For China’s business elite, staying out of politics is no longer an option

Internet infrastructure operators like Didi will now have to prove their political and legal legitimacy to the government, Ma Changbo, an online media start-up founder, wrote on his WeChat social media account.

“This is the second part of the US-China decoupling,” he wrote. “In the capital market, the model of playing both sides of the fence is dying out.”

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

China’s Internet companies have benefited from the best of two worlds since the 1990s. Many received foreign venture funding – Alibaba, the e-commerce giant, was funded by Yahoo and SoftBank, while Tencent, another Internet titan, was backed by South Africa’s Naspers. He also copied his business model from Silicon Valley companies.

Chinese companies further benefited when Beijing blocked nearly all major US Internet companies from its domestic market, giving its domestic players plenty of room to grow. Several Chinese Internet firms later went public in New York, where investors have a greater appetite for innovative and risky start-ups than in Shanghai or Hong Kong. So far this year, more than 35 Chinese companies have gone public in the United States.

Now Didi’s action is changing calculations for many in China’s tech industry. An entrepreneur who has set his sights on a listing in New York for his enterprise software start-up said it would be hard to go public in Hong Kong with high valuations because of what his company did – software as a service. – The idea was relatively new in China.

A venture capitalist in Beijing said that due to China’s data security requirements, it was no longer likely that start-ups in artificial intelligence and software as a service would consider going public in New York. Some were prepared to speak on the record, fearing a retaliation by Beijing.

At the same time, the United States has become more hostile towards Chinese tech companies and investors. As Washington intensifies its investigation into deals involving sensitive technologies, it has become nearly impossible for Chinese venture firms to invest in Silicon Valley start-ups, several investors said.

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