Chinese technology companies have long looked to the United States as a major market and source of investment. Firms such as ByteDance, the company behind TikTok, approached major US investment firms such as General Atlantic and Susquehanna Capital. Chinese startups in Shanghai and Shenzhen saw an initial public offering on the Nasdaq or New York stock exchanges 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. No one wants to end up like TikTok, which spent years trying to avoid Washington’s concerns about its ties to China.
Popular startups that investors would have once considered promising candidates for US listings, such as fast-fashion retailer Shein, are now looking elsewhere or waiting to list. Others are deciding not to buy shares in American companies.
“We’re at a point now where almost no major Chinese technology acquisition of an American company will succeed without serious scrutiny,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security. Many of those deals are ending early, Mr. Gertz said.
TikTok is not the first tech company with Chinese ties to face intense regulatory scrutiny in Washington.
In 2019, the Committee on Foreign Investment in the United States opened a review of the Chinese company that owned Grindr, a dating app popular with gay and bisexual men. Members of the panel, known as CFIUS, had similar concerns about Grindr that 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, Beijing Kunlun Tech Company, to leave.
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 off land in Wyoming near a US military base.
CFIUS is “laser focused” on reviewing transactions involving companies with any ties to Chinese firms, no matter how small or distant, said Chase D. Kaniecki, a partner at Cleary Gottlieb who specializes in CFIUS reviews.
According to Mr. Kaniecki, China has become the main focus of CFIUS, which was created in 1975 because of concerns about investment 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 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 can also be a windfall for investors who put money into early-stage start-ups.
Shein, the Chinese-founded online shopping company, moved its plans for a stock listing to London after US officials expressed concern over reports that it had filed to go public in New York. Sen. Marco Rubio, R-Florida, asked the head of the Securities and Exchange Commission to block the listing if Shein refuses to share information about his ties to the Chinese government.
The small number of Chinese firms 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 was preparing a rule to bar Chinese self-driving car companies from using their technology in the United States.
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 said it was quadrupling tariffs on electric vehicles made in China.
More Chinese companies are expected to seek US 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 maker of electric heavy-duty trucks now incorporated in Belgium, has said it plans to seek a U.S. public listing this year.
