(Yicai Global) July 12 -- China's internet watchdog has proposed that firms that have collected personal data from more than one million users should apply for approval before going public abroad. The move comes less than two weeks after ride-hailing giant Didi Chuxing's initial public offering in the US.

The Cyberspace Administration of China updated its Measures for Cybersecurity Review on July 10. The draft is open for public feedback till July 25.

Early this month, the regulator said it will review Didi Chuxing, Full Truck Alliance's truck-sharing platforms Yunmanman and Huochebang, as well as recruitment site Boss Zhipin. All three are listed in the States where the regulatory environment is becoming increasingly tight for listed Chinese firms after Luckin Coffee's accounting fraud last year.

The new rules should strengthen the supply chain security of crucial information infrastructures and ensure national security, the CAC added.

Change of Logic

The document says "review" instead of "no permission," managing director of a domestic financial institution told Yicai Global. The regulator is unlikely to apply a one-size-fits-all approach, the person added.

Still, the new policy will probably affect startups' plans. The review criteria have not been revealed yet so firms are likely to choose a more predictable and secure listing destination, said the managing director.

The policy change doesn't prohibit platform companies from going public abroad but they just need to be assessed by government agencies first, Pang Ming, chief economist with China Renaissance Securities in Hong Kong, said to Yicai Global.

But internet startups' valuations may be at risk. The valuation logic and system in the primary market will be reconstructed to reflect the latest trends in regulation and financing channels, Pang predicted.

The original cybersecurity review measures were put into effect in June 2020 after a draft was published in April.

Editor: Emmi Laine, Xiao Yi