Meta's acquisition of Manus, a Singaporean AI startup with Chinese origins, for $2 billion late last year was initially seen as a breakthrough for Chinese founders seeking to circumvent regulatory scrutiny by relocating their businesses offshore, a practice known as 'Singapore washing' [1]. However, Beijing's swift intervention shattered these hopes, as the Chinese government began reviewing whether the sale violated technology export and outbound investment laws, and barred Manus co-founders Xiao Hong and Ji Yichao from leaving China for Singapore [1].
Manus, originally founded in China, moved its headquarters and core teams to Singapore in 2025, attracting foreign capital including investment from San Francisco-based Benchmark. The company gained attention in Silicon Valley for its AI agent capable of building websites and executing basic coding tasks independently. Despite this, U.S. lawmakers had already prohibited American investors from directly backing Chinese AI companies, highlighting the intensifying U.S.-China rivalry in the AI sector [1].
The Chinese government's broadening review has sparked concern and confusion among Chinese tech founders and venture capitalists who had embraced the 'Singapore-washing' model. Wayne Shiong, managing partner of Argo Venture Partners, stated that the Manus path is no longer viable, and more founders are now considering starting their companies outside China from the outset, rather than attempting a structural pivot mid-growth [1]. Shiong also noted that founders seeking global expansion and higher valuations still see advantages in having U.S. backers, as Chinese AI startup valuations remain significantly lower than their U.S. counterparts [1].
Yuan Cao, a Beijing-based lawyer, emphasized that Beijing views the transfer of assets to overseas entities after initial development in China as a 'red flag.' The Manus deal has forced a reckoning among Chinese tech entrepreneurs, as the competition between the U.S. and China in AI is increasingly defined by talent and technology flows, not just access to advanced chips [1].
CONCLUSION
Beijing's intervention in the Meta-Manus deal has fundamentally altered the landscape for Chinese AI startups seeking offshore expansion. The crackdown signals heightened regulatory scrutiny and a shift away from the 'Singapore-washing' model, prompting founders to reconsider their global strategies. The market impact is high, with increased uncertainty for cross-border tech investments and a deepening U.S.-China rivalry in the AI sector.