On the fourth floor of a harborside mall on Grand Cayman, not far from touristy scuba-diving outlets and a jerk-chicken shack, is the offshored home of ride-hailing company DiDi Global Inc., one of China’s biggest technology firms. A few doors down are the internet companies Baidu Inc. and Meituan; Alibaba Group Holding Ltd. is registered at a P.O. box up the street, right across from Singh’s Roti Shop & Bar.
The Caribbean footholds, essentially leased mailing addresses, have no operational value but have made it easier for Chinese unicorns to attract European and American investors. They’ve been a bridge between East and West, a sunny symbol of the freewheeling capitalism tolerated by the Chinese Communist Party (CCP) as the cost of allowing its homegrown juggernauts to compete with their U.S. counterparts. DiDi’s presence there was needed for it to go public on the New York Stock Exchange on June 30. Chinese companies saw multiple benefits to gaining access to the U.S. When DiDi opened a research campus in California in 2017, founder and Chief Executive Officer Cheng Wei gushed about the company’s “new home ... alongside the greatest technology companies in the world.” Together, they were embarking on a “great journey.”
But this journey started veering off course in October when Alibaba co-founder Jack Ma, one of the country’s most visible billionaires, blasted Chinese regulators for stifling innovation. President Xi Jinping’s government responded by squashing Ma’s plan to take Alibaba’s fintech offshoot, Ant Group Co., public and initiating an antitrust case against Alibaba. Ma disappeared from public view, his fortune dwindled, and murmurs began about a broader realignment in the relationship between China’s government and its biggest companies.
DiDi’s turn came on July 2, just days after its $4.4 billion initial public offering in the U.S. Regulators ordered a security review, then demanded mobile stores remove DiDi’s apps. “Just because you are a highly successful tech company does not mean you are above the CCP,” says Michael Witt, a senior affiliate professor of strategy and international business at Insead in Singapore. “Ant Group and Jack Ma found that out for themselves last year, and it is surprising DiDi did not get the message.”
Later in the month, the Chinese government announced a sweeping new regulatory framework for the online education industry, which it said had been “hijacked by capital,” then said online food platforms must ensure workers make at least the local minimum income. This gutted share prices of delivery giant Meituan, which was already facing an investigation into alleged monopolistic behavior.
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