China is widening a crackdown on tech companies, as Beijing grows wary of the sprawling reach and power of the country’s Internet giants and signals it is prepared to rein them in despite the financial disruption.
The country’s regulators on Sunday ordered the removal of Didi Chuxing, China’s equivalent of Uber, from domestic app stores, dealing a blow to the company just days after its landmark U.S. listing. On Monday, authorities expanded their sights to at least three other platforms, including truck-hailing apps and a recruitment service.
Didi will remain banned by app stores until further notice as it was found to have “illegally collected and used users’ personal information” in a “grave violation of law and regulation,” China’s cyberspace regulator said in a statement on Sunday after a two-day cybersecurity review. Didi said Monday it expects the app takedown to “have an adverse impact on its revenue in China,” adding the app would continue to operate but had suspended new user registrations. [WaPo]
While the United States is known to interfere in the free market during times of war, occasionally appropriating an invention for its own use, in complete secrecy, the US government also knows that well-regulated, meaning predictable and oriented towards the good of society, capitalism is its heart.
The Chinese Communist Party (CCP or CPC), which like all autocratic political entities is deeply jealous of its paramount power, will use its eccentric vision of what may threaten it to guide what companies, public or private, receive its favor – or its wrath. And if a public company receives its wrath, well, too bloody bad for the shareholders.
That’s the lesson of this article. Investing in China may seem like an invitation to future riches, but when the caretakers are more concerned with their power than with the health and welfare of the public, and they have near limitless domestic power, well, I would take great care and prudence when making such investments. In this example, DIDI hasn’t collapsed – yet. The shareholders are now stuck with wondering if it’s time to run or hold on tight.
Remember, I’m not a professional investment advisor and barely even remember what I’m doing. I’m just one investor speaking to all the others.
