Didi Chuxing starts companywide lay-offs amid unresolved cybersecurity probe, ongoing delisting in New York

Lay-offs at China’s largest ride-hailing firm could affect 20 per cent of employees outside of its autonomous driving and international business units
Didi Chuxing has faced a cybersecurity probe and mounting losses since its IPO last summer, culminating in an announced delisting in New York

Didi Chuxing

Coco Fengin Beijing

Published: 2:30pm, 15 Feb, 2022

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Chinese ride-hailing giant Didi Chuxing has started companywide lay-offs as the company seeks to delist from the New York Stock Exchange (NYSE) amid an unresolved cybersecurity probe by Beijing, according to two employees familiar with the matter.

The employees, who were briefed on the corporate decision but declined to be identified because the matter is private, said those being laid off would be compensated with their monthly salary multiplied by the number of years they have been at the company, plus an additional month, as required by Chinese law. The lay-offs were previously reported by online Chinese media outlet LatePost.

The job cuts cover almost all internal departments except for autonomous driving and international business, one of the employees said.

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About 20 per cent of Didi staff will be let go, according to the LatePost report published on Monday. Didi had nearly 16,000 full-time employees as of the end of 2020, and about 14,600 in China, according to its prospectus last year. That would mean thousands of employees are likely to be affected.

Didi did not immediately respond to a request for comment on Tuesday.

The ride-hailing giant has been under pressure since last summer, shortly after its US$4.4 billion initial public offering in New York under the name Didi Global. The company was said to have “forced its way” to an overseas listing after warnings from Chinese market regulators over cybersecurity concerns. The Cyberspace Administration of China (CAC) launched a probe into the company days after the IPO, forcing it to freeze sign-ups for new customers and resulting in its apps being removed from app stores.

The stock was up 7.27 per cent on Monday to US$4.28, less than a third of its US$14 IPO price. Daily ride orders fell to 20 million in January from an average of 25 million in the first quarter of 2021, according to LatePost.

Didi’s average daily active users dropped to 10.9 million last August from 15.6 million in June, just before its New York listing, while some of its smaller rivals either increased their user numbers or saw them fall by a smaller proportion, according to Shenzhen-based market researcher Aurora Mobile.

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Why China is tightening control over cybersecurity

Didi reported a 30.4 billion yuan (US$4.77 billion) loss and a 1.7 per cent decline in revenue to 42.7 billion yuan in the third quarter of 2021.

In December, Didi said it would delist from the NYSE and explore listing in Hong Kong.

The CAC now requires a rigid cybersecurity review process for all IPOs in foreign markets by mainland companies holding the personal data of at least 1 million customers. Although the new rules are separate from those for listing in Hong Kong, a November draft regulation by CAC proposed a cybersecurity review of companies seeking to list in the southern financial hub on national security grounds.

Didi’s bankers have held preliminary discussions with Hong Kong Exchanges and Clearing Limited for a listing that may take place in the second quarter, the South China Morning Post reported last month.

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