Didi founder Cheng Wei faces turbulent months after the stock market pull-out

Cheng Wei

He holds back from criticizing China’s powerful people, but was nevertheless severely attacked by the regulators.

(Photo: Bloomberg)

Beijing From the perspective of the Chinese Communist Party, Cheng Wei should actually be a model entrepreneur. After all, the 38-year-old with a rural background built up the multi-billion dollar transport service provider Didi within a few years and, on the way, ousted the powerful US competitor Uber from the Chinese market.

And unlike Alibaba founder Jack Ma, who has fallen out of favor with China’s head of state and party leader Xi Jinping, Cheng has always shown himself cautious and has so far not attracted any critical comments against China’s regulators – criticism of the country’s leadership is undesirable and in the People’s Republic can have serious consequences.

Cheng even knows Xi personally. At the end of 2015, he met China’s powerful political leader: A photo shows the men in conversation at the company’s booth at an internet fair. At the beginning of the year Didi was honored by the communist leadership together with other companies and people for the fight against poverty in the People’s Republic.

Still, Cheng’s company has been attacked unusually hard by Chinese regulators for months. The reason is, according to observers, Didis pushing his IPO on the New York Stock Exchange in the summer of this year. Although there had apparently been criticism from regulators of the company’s data protection prior to the IPO, Cheng pulled off the IPO.

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The company raised $ 4.4 billion in the process, but at a high price. Just a few days later, the Chinese cyberspace regulatory authority announced that it would review the company’s data security. App stores in China have been instructed to remove the operator’s app from their list of offers – a disaster for Cheng. A number of other inspections by Chinese authorities and ministries followed. The first rumors arose that Cheng would have to revoke the listing.

Above all, the Chinese leadership wants to make it more difficult for companies with extensive data collections to go public abroad. She fears a loss of control over the data. On Friday Didi finally gave in to the pressure: Steps will be taken immediately to withdraw from the New York Stock Exchange.

What Cheng Wei and Jack Ma have in common

Cheng, whose English name is Will and whose fortune is estimated by the US magazine “Forbes” at 1.9 billion US dollars, is not the first founder of a large tech company that has come under pressure in recent months. Alibaba and Ant founder Jack Ma went into hiding for several months at the end of November after the IPO of Ant (“Alipay”) was banned by Chinese financial authorities.

What Cheng has in common with Ma is not just a clash with Chinese regulators. Cheng had worked at Alibaba from 2005 to 2011, where she rose quickly. Most recently, he was Vice President of Alipay, where he was responsible for the business-to-consumer functions.

Cheng has made a rapid career. After earning his bachelor’s degree in management from Beijing University of Chemical Technology, he initially sold insurance and ran a foot massage parlor before moving to Alibaba. The idea of ​​developing a Chinese driving service app came to him during his time at the technology company – it says in a portrait of him in the Chinese newspaper “The Paper”. That was in 2011 when he waited in vain for a taxi for a long time on a business trip in the rain.

The next few months are likely to be turbulent for Cheng and co-founder Jean Liu, who brought Cheng from Goldman Sachs to the driving service provider in 2014. Because investors are wondering what will happen to their Didi shares. Didi had announced that the US shares would “be converted into freely tradable company shares on another internationally recognized stock exchange” – Didi apparently wants to go public on the Hong Kong stock exchange. However, in view of the current difficult environment, it is far from certain that this will work out.

More: Didi’s withdrawal from the US stock market shows China’s tough line

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