After Didi, China launches an investigation into other US-listed firms
The Cyberspace Administration of China (CAC) has ordered an investigation into online recruiter Zhinpin.com, and truck-hailing applications Huochebang and Uunmanman, in an effort to further crackdown on US-listed firms. The regulator of China had recently initiated an investigation and suspended app downloads of Chinese ride-hailing company Didi Global Inc.
All these platforms have a substantial user base, with Zhinpin.com having 24.9 million monthly active users. The truck hailing applications combined have more than 10 million registered truck drivers and more than 5 million truck owners on their platform.
Reasons for Investigations
Didi, as well as a merger between Huochebang, Yumanman, and Kanzhun Ltd (Zhinipin’s owner), went public in the US Stock Market last month. As a result of the investigation, all these applications can no more register new users. The CAC says that the investigations are as per China’s cybersecurity law will “prevent national data security risks and safeguard national security.”
Didi was listed in the US with a $4.4 billion initial public offering. However, after the removal of the app from app stores, the stock fell as much as 30%, to $10.90. Kanzhun Ltd. went down by 16%.
While the decision will impact both Chinese and American investors, the Chinese government perhaps expects American investors to lose the most. The move may also indicate China’s tightening grip on corporate leaders.
Do subscribe to our Telegram channel for more resources and discussions on tech-law. To receive weekly updates, don’t forget to subscribe to our Newsletter.