi’s IPO was the biggest listing in the U.S. by a company based in China since Alibaba’s debut in 2014.
The over-a-billion-dollar fine would be the largest regulatory penalty imposed on a Chinese tech company since China’s antitrust regulator slapped a $2.75 billion fine on ecommerce titan Alibaba and $527 million fine on delivery giant Meituan last year.
- China’s central bank said on July 15 that it had fined Didi’s payments unit worth 4.65 million yuan ($690,000) for mishandling of customer information and identity verification.
- Earlier this month, Beijing announced that a subsidiary of Didi was one of the companies, along with Alibaba and Tencent, that were fined in March for failing to comply with antimonopoly laws and to disclose certain transactions.
Didi has been the poster child for Beijing’s crackdown on the internet industry that began in 2020: Once seen as a rival to Uber, Didi’s sordid tale has since sent shivers down the spines of investors keen on doing business in China: China’s biggest ride-hailing company has since shed about 80%, or more than $60 billion of market cap in a year — the single biggest loss in shareholder value ever witnessed over the first year of an Asian IPO worth over $1 billion, per Bloomberg.
- Earlier in March, investors scrambled to buy up shares of Chinese companies after Beijing gave a slight nod to the private sector with a political meeting to encourage the markets.
However, as TechBuzz founder Rui Ma told The China Project in March, although Beijing prioritizes building a highly digitized society and harbors “no motivation to ‘kill’ the industry,” private enterprises also need to be “reined in by regulations and higher socio-political-economic objectives than just financial returns.”
- “In their minds, they need to balance these two forces, which they believe to be complementary and both necessary, instead of choosing one over the other,” she states.
