China continues to crack down on local tech companies to the envy of competitors. Neither Apple, Microsoft, or Google have been able to do what is now successfully brought into action by the Chinese Communist Party. Shares of Chinese firms are falling at their fastest pace on record. The next step on China’s agenda is to ban IT companies with large amounts of user data from listing overseas. In other words, such companies will no longer be able to sell their stocks outside China. Ahead of the new rule, the China Securities Regulatory Commission (CSRC) issued a warning to several firms and investors. The government’s insatiable craving for total control has gone over the edge. Entering foreign exchanges has always been challenging for Chinese firms. They have to create an offshore company with a similar name outside of China, launch an IPO, and then transfer back the funds received. IT giants such as Alibaba, DiDi, and Tencent use the scheme called a “variable stakeholder” because of the limit on foreign investments in Chinese companies. Apparently, tech firms will now have to come up with new schemes to bypass restrictions.
