Chinese AI Startups Drop Offshore Structures Amid Beijing Push

BEIJING — Chinese AI startups Moonshot AI and StepFun are reportedly dissolving their offshore holding structures to register directly in China, following Beijing’s push for domestic company registration, The Decoder reported Thursday.

The two prominent Chinese AI startups are considering dismantling their foreign holding entities in favor of domestic registration after China’s securities regulator signaled that companies seeking to go public should be registered at home, according to The Decoder.

The regulatory push follows what was reportedly Beijing’s decision to block Meta’s attempted acquisition of Manus, the Chinese AI agent startup, a move that drew international attention and underscored the limits China is placing on foreign access to its AI sector.

The trend carries implications for U.S. venture capital firms and technology companies that have historically used offshore holding structures — typically registered in the Cayman Islands — to invest in Chinese startups. These so-called Variable Interest Entity, or VIE, structures have served for decades as the primary mechanism through which foreign investors could hold stakes in Chinese technology companies operating in sectors where direct foreign ownership is restricted.

By encouraging or requiring domestic registration, Beijing effectively reduces the ability of U.S. investors to acquire or maintain equity positions in Chinese AI firms. The shift also limits potential acquisition opportunities for major U.S. technology companies seeking to expand their AI capabilities through deals with Chinese startups.

The onshoring trend fits within a broader pattern of U.S.-China AI decoupling that has accelerated in recent years. Washington has imposed export controls on advanced semiconductors and AI chips destined for China, while Beijing has moved to ensure its most strategically important AI companies remain under domestic control.

Moonshot AI, known for its Kimi chatbot, and StepFun, which develops large language models, are among China’s most well-funded AI startups. Both companies had previously used offshore structures common among Chinese tech firms seeking international venture capital.

The regulatory posture represents a shift from the era when Chinese technology companies routinely listed on U.S. stock exchanges through offshore vehicles. Beijing has progressively tightened oversight of overseas listings since 2021, and the latest moves suggest AI companies are now firmly within the scope of that campaign.

For U.S. firms and investors, the development adds another layer of complexity to an already constrained landscape for cross-border AI deals between the world’s two largest AI ecosystems.