By Julie Zhu

HONG KONG (Reuters] – Didi Global has survived despite being nominated by shareholders to delist the stock. But the Chinese ride-hailer will struggle to return quickly and grow as it faces more regulatory scrutiny than ever before.

Didi withdrew from the U.S. less than a full year after it made its debut. This is seen to be an effort to placate regulators who were angered at its decision to go ahead with a $4.4billion IPO despite having been asked to suspend the process while Chinese officials review its data practices.

Didi’s Chinese mobile apps were taken from the app store and all new registrations for users have been suspended. According to Didi, the company reported last month a 13% decline in fourth-quarter revenues compared with the doubling of revenue in the 2021 quarter prior to the probe.

As the cybersecurity review led by Cyberspace Administration of China, Didi’s fortunes are unlikely to recover anytime soon. ()According to sources familiar with the matter, this is not yet complete and there is no penalty.

They added that the final punishment for Didi will have to be approved by the central leadership. The current focus of the government is on more pressing issues like a severe economic slowdown or coronavirus epidemics in the country.

One person said that “Didi’s cybersecurity probe was simply not on the agenda for the central leaders.”

Some investors may not have an exit option for Didi shares if Didi is delayed in charting its future. The company’s value has already plummeted. Today, the ride-hailing company is valued at $7.2 billion as compared with $80 billion when it was listed.

Didi didn’t immediately reply to our request for comment. Neither did the CAC nor the State Council Information Office.

SoftBank and Uber Technologies (NYSE): Didi stated earlier in the month that it wouldn’t be able finish Beijing’s cybersecurity assessment if it doesn’t delist from U.S. exchanges.

On Monday, 96% Didi shareholders approved the delisting of its American Depositary Shares (New York Stock Exchange). The company plans to submit paperwork to the U.S Securities and Exchange Commission by June 2, or later, in order to delist.

Didi also provides financial and delivery services. It previously wanted to be listed in Hong Kong by June. Reuters reported that Didi has placed such plans on hold after it failed to get approval from Chinese regulators.

DOWNWARD TREND

Last year’s regulatory action against Didi was part of an unprecedented and wider crackdown on antitrust violations and data security regulations. It also targeted some of China’s most well-known corporate names.

Five months ago, Didi announced in December that it was withdrawing from the NYSE to pursue a Hong Kong listing.

According to a source familiar with Didi’s thinking, “The removal from the list is an important but not sufficient step in Didi’s survival plan.” It must withdraw its presence from the U.S. capital markets as quickly as possible in order to be eligible for the opportunity.

Didi’s revival in ride-hailing is also being held back by China’s zero-COVID regulations. These rules have placed several Chinese cities, including the financial center Shanghai, under lockdown and caused many other countries to implement mobility controls.

China’s ride-hailing industry has seen a decline in demand since the middle of last year, due to COVID-19 epidemics and stricter licensing compliance. According to Bernstein analysts, such orders fell by 30% and 37% respectively year-on year.

They wrote last week that Didi would need to invest more in marketing to increase demand once life returns to normal.