Reaction to China imposing $1.2 billion fine on Didi Global
2022.07.21 09:55
FILE PHOTO: The app of Chinese ride-hailing giant Didi is seen on a mobile phone in front of the company logo displayed in this illustration picture taken July 1, 2021. REUTERS/Florence Lo/Illustration
(Reuters) – China’s cybersecurity regulator fined Didi Global Inc 8.026 billion yuan ($1.2 billion) after a year-long probe found the ride hailing giant had violated laws including ones pertaining to data security.
Following are comments from analysts and investors:
TRAVIS LUNDY, ANALYST AT QUIDDITY ADVISORS, HONG KONG, WHO PUBLISHES ON RESEARCH PLATFORM SMARTKARMA:
“I had expected a $1 billion number because it was a round number. The number chosen was a different one. But similarly still a large penalty against the private equity and private owners at the top.
The fine should mark the end of Didi’s regulatory troubles. If there were more, they’d have waited until those were understood and addressed to levy the fine.
The catharsis should allow the stock to pursue a Hong Kong listing. It could theoretically list in the STAR market but I expect that the existing owners would prefer Hong Kong, and now that the regulatory troubles are settled, Hong Kong would have less reason to nix it.”
FRASER HOWIE, AN INDEPENDENT COMMENTATOR AND AUTHOR OF BOOKS ABOUT CHINA’S FINANCIAL SYSTEM:
“This closes a very difficult chapter for Didi but the business environment for tech companies remains troubling. In addition Didi’s business is all about moving people but China is going from one lock down to another. Cities get shut down virtually within hours, a horrible business for ride hailing.”
DAVID BLENNERHASSETT, BALLINGAL INVESTMENT ADVISOR, WHO PUBLISHES ON SMARTKARMA:
“Definitely a step forward, and a means to lifting restrictions on adding new customers to its platform, and potentially restoring its app on domestic app stores.”
“Didi had 174 billion yuan of revenue in FY21, so this fine is 4.6% of revenue. I see media articles saying that Alibaba (NYSE:BABA)’s fine equated to about 4% of its 2019 domestic sales, and Meituan’s was 3% of its 2020 domestic sales.”
“I would think Didi considers themselves lucky. They stubbornly listed in the U.S. when regulatory issues were outstanding.”
