For China’s Business Elites, Staying Out of Politics Is No Longer an Option
Internet infrastructure operators like Didi must now prove their political and legal legitimacy to the government, Ma Changbo, founder of an online media start-up, wrote on his WeChat social network account.
“This is the second half of the US-Chinese decoupling,” he wrote. “In the capital market, the model of playing on both sides of the fence is coming to an end.”
Didi, Ms. Liu, and Mr. Liu did not immediately respond to requests for comment.
Chinese internet companies have enjoyed the best of both worlds since the 1990s. Many have received funding from foreign venture capital – Alibaba, the e-commerce giant, has been funded by Yahoo and SoftBank, while Tencent, another titan of the Internet, was supported by the South African Naspers. They also copied their business models from those of Silicon Valley companies.
Chinese companies gained further advantages when Beijing shut down nearly all of the major US internet companies in its home market, leaving local players with a lot of room for growth. Many Chinese internet companies then went public in New York, where investors have a greater appetite for innovative and risky start-ups than in Shanghai or Hong Kong. So far this year, more than 35 Chinese companies have gone public in the United States.
Today, Didi’s crackdown is changing the calculations of many players in China’s tech industry. An entrepreneur who set her sights on a New York listing for her enterprise software startup said it would be more difficult to go public in Hong Kong at a high valuation because what her company has fact – software as a service – was relatively new. idea in China.
A venture capitalist in Beijing added that due to Chinese data security requirements, artificial intelligence and software-as-a-service start-ups were now unlikely to consider becoming public in New York. Few were prepared to speak officially for fear of retaliation from Beijing.
At the same time, the United States has become more hostile to Chinese technology companies and investors. As Washington has stepped up its scrutiny of deals involving sensitive technology, it has become nearly impossible for Chinese venture capitalists to invest in Silicon Valley start-ups, several investors have said.
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