US Regulatory Hurdles Push Chinese AI Startups To Shift Base To Singapore

In the face of rising geopolitical tensions and regulatory challenges in the U.S., Chinese artificial intelligence (AI) startups are increasingly relocating to Singapore. This move is aimed at gaining better access to global investors and technologies.

What Happened: Due to U.S. export controls, AI startups in China are finding it difficult to secure venture capital and access cutting-edge technologies. This has led many to shift their base to Singapore, Bloomberg reported on Monday.

According to Wu Cunsong, co-founder of Hangzhou-based AI firm Tabcut, Singapore offers a more business-friendly environment, access to global investors, and the ability to purchase advanced technologies.

“We wanted to go to a place abundant with capital for financing, rather than a place where the availability of funds is rapidly diminishing,” he said.

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Companies like ByteDance Ltd. and Shein have continued facing challenges in the U.S. market, despite moving their headquarters to Singapore. This is because the strategy of distancing themselves from their Chinese origins, often referred to as “Singapore-washing,” doesn’t always succeed in avoiding scrutiny from customers and regulators in countries that are political opponents of China, like the U.S.

Why It Matters: The U.S. has been tightening regulations to restrict China’s access to advanced AI software. This move is seen as a strategy to safeguard U.S. AI from China, following a series of measures over the past two years aimed at blocking the export of sophisticated AI chips to the Asian country.

Chinese firms have been rebranding and setting up U.S.-based businesses to circumvent the Joe Biden-led administration's intensified restrictions on Chinese companies operating in the U.S. However, this strategy has not always been successful.

Furthermore, China’s President Xi Jinping has urged his nation to boost its innovation capabilities, in light of the continuing semiconductor dispute with the U.S. This call to action highlights the challenges faced by Chinese AI startups in their home country.

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Photo Courtesy: Andrew Linscott On Shutterstock.com

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari