Chinese high-tech companies have long looked to the United States as a major market and source of investment. Companies such as ByteDance, which operates TikTok, have courted large U.S. investment firms such as General Atlantic and Susquehanna Capital. Chinese startups in Shanghai and Shenzhen viewed an initial public offering on the Nasdaq or New York Stock Exchange as the ultimate symbol of success.
But that is changing as relations between the United States and China become increasingly strained.
Companies with ties to China are currently facing so much regulatory and political scrutiny that some companies are reconsidering going public or operating in the United States, investors and experts say. It is said that there is. No one wants to end up like TikTok, which spent years deflecting the U.S. government's concerns about its relationship with China.
Popular startups that investors once considered likely candidates for a U.S. listing, like fast-fashion retailer Shein, are now looking elsewhere or waiting to go public. Some companies have decided not to acquire shares in US companies.
“We're at a point now where China's major technology acquisitions of American companies are almost impossible without serious scrutiny,” said Jeffrey Gertz, senior fellow at the Center for a New American Security. Many of those deals are preemptively drying up, Gertz said.
TikTok is not the first technology company with ties to China to come under intense regulatory scrutiny in Washington.
In 2019, the Committee on Foreign Investment in the United States launched an investigation into the Chinese company that owns Grindr, a dating app popular with gay and bisexual men. Members of the committee, known as CFIUS, had concerns about Grindr similar to those that lawmakers have about TikTok — that the app could give the Chinese government sensitive information such as Americans' location and dating preferences. They say it could be used to give access to data. CFIUS ordered Grindr's owner, Beijing Kunlun Tech Company, to sell.
In 2020, CFIUS blocked a Chinese company from forming a joint venture with a US medical robotics company. Last year, President Biden ordered a Chinese cryptocurrency mining company to divest from land near a U.S. military base in Wyoming.
Chase D. Kaniecki, a partner at Cleary Gottlieb who specializes in CFIUS reviews, said CFIUS is “focused” on reviewing transactions involving companies with ties to Chinese companies, no matter how small. It doesn't matter how big or far away it is.
CFIUS, which was founded in 1975 out of concerns about major oil exporters investing in the United States, has been primarily focused on China, Kaniecki said.
The number of Chinese companies listed in the United States in 2024 exceeded the previous two years combined. However, the money raised in last year's offering was only a fraction of the money raised in initial public offerings in 2021, according to Dealogic data.
Going public gives companies access to capital that can be used to fund growth. It can also be a windfall for investors who put money into early-stage startups.
Chinese-founded online shopping company Shein has shifted its plans to go public in London after U.S. authorities expressed concern over reports that the company had filed to go public in New York. Sen. Marco Rubio (R-Florida) has asked the Securities and Exchange Commission chairman to block Shein's listing if it refuses to share information about its ties to the Chinese government.
The few Chinese companies that went public in the U.S. last year faced other headwinds.
Two Chinese self-driving startups, WeRide and Pony.ai, began trading on the Nasdaq in the fall as the Biden administration prepares rules that would ban Chinese self-driving companies from using their technology in the United States.
Zeekr, a luxury electric car brand owned by Chinese automaker Geely Automobile, was listed on the New York Stock Exchange in May. A few days later, the White House announced that it would quadruple tariffs on Chinese-made electric vehicles.
More Chinese companies are expected to seek U.S. listings in the first year of the Trump administration.
Last year, self-driving car technology company Momenta received permission from Chinese regulators to pursue an initial public offering (IPO) in the United States. Windrose Technology, a Chinese heavy-duty electric truck maker now incorporated in Belgium, said it plans to go public in the U.S. this year.
