Editor’s note for Friday, July 16, 2021

My thoughts today:

After Beijing suspended Didi Chuxing’s app for data security reasons within a week of the company’s Wall Street IPO, it has taken a number of other steps to discourage Chinese companies from pursuing listings on American markets. These include a reported ban on the VIE workaround that allows Chinese tech companies to go public abroad despite foreign ownership restrictions, and a strict cybersecurity review for companies that have more than a million users.

The messaging is working: Today, Bloomberg reported that red hot fashion ecommerce startup Xiaohongshu, or “Little Red Book,” has scrapped its U.S. IPO plans.

Now Beijing is sending another clear message to companies that want to go public, also per Bloomberg: Go to Hong Kong! Companies that list there will be exempt from the above-mentioned cybersecurity review.

On Didi’s first day of trading on the New York Stock Exchange, the company’s executives did not ring the traditional market opening bell. If they had, it would have been the funeral toll of the Chinese tech company IPO in America.

Our word of the day is iron wall to safeguard Hong Kong’s national security (香港维护国家安全的铜墙铁壁 xiānggǎng wéihù guójiā ānquán de tóng qiáng tiě bì, literally, a copper wall and iron rampart, i.e. an impenetrable barrier.) See our top story today for the source.

—Jeremy Goldkorn, Editor-in-Chief