WSJ News Exclusive | Chinese Regulators Nudge Didi Toward Hong Kong Listing

Authorities are expected to deliver findings after the probes conclude as soon as next month, the people said.

Enticing Chinese tech companies trading abroad to list at home or in Hong Kong has been a national priority in recent years. Beijing is concerned that data-rich companies could pose political or national security risks by answering to regulators in the U.S. Having another listing in Hong Kong would mean any eventual delisting from the U.S.—either by choice or as a result of regulatory pressure—would be less disruptive to companies and their investors.

A listing in Hong Kong could also allow mainland Chinese investors to more easily invest and profit from the growth of these fast-expanding companies. U.S-listed firms like

Alibaba Group Holding Ltd.

and

Baidu Inc.

have pursued share offerings in the city in the past two years.

Chinese authorities are planning to propose new rules that would ban companies with large amounts of sensitive consumer data from going public in the U.S., The Wall Street Journal has previously reported.

The cybersecurity reviews, which were launched days after Didi went public in the U.S., are part of a broader crackdown on China’s internet industry, one that has swept up technology giants Alibaba and

Tencent Holdings Ltd.

Over the past year, Chinese regulators have come down hard on what they characterize as monopolistic and unfair practices in the nation’s consumer-internet industry, and they have introduced new rules governing data protection and public listings abroad.

The Cyberspace Administration of China, Didi, Kanzhun and Full Truck Alliance didn’t respond to requests for comment.

Full Truck Alliance, which provides Uber-like services for China’s trucking industry, is already in the process of exploring an offering in Hong Kong, two people close to the matter said. One person said the listing could happen as early as next year and that the decision was made before the review began, since the company felt it would open up opportunities for investors closer to its home market who are more familiar with its business.

Chinese internet companies seeking listings in Hong Kong have been in line with the broader trend over the last two years. Didi initially intended to list on the Hong Kong stock exchange but later abandoned the plan as it wasn’t meeting the exchange’s requirements, the Journal reported previously.

Chinese regulators unveiled the cybersecurity investigation into Didi on July 2, a move that was triggered by the company’s hasty public offering on the New York Stock Exchange. At the time, cyberspace regulators warned the company to delay its listing until it could conduct a thorough internal security review, the Journal has reported.

The unveiling of the probes into Full Truck Alliance—also known as Manbang Group—and Kanzhun came less than a week after Didi’s. During the probe, all three companies were blocked from registering new users.

As part of the cybersecurity review, officials spent roughly two months investigating the companies, mostly on-site, people familiar with the probe said. They questioned senior executives, collected emails and internal communications and tracked how the companies stored and made use of user information, they said.

Part of the investigation into Didi was focused on the decision-making process behind the company’s public offering, they said.

Regulators have discovered little evidence so far to support allegations that the companies posed national data security risks by listing in the U.S. and letting American regulators have full access to review their auditing papers, the people said.

Beijing’s campaign to crack the whip on domestic technology companies has already deterred global investors from financing Chinese internet startups and has led to a wave of Chinese tech firms refraining from pursuing listings in the U.S. Since the data security reviews were announced, Didi’s NYSE-listed shares have almost halved to $8.62 as of Oct. 20. Full Truck Alliance’s shares are down about 10%, while Kanzhun’s shares on the

Nasdaq Stock Market

have remained mostly flat.

—Raffaele Huang contributed to this article.

Write to Keith Zhai at [email protected] and Liza Lin at [email protected]