"As U.S.-China ties fray, dozens of Chinese startups are going against the tide, seeking ways to expand into the U.S. and other international markets.
Many are driven by China's slowing economy and toughened regulatory environment as well as the uncertainty of the zero-Covid policy, which has sparked nationwide protests. Others are inspired by the global success of companies like TikTok owner ByteDance Ltd. and fast-fashion retailer Shein.
To avoid the kind of backlash that short-video app TikTok has faced, they are moving their headquarters out of China or creating separate entities in countries such as Singapore. Some are renaming themselves and dropping references to their China roots, or developing separate products for the Chinese and international markets.
In two dozen interviews, founders, executives, and investors outlined strategies to let China-founded firms maintain access to resources and markets across the world's two largest economies, while seeking to avoid the attention that comes with being labeled a Chinese company.
Chris Pereira, head of North American Ecosystem Institute, a consulting firm helping Chinese companies expand abroad, said his nearly 40 clients are taking steps to minimize the geopolitical risks associated with their China connections.
He advises clients to put less emphasis on their origin and more on their products. Some are creating subsidiaries in the U.S., Canada and Singapore with different names or management teams from their parent companies to avoid unwanted scrutiny, he said.
Following a crackdown on private education in China last year, English-language learning platform China Online Education Group spun off its domestic business, shifted to overseas markets and renamed itself 51Talk Online Education Group, it said. The company switched its headquarters to Singapore to drive its international expansion, it said, while maintaining a research-and-development center in Beijing.
In the process of its restructuring, the U.S. Securities and Exchange Commission marked the New York Stock Exchange-listed company as at risk of being delisted, amid a yearslong standoff between Washington and Beijing over whether to allow U.S. regulators to inspect the auditing records of U.S.-listed Chinese firms. To address the concerns, 51Talk switched its auditor from PricewaterhouseCoopers China to Marcum Bernstein & Pinchuk LLP in the U.S., the company said.
Before U.S.-China relations really soured, entrepreneurs born in China and educated in the West sought to take advantage of their bilingual skills and cross-border networks to build companies that could compete globally. Geopolitics has created new obstacles, but their ambitions haven't changed, founders and investors said.
In developing globalization strategies, many have looked to ByteDance and Shein. The companies have shown the success that can come from combining the talent, supply chains, capital and markets in the U.S. and China." [1]
1. Business News: Chinese Startups Seek Global Access
Hao, Karen; Shen, Lu.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 30 Nov 2022: B.5.
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