The $2 billion Meta deal was supposed to be a crowning moment for Chinese AI startup Manus, but it’s quickly become a sharp warning.
For Chinese founders, the message is clear: go global before you go viral. For American investors, it’s a reminder of the political burden of working with Chinese companies.
In March 2025, Manus was on its way to becoming a truly global company.
Manus is designed to be an AI assistant that automatically carries out tasks such as creating a website, conducting stock market research, or screening resumes. Although the company had offices in Beijing and Wuhan, the product was marketed to Western users. The 32-year-old founder Yichao “Peak” Ji, who had lived in America as a child, spoke fluent English in a product demo video, which was viewed millions of times on YouTube and X.
Then, the company received investments from the U.S. venture capital firm Benchmark, moved its headquarters from China to Singapore, and shut down its Chinese operations.
The crowning moment came in December. Meta acquired Manus for more than $2 billion. On X, Ji celebrated by sharing two photos: one of a young Zuckerberg and another one of himself working from the exact same room. “21 years ago and 13 years ago, two dropouts in this same room set out on their own journeys,” Ji wrote. (He had dropped out from a university in Beijing.) “Today, those paths merge.”
In a way, Manus was a China success story: it showed that homegrown talent could create Silicon Valley-caliber products. It was an encouragement for the Chinese AI community.
But the story took another turn. The Chinese government began investigating the acquisition earlier this year, saying that technology exports and cross-border acquisition should be compliant with Chinese laws. In March, the Financial Times broke the news that China had barred two co-founders of Manus from leaving the country as the investigation continued. Meta has said the deal was fully compliant.
Chinese AI founders face a difficult choice between staying home and going abroad. Sure, China offers a vast pool of engineering talent and government support for AI, but companies there are cut off from top-tier American chips and AI models. It is also hard to generate revenue in China: Consumers and enterprises are not in the habit of paying high subscription fees for AI products, and startups are easily squeezed out in a price war with Big Tech companies.
The consensus is to start companies in America … especially given what happened to Manus.”a Silicon Valley-based Chinese investor
China-based startups also attract political scrutiny if they ever want to expand into the most lucrative Western markets.
Chinese AI entrepreneurs have already been moving to Singapore and California, a trend dubbed “China-shedding.” Manus’ troubles are proving the strategy necessary. “The consensus is to start companies in America,” a Silicon Valley-based Chinese investor told me recently, “especially given what happened to Manus.”
The Chinese government might hope to prevent a brain drain by opening this investigation. But it is instead creating a chilling effect — both for entrepreneurs who want to start AI ventures at home, and for foreign investors interested in funding or acquiring Chinese-founded companies. By keeping the Manus founders in the country, the government is ultimately pushing away some of the nation’s brightest tech minds.
