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Illustration: Sarah Grillo/Axios

U.S. tech companies for years have grumbled about how the Chinese government favored its homegrown heroes, largely shielding them from global competition. Now, though, China is turning on its own Big Tech companies, reminding them who's boss.

Why it matters: This complicates U.S. IPO plans for dozens of Chinese companies, and potentially revalues even more Chinese unicorns.

Driving the news: China on Sunday banned DiDi from app stores, just days after the ride-hail giant went public on the NYSE at a $73 billion valuation.

  • WSJ reports that Chinese regulators privately urged DiDi to delay its IPO, which the company neither did nor disclosed.
  • Per WSJ: "Back in Beijing, officials, especially those at the Cyberspace Administration of China, remained wary of the ride-hailing company’s troves of data potentially falling into foreign hands as a result of greater public disclosure associated with a U.S. listing."
  • DiDi shares were down more than 24% at this morning's market open, representing around $18 billion in lost market value.
  • Chinese regulators also disclosed cybersecurity investigations into several other companies, including recent U.S. IPO issuer Full Truck Alliance, blocking them from registering new users.
  • And there are new reports that Weibo (Nasdaq: WB) is considering a take-private plan amid the crackdown, although the social media company is saying it's untrue.

Flashback: Chinese regulators successfully scuttled an IPO for Ant Financial late last year, just days before it was set to price, albeit for different official reasons.

  • The big difference between then and now is that, by letting DiDi and others go public before bringing down the regulatory hammer, China is putting a chill on foreign investor interest in future Chinese tech IPOs. And lots of them are (or were?) expected to hit U.S. exchanges in the back half of 2021.

The bottom line: What a government giveth, a government can taketh away. From both companies and its shareholders.

Go deeper

Oct 12, 2021 - World

Companies still optimistic after China's youth gaming restrictions

Illustration: Sarah Grillo/Axios

China's new regulation limiting children under 18 to just three hours of online games per week may be devastating for dedicated gamers, but gaming companies — and the advertisers that rely on them — will likely be fine if they can adapt.

Why it matters: China comprises about a quarter of the world's gaming market; the country's mobile gaming industry alone raked in more than $29 billion in 2020.

Kate Marino, author of Markets
Oct 12, 2021 - Economy & Business

Evergrande isn't alone

Illustration: Aïda Amer/Axios

China Evergrande’s debt problems aren’t an anomaly. Signs of stress are piling up in China’s real estate development sector, and more companies are signaling they may not be able to pay back their debt.

Driving the news: Fellow builder Modern Land asked its bondholders if it could delay a bond payment by three months, and Sinic said it will likely default next week, Reuters reports.

Oct 12, 2021 - World

Interview: Jacob Helberg on U.S. tech companies and China

Photo illustration: Sarah Grillo/Axios. Photo courtesy the Center for Strategic and International Studies

Whether it's Google's Project Dragonfly, Zoom's termination of U.S.-based Tiananmen memorials, or LinkedIn's growing censorship, former Google global news policy lead Jacob Helberg thinks there is a fatal flaw underlying attempts by U.S. companies to make it in China's market.

Key takeaway: “I don’t believe in one company, two systems, I don’t believe it's tenable," Helberg told Axios, riffing on Beijing's formulation of "one country, two systems" as a now-defunct model for integrating a liberal Hong Kong into an authoritarian China.