Despite a law requiring TikTok's complete separation from its Chinese owner ByteDance, the approved deal maintains deep operational and financial ties. ByteDance retains a board seat and leases its core algorithm for royalties, effectively creating a superficial compliance that fails to address the law's original national security concerns.

Carson Block avoids China's market entirely. The government's crackdown on information sources makes due diligence nearly impossible. Compounding this is the constant risk of 'policy capriciousness,' where a profitable industry can be destroyed overnight by a political decree, making any investment fundamentally unstable.

Carson Block clarifies that Enron's fatal flaw wasn't illegal fraud, but its use of legal accounting maneuvers to mischaracterize billions in financing cash flow as operating cash flow. While some minor fraud was prosecuted due to political pressure, the core, company-killing activity remains legal.

Complex, multi-layered SPVs used to sell private stock to smaller investors are creating massive hidden risks. With stacked fees and lack of transparency, a wave of litigation from aggrieved investors is inevitable when these companies IPO and the true, diluted returns are finally revealed.

Block states most of his work targets companies that violate the spirit, but not the letter, of the law. These "gray zone" activities, like creative expense categorization, can massively manipulate financial statements, yet investors often dismiss them because they aren't legally defined as fraud.

China counters US sanctions by making it illegal for companies within its borders to comply. This creates a legal bind, forcing businesses to choose between breaking US law or Chinese law, with penalties threatened for siding with the US.

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.

Global pharma companies must be flexible when structuring deals with Chinese biotechs. Many Chinese firms face post-IPO obligations requiring them to retain Greater China rights and be the Marketing Authorization Holder to book revenue, which prevents simple global licensing deals.

When the Chinese government trapped the founders of the Meta-acquired tech company Manus, it signaled the end of a popular VC strategy. 'Singapore washing'—re-domiciling a Chinese startup to a neutral country to attract Western investment—is now too risky for founders and investors.