2021, annus horribilis for Didi, the Chinese hybrid vehicle giant


Since its IPO on Wall Street six months ago, Didi has experienced a descent into hell. This difficult period is felt in the financial performance of the group, which announced $ 4.7 billion in losses in the third quarter.

For Didi, 2021 should have been the year of the consecration. By making his debut on Wall Street this summer, the Chinese champion of the VTC entered the big leagues, alongside other Chinese giants like Alibaba. On this occasion, the company, which pushed Uber out of the Chinese market in the summer of 2016, raised $ 4.4 billion. But since then, the company has been going through difficult times, its IPO on the other side of the Pacific having triggered Beijing’s ire.

This complex period is reflected in the financial performance of Didi, which announced $ 4.7 billion in losses in the third quarter, completely wiping out the $ 4.4 billion raised by the group during its US IPO six months ago. . In the first nine months of the year, the company’s operating losses reached $ 6.3 billion, while its revenue fell 2% in the last quarter compared to the same period in 2020. Also in the last quarter, Didi, despite being the absolute leader in its domestic market, saw its revenues plummet by 13% in China, a particularly worrying signal.

The IPO on Wall Street, the beginning of the ordeal for Didi

It must be said that the Chinese giant has been experiencing a real descent into hell since this summer. In the wake of its IPO on Wall Street, Beijing has indeed launched an offensive to cool the ambitions of the company. The Chinese cybersecurity authority has thus opened an investigation for an alleged “serious violation of the regulations regarding the collection of user data“. In question, the data recorded by the company with Chinese citizens and the fear of seeing them go abroad, causing Beijing to run the risk of losing control over this information. The Chinese police, accompanied by representatives of the State, ended up landing at Didi’s head office in the capital.

As part of their investigation, the authorities also ordered the withdrawal of its application from the platforms that hosted it, at the same time ordering the company to “correct existing problems and effectively protect users’ personal information“. In response, Didi promised”rectificationsThe pill was hard to digest for the group, which claimed 493 million annual active users and 15 million drivers when it was listed in the United States. Two months after its IPO, the company had already lost 30% of daily users (from 15.6 million in June to 10.9 million in August).

International expansion postponed

Faced with the turn of the screw operated by Beijing, Didi had no other choice but to revise his plans downwards. In September, The Telegraph revealed that the Chinese giant had suspended for a year its expansion projects in Europe, which were to allow it to become a credible rival to Uber on a global scale. In this sense, the company relied in particular on the United Kingdom, France and Germany, according to Bloomberg. International expansion was one of the keys to Didi’s development plan to increase revenues and achieve profitability. But the application can no longer be downloaded in China, this quest is now compromised.

Powerless in the face of the measures taken by the Chinese authorities, Jean Liu, co-founder and president of the Chinese giant of VTC, would think of letting go of the reins of the company, according to Reuters. She would even expect the Chinese government to eventually take control of Didi and place a new leadership there. Jean Liu would also have advised other executives of Didi, often considered as “the Chinese Uber”, to explore new opportunities. Previously, other giants, such as Alibaba, JD.com, ByteDance or Pinduoduo, saw their leadership restructured in the context of repressive measures by a Chinese Communist Party eager to regain control of its technological nuggets. “It should be understood that here liberal logic does not apply. We no longer want to promote the emergence of this kind of champion, but to control these people who are becoming too powerful.“, explained Camille Brugier, researcher specializing in China, to Digital in September.

Didi withdraws from Nasdaq

It is a very critical speech by Jack Ma, emblematic founder of Alibaba, towards the Chinese authorities who had ignited the powder in October 2020. He then called for reforming the Chinese financial system on the sidelines of entry on the Ant Group stock market, Alibaba’s financial arm. The latter promised to be colossal since it could have enabled Ant Group to raise $ 37 billion in double listing in Hong Kong and Shanghai. But the operation had finally been aborted at the last moment. In the wake of this dramatic turn of events, Beijing had forced Ant Group to restructure and began a crackdown aimed at bringing its technological giants back into line.

Failing to see its abortive public offering in the United States, Didi finally decided to back down in the face of pressure from the communist regime. Indeed, the company has announced its intention to withdraw from the New York stock exchange, where it was listed on the Nasdaq. It must be said that its market capitalization has melted like snow in the sun since its IPO.

Valued at $ 67.5 billion when taking its first steps on Wall Street at the end of June, the Chinese giant weighs only $ 25 billion, a dizzying loss of $ 42.5 billion. In the eyes of the Chinese authorities, Didi must therefore serve as an example to push other technological nuggets to favor national stock markets (Hong Kong, Shanghai, Shenzhen or Beijing). In this sense, Beijing recently announced measures to ban the listing of Chinese companies abroad.



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