For the world of investors, for Xi Jinping president is trying to manage big data, which is one of the resources that the most valuable in the country, the story over the dropwise outgoing has a more dangerous betting the largest technology companies in China ..
Diddy is almost always a fascinating success story. The company controls almost the entire Chinese ride hailing market and is SoftBank Group Corp. And Tencent Holdings Ltd. Is counted as a major shareholder. Diddy was actually making a profit in the first quarter, which is unusual in the industry. Last week’s initial public offering was well received, with China-based companies being the second largest in the United States. Diddy sold 317 million shares. This is about 10% more than originally planned.
Still, the list on the eve of the Communist Party’s 100th anniversary did not seem to have triggered a celebration in Beijing. Instead, two days after the IPO, Chinese cyberspace regulators said they were reviewing the company for national security reasons. Two days later, regulators said the company had committed a serious breach in the collection and use of personal information.Then to the company app Removed from store..
What made Diddy so valuable to investors is the same as making Diddy and other tech companies a potential threat to Beijing. Diddy holds vast amounts of sensitive data from 500 million active users annually, primarily in China. Over the past year, the Xi government has used data to promote broader economic growth, rather than simply enriching a cohort of millionaires who could protect users from abuse and challenge the Communist Party. I’ve been trying to get control of this data to find out. Party authority.
Diddy, like many other Chinese tech giants, grew rapidly without comprehensive surveillance. Beijing is currently aiming to close regulatory loopholes, but more time is needed. By listing on the United States, Diddy effectively circumvented the extensive approval process by China’s Securities Watchdog when authorities demanded more companies to raise money domestically.
Xiaomeng Lu, a senior analyst at Eurasia Group, a political risk consultancy, said: “We also want tech companies to retain their core assets of data and algorithms in China.”
Some projections show that China will hold one-third of the world’s data by 2025, giving it a potentially significant competitive advantage in areas such as artificial intelligence that drive the modern economy. I will. It also has a high geopolitical stake. The Biden administration is considering which user data to keep out of China, and Beijing is similarly concerned about passing information that the enemy might use.
After recovering from the effects of the COVID-19 pandemic and increasing tensions with the United States, a campaign to impose strict regulations on Chinese tech companies accelerated at the end of last year. Officials launched a strong broadside in the fintech sector when they acquired Ant Group Co.’s $ 35 billion dual-listed company in Shanghai and Hong Kong in the 11th hour.
Like Diddy, Ali dominated the field. In just 10 years, Jack Ma’s Alibaba Group affiliate has grown to revolutionize the lives of millions of Chinese through the Alipay app and the giant Yu’ebao money market fund.
By March, it was clear that authorities were expanding the attack. At a meeting of the Communist Party’s Chief Financial Advisory Board, President West warned that Beijing would chase after so-called “platform” companies that have accumulated data and market power. The term effectively covers a variety of companies serving hundreds of millions of people, from Didi to e-commerce leaders like food delivery giant Meituan and JD.com Inc.
The crackdown weighs heavily on the tech department. Alibaba’s Hong Kong-traded stocks are down 33% from their October highs, and Tencent (China’s leader in social media, games and music publishing) is down 28% from its January record. Diddy fell 11% on Friday.
China is not alone in trying to control the dominance of large tech companies. The US Congress is Amazon.com Inc. And Apple Inc. While trying to force companies such as and others to radically change their business models, Google is facing a thorough European Union investigation into its advertising technology.
Joshua Club, Senior Portfolio Manager at Robeco in Hong Kong, said:
However, the size and speed of Xi’s campaign speaks to its obsession with Communist rule. The party is fighting what it sees as multiple threats to national security, and the October five-year plan included a focus on security issues for the first time. Competition with the United States is intensifying only under the Biden administration, which recently rallyed allies to present a more united front to Beijing.
The problem is that Chinese entrepreneurs often turn to the US stock exchange. The US stock exchange offers founders something they can’t get at home. A rich pool of international capital and low barriers to entry mean that the world’s largest markets remain important destinations for Chinese and Hong Kong companies that were raising at record paces earlier this year. To do. The potential delisting by the New York Stock Exchange and the stricter requirements for the Nasdaq were not deterrents for Chinese companies in need of cash.
The Communist Party has made little to say about the listing process of US private companies, but it often has the potential to fine-tune top-level management. But, as in Diddy’s case, exerting influence on a company’s business is a much bolder move, imposing a government mark on the US stock market.
China’s cyberspace regulators are “trying to exert influence over this entire process,” said Chucheng Feng, co-founder and partner of China’s political and economic research firm Plenum. .. “They are using Didi to set up this example of how the company will be listed in New York in the future.”
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