China's investigation into Meta's acquisition of Singapore-based Manus (a formerly Chinese company) is a warning shot. It signals that China will discourage its founders from re-domiciling to neutral territories like Singapore simply to facilitate sales to American companies.
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Meta's acquisition of Manus, a Chinese-founded startup that moved to Singapore, is being scrutinized by Beijing. This shows that simply changing legal domicile is not enough to escape China's control over deals involving its domestic technology, data, or talent, setting a precedent for future cross-border M&A.
The most significant sanctions loophole isn't physical chip smuggling but 'compute smuggling.' Chinese firms establish shell companies to build and operate data centers in neutral countries like Malaysia. They then access this cutting-edge compute power remotely, completely bypassing physical import restrictions on advanced hardware.
Meta is likely acquiring Manus to pair its AI agent technology with its open-source models for on-premise enterprise deployments. This signals a strategic expansion into enterprise tooling, moving beyond its core social media business and leveraging its existing open-source leadership.
Meta's $2.5B acquisition of Butterfly Effect shows a playbook for acquiring Chinese-origin tech. By relocating to a neutral country like Singapore, the company becomes palatable for US investment and acquisition, navigating geopolitical regulations and PR backlash, effectively getting "into the democracy bucket."
AI startup Manus's move from China to Singapore was a survival tactic to escape a market where big tech clones viral products in days. This strategic relocation allowed it to build defensible traction with a Western user base, creating a new playbook for Chinese-founded startups seeking global acquisition.
Despite a potential US ownership deal, TikTok remains a national security risk because the core algorithm will still be licensed from China. Control over the information flow to Americans is the real issue, not data storage location, making the deal a superficial fix.
The US government's demand for TikTok to store American user data on US servers is identical to the policy China has long required of foreign tech companies. This rule is why platforms like Facebook, which refused to comply, are unavailable in China.
Mark Zuckerberg's primary innovation strategy has been acquiring and cloning, as seen with Instagram and WhatsApp. In a heightened regulatory environment where large acquisitions are blocked, his core playbook is neutralized, forcing him into the less proven territory of zero-to-one product development—a significant strategic challenge for Meta.
Despite Nvidia CEO Jensen Huang's claim of being "100% out of China," the company is experiencing massive, unexplained business growth in neighboring Singapore and Malaysia. This suggests these countries may be acting as intermediary hubs to quietly funnel chips into the Chinese market, bypassing direct restrictions.
Prominent investor Keith Rabois claims that payments company Airwallex, despite its Singapore HQ, has significant operations and legal obligations in China. He alleges this structure requires them to assist with CCP espionage by providing sensitive financial data from US customers, including AI labs and defense contractors.
