Chinese tech companies long looked to the United States as a key market and source of investment. Firms like ByteDance, the company behind TikTok, courted major American investment firms like General Atlantic and Susquehanna Capital. Chinese start-ups in Shanghai and Shenzhen saw an initial public offering on the Nasdaq or New York Stock Exchange as the ultimate symbol of success.
But as relations between Washington and Beijing have grown increasingly strained, that is changing.
Companies with ties to China now face so much regulatory and political scrutiny that some companies are reconsidering going public or doing business in the United States, investors and experts said. None want to end up like TikTok, which spent years trying to deflect Washington’s concerns about its ties to China.
Popular start-ups that investors would have once considered promising candidates for U.S. listings, like the fast-fashion retailer Shein, are now looking elsewhere or waiting to list. Others are deciding not to take stakes in American companies.
“We’re at a point now where almost no major Chinese tech acquisition of a U.S. company is going to get by without serious scrutiny,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security. A lot of those deals are drying up pre-emptively, Mr. Gertz said.
TikTok is not the first technology company with Chinese ties to face intense regulatory examination in Washington.
In 2019, the Committee on Foreign Investment in the United States opened a review into the Chinese company that owned Grindr, a dating app popular with gay and bisexual men. The members of the panel, known as CFIUS, had similar concerns about Grindr to the ones lawmakers have about TikTok — that the app could be used to give the Chinese government access to sensitive data about Americans, including their locations and dating preferences. CFIUS ordered Grindr’s owner, the Beijing Kunlun Tech Company, to divest.
In 2020, CFIUS blocked a Chinese company from forming a joint venture with an American medical robotics company. Last year, President Biden ordered a Chinese cryptocurrency mining company to divest from land in Wyoming near a U.S. military base.
CFIUS is “laser focused” on reviewing transactions involving companies with any ties to Chinese firms, no matter how small or far removed, said Chase D. Kaniecki, a partner at Cleary Gottlieb who specializes in CFIUS reviews.
According to Mr. Kaniecki, China has become the primary focus of CFIUS, which was established in 1975 over concerns about major oil exporting nations’ investments in the United States.
More Chinese companies went public in the United States in 2024 than during the preceding two years combined. But last year’s offerings raised a fraction of the money raised by new listings in 2021, according to data from Dealogic.
Public listings give companies access to funds they can use to finance their growth. They also can be a windfall for investors who put money into start-ups in their early stages.
Shein, the Chinese-founded online shopping company, shifted its planning for a stock listing to London after U.S. officials expressed concern over reports that it had filed to go public in New York. Senator Marco Rubio, Republican of Florida, urged the head of the Securities and Exchange Commission to block the listing if Shein refused to share information about its ties to the Chinese government.
The small number of Chinese firms that did go public in the United States last year faced other headwinds.
Two Chinese autonomous-driving start-ups, WeRide and Pony.ai, started trading on the Nasdaq in the fall as the Biden administration was preparing a rule to ban Chinese self-driving companies from using their technology in the United States.
Zeekr, a luxury electric vehicle brand owned by the Chinese automaker Geely, went public on the New York Stock Exchange in May. A few days later, the White House said it was quadrupling tariffs on electric vehicles made in China.
More Chinese companies are expected to seek U.S. listings during the first year of the Trump administration.
Momenta, a self-driving car technology firm, received permission last year from Chinese regulators to seek an initial public offering in the United States. And Windrose Technology, a Chinese manufacturer of heavy-duty electric trucks that is now incorporated in Belgium, has said it plans to seek a U.S. public listing this year.
