Meta's acquisition of Manus, a Singaporean AI startup with Chinese roots, for $2 billion late last year was initially seen as a validation of the 'Singapore washing' model, where Chinese companies relocate to Singapore to circumvent regulatory scrutiny from both Beijing and Washington [1]. However, China's surprise intervention quickly disrupted this strategy, as the Chinese government began reviewing whether Manus' sale violated laws governing technology exports and outbound investment, and barred co-founders Xiao Hong and Ji Yichao from leaving China for Singapore, according to a Financial Times report [1].
Manus, originally founded in China, moved its headquarters and core teams to Singapore in 2025 to access deeper capital pools from foreign investors, including Benchmark, a San Francisco-based venture capital firm [1]. The company attracted attention in Silicon Valley with its AI agent capable of building websites and executing basic coding tasks independently [1]. Despite this, U.S. lawmakers had already prohibited American investors from directly backing Chinese AI companies, and the Chinese government's broadening review has fueled concerns among Chinese tech founders and venture capitalists who had embraced the 'Singapore washing' model [1].
Wayne Shiong, managing partner of Argo Venture Partners, stated, 'The path taken by Manus: people will not go down that route anymore,' indicating that founders are now considering starting outside China from 'day one' rather than attempting a structural pivot mid-growth [1]. Shiong also noted that founders seeking global expansion and higher valuations would still see the upside of having U.S. backers, as valuations for Chinese AI startups tend to be much lower than their U.S. counterparts [1].
The Manus deal unfolded amid intensifying U.S.-China rivalry in the AI sector, prompting a reckoning among Chinese tech founders and VCs regarding offshore strategies and global expansion [1].
CONCLUSION
China's intervention in the Meta-Manus deal has significantly altered the landscape for Chinese AI startups seeking global expansion through offshore structures. The move has prompted founders and investors to reconsider their strategies, with many now looking to establish operations outside China from the outset. The event underscores the deepening U.S.-China tech rivalry and its impact on cross-border investment and innovation.