Staying Away From Politics Is Now A Thing For China’s Business Elite

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Ma Changbo, the founder of an online media startup, wrote on his WeChat social media account that internet infrastructure operators like Didi now need to prove their political and legal legitimacy to the government.

“This is the second half of the US-China divergence,” he wrote. “The model of playing both sides of the fence in the capital market is coming to an end.”

Didi, Ms. Liu, and Mr. Liu did not immediately respond to requests for comment.

China’s internet companies have enjoyed the best of two worlds since the 1990s. Many have received foreign venture financing – financed by e-commerce giant Alibaba, Yahoo and SoftBank, while another internet giant, Tencent, is backed by South Africa’s Naspers. They also copied their business model from Silicon Valley companies.

Chinese companies took a further advantage when Beijing blocked nearly all major American internet companies from its home market and gave home players plenty of room to grow. Many Chinese internet firms later went public in New York, where investors are more interested in innovative and risky ventures than in Shanghai or Hong Kong. More than 35 Chinese companies have gone public in the United States so far this year.

Now the Didi collapse is changing the calculations for many in China’s tech industry. An entrepreneur setting his eyes on a listing for enterprise software startup in New York would find it more difficult to go public with a high valuation in Hong Kong because what his company did – software as a service – was relatively new. idea in China.

A venture capitalist in Beijing added that because of China’s data security requirements, start-ups in artificial intelligence and software as a service are no longer likely to consider going public in New York. Few were willing to speak on the record, for fear of retaliation from Beijing.

At the same time, the US has been more hostile towards Chinese tech companies and investors. Several investors said it has become nearly impossible for Chinese venture firms to invest in startups in Silicon Valley as Washington accelerates its scrutiny of deals involving sensitive technologies.

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