On Saturday, China moved to require domestic tech companies to undergo cybersecurity checks before they can list on foreign stock exchanges, a step that will close the regulatory gap. allowed ride-hailing giant Didi to list shares on Wall Street last week without receiving a clean bill on digital health from Beijing.
On July 2, two days after Didi’s shares began trading on the New York Stock Exchange, China’s internet regulator ordered the company to stop user registration while officials The agency conducted a security review, causing the company’s stock price to drop.
Chinese regulators have since ordered Didi’s apps from mobile stores and fined it for not giving advance notice of a number of past mergers, clearly displeased. with the company, the ride-hailing service has 377 million annual active users in China.
Data protection is Beijing’s main focus as China competes with the United States for the top spot in high-tech. Just as American officials have sought to ensure that Americans’ data is protected from the prying eyes of the Communist Party, Chinese officials want to make sure that domestic tech companies do not harm them. damage their information about Chinese users when they are made public abroad and are subject to foreign surveillance. securities regulator.
China’s internet regulator, the Cyberspace Administration of China, issued rules on security reviews last year as part of a framework to protect the nation’s digital infrastructure. family.
Those regulations no longer require companies like Didi to undergo a formal security check before filing for an initial public offering abroad, but that will change under the amendments. change proposed by the agency on Saturday.
The revised rules say a security review will be mandatory for any business that owns information about more than a million users that wants to list its shares overseas. Such companies will need to submit documents related to its IPO, as well as procurement documents and contracts.
Under applicable rules, the security review is intended to address the risks to national security and business continuity posed by servers, software, cloud services, and other products that Large technology companies use cause.
The revised rules add two more risks to the listing: the possibility that critical data could be “stolen, leaked, damaged, and illegally exploited or transferred abroad” and the data that could be “maliciously influenced, controlled, or exploited by foreign governments” following an IPO abroad
The Cyberspace Administration is accepting public comments on the amendments through July 25.
China’s top policymakers indicated this week in a policy document that they would seek to increase scrutiny of overseas-listed companies, an issue the document said. considered a national security concern.
For China’s fast-growing tech businesses, a stock sale on Wall Street has long been coveted as an opportunity to reward early employees and sponsors and win validation. of international investors. But Beijing is making it clear that nothing is more important than securing companies’ data and digital infrastructure.
Following its fight against Didi, the Cyberspace Administration this week requested three additional internet platforms – two that connect freight customers with truck drivers and one for job vacancies – suspend user subscriptions and submit security reviews. Like Didi, the two companies behind those platforms, Full Truck Alliance and Kanzhun, also recently listed shares in the United States.