The float on the American stock exchange could now turn out to be fatal for Didi.
A month after the Chinese driver service broker went public in New York, rumors of raids and other drastic penalties have risen. The sanctions could be even tougher than those of the online giant Alibaba.
KLess than a month after the Chinese driver service broker Didi Chuxing went public in New York, China is considering drastic fines, according to a press report. The decision of Didi’s board of directors to go public despite objections from the Chinese administration is viewed as a provocation, reported the Bloomberg news agency on Thursday, citing people familiar with the matter. Neither Didi nor the responsible Chinese authorities responded to the request.
According to the report, several ministries and authorities have ordered raids on the company’s offices. Didi could therefore face a fine or a stop of certain businesses. It is also possible that the entry of a state investor will be imposed, it said. Furthermore, a forced withdrawal from the American stock exchanges are also under discussion. Beijing probably wants to sanction the travel agent more severely than the online giant Alibaba. After months of investigation, he had accepted a record fine of 2.8 billion dollars (the equivalent of 2.4 billion euros).
Since the IPO on the New York Stock Exchange at the end of June, Didi shares have fallen dramatically in value. Just a few days after the initial listing, the Beijing cyberspace supervisory authority ordered the Didi app to be deleted from Chinese app stores. Didi follows a similar business model as its American competitor Uber. In its home market, the company prevailed against Uber in a bitter price war. The American company capitulated in 2016 and sold its China business in exchange for a stake in Didi.