Chinese technology companies have long viewed the United States as a key market and source of investment. Companies like ByteDance, the company behind TikTokcourted major U.S. investment firms like General Atlantic and Susquehanna Capital. Chinese start-ups in Shanghai and Shenzhen saw a IPO on the Nasdaq or the New York Stock Exchange as the ultimate symbol of success.
But as relations between Washington and Beijing become increasingly tense, the situation is changing.
Companies with ties to China now face so much regulatory and political scrutiny that some of them are considering going public or doing business in the United States, investors and experts said. No one wants to end up like TikTok, which spent years trying to deflect Washington’s concerns about its ties to China.
Popular startups that investors once would have considered promising candidates for a U.S. listing, such as fast-fashion retailer Shein, are now looking elsewhere or waiting to list. Others decide not to take stakes in American companies.
“We are now at a point where almost no major Chinese technology acquisition by a U.S. company will go ahead without serious review,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security. Many of these deals are drying up preemptively, Mr. Gertz said.
TikTok is not the first tech company with ties to China to face increased regulatory scrutiny in Washington.
In 2019, the Committee on Foreign Investment in the United States opened an investigation into the Chinese company that owns Grindr, a dating app popular with gay and bisexual men. Members of the panel, known as CFIUS, had similar concerns regarding Grindr to those lawmakers have about TikTok — that the app could be used to give the Chinese government access to sensitive data about Americans, including their location and dating preferences. CFIUS ordered Grindr’s owner, Beijing Kunlun Tech Company, to divest.
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 itself of land in Wyoming, near a US military base.
CFIUS is “laser-focused” on examining transactions involving companies with ties to Chinese companies, no matter how small or remote, said Chase D. Kaniecki, a partner at Cleary Gottlieb who specializes in CFIUS examinations. .
According to Mr. Kaniecki, China has become the main target of CFIUS, created in 1975 following concerns over investments by major oil exporting countries in the United States.
More Chinese companies went public in the United States in 2024 than in the previous two years combined. But last year’s deals raised only a fraction of the money raised from new listings in 2021, according to Dealogic data.
Public listings give companies access to funds they can use to finance growth. They can also be a boon for investors investing in early-stage startups.
Shein, the online shopping company founded in China, has changed its plans to stock market listing in London after US officials expressed concern over information they had filed for public release in New York. Senator Marco Rubio, Republican of Florida, urged the head of the Securities and Exchange Commission to block list if Shein refused to share information about its ties to the Chinese government.
The small number of Chinese companies that went public in the United States last year faced other headwinds.
Two Chinese self-driving startups, WeRide and Pony.ai, began trading on Nasdaq in the fall as the Biden administration prepared a rule banning Chinese self-driving companies from using their technology in the United States. United.
Zeekr, a luxury electric vehicle brand owned by Chinese automaker Geely, went public on the New York Stock Exchange in May. Days later, the White House announced it was quadrupling tariffs on electric vehicles made in China.
More Chinese companies are expected to seek listings in the United States during the first year of the Trump administration.
Momenta, a self-driving car technology company, received approval from Chinese regulators last year to launch an IPO in the United States. And Windrose Technology, a Chinese maker of heavy-duty electric trucks now incorporated in Belgium, announced plans to file for an IPO in the United States this year.