Apply for U.S. ODI Key Factors and Steps You Must Know!

Applying for U.S. Outbound Direct Investment ODI A Practical Guide for Chinese Enterprises

Outbound Direct Investment ODI has become one of the key strategies for Chinese enterprises to expand into overseas markets in recent years. As global economic dynamics continue to shift and U.S.-China relations grow increasingly complex, Chinese companies face both challenges and opportunities in their internationalization efforts. Drawing from recent news developments and practical experience, this article provides a systematic overview of the critical factors and steps involved in applying for ODI in the United States, offering actionable insights for enterprises.

1. What is ODI and Why Choose the U.S.?

ODI refers to investment activities where domestic enterprises establish or acquire non-financial entities abroad, obtaining ownership, control, or other rights over existing businesses. For Chinese firms aiming to go global, the United States remains an attractive destination due to its mature market system, strong consumer base, and robust legal framework.

According to data released by China’s Ministry of Commerce in 2025, despite ongoing U.S.-China trade tensions, Chinese investment in the U.S. has not completely halted, particularly in sectors such as high-tech, new energy, and biomedicine. However, tightening scrutiny has made approval and execution of ODI projects more challenging.

2. Key Considerations for Applying for U.S. ODI

2.1 Clear Investment Purpose and Strategy

Before initiating an ODI application, enterprises must clearly define their investment objectives-whether it's technology acquisition, brand expansion, market access, or resource procurement. These goals will shape the strategic path and determine the focus of documentation and preparation. For instance, if entering through a merger or acquisition, attention should be paid to the target company’s industry profile, regulatory compliance, and potential national security implications.

2.2 Compliance Review and Regulatory Oversight

U.S. scrutiny of foreign investments, especially from China, has intensified. The Committee on Foreign Investment in the United States CFIUS frequently intervenes in transactions involving Chinese capital, particularly in areas like semiconductors, artificial intelligence, and critical infrastructure.

Companies planning U.S. investments should assess whether a voluntary filing with CFIUS is necessary and prepare accordingly. It is also crucial to understand the impact of the Foreign Investment Risk Review Modernization Act FIRRMA, which expanded CFIUS oversight and presents additional hurdles for Chinese investors.

2.3 Legal and Transparent Funding Sources

The source of funding is a central concern during ODI reviews. Companies must ensure that funds used for overseas investment are legally sourced and verifiable to avoid issues such as false capital contribution or money laundering. Financial institutions and regulators closely monitor fund flows, so transparency and traceability in financial arrangements are strongly recommended.

2.4 Tax Planning and Structural Design

The U.S. tax system is complex, and effective tax structuring can significantly reduce cross-border investment costs. Many companies opt to set up holding companies in third countries such as Singapore or the Cayman Islands to optimize their tax positions. Additionally, consideration should be given to federal and state-level tax policies, as well as the bilateral tax treaty between China and the U.S.

3. Key Steps in Applying for U.S. ODI

Step 1 Preliminary Research and Feasibility Analysis

Prior to formal application, conduct comprehensive market research and feasibility analysis. This includes evaluating competitive conditions in the target industry, local laws and regulations, cultural differences, and labor costs. Special attention should be given to U.S. antitrust laws, labor standards, and environmental regulations.

Step 2 Project Approval and Internal Decision-Making

After completing preliminary research, hold board or shareholder meetings to formalize investment decisions. Determine core elements such as investment amount, equity structure, organizational form, and detailed implementation plans.

Step 3 Submitting ODI Filing or Approval Application

Under current Chinese regulations, ODI projects fall under either the filing or approval system. Non-sensitive projects generally follow the filing process, while those involving sensitive countries, regions, or industries require approval from the National Development and Reform Commission NDRC. Required documents typically include

ODI project filing/application form

Copy of business license

Draft investment agreement

Feasibility study report

Fund proof documents

Legal opinion letter

Step 4 Foreign Exchange Registration and Fund Transfer

Upon ODI approval, enterprises must complete foreign exchange registration with the State Administration of Foreign Exchange SAFE and transfer funds through legal channels. Close coordination with banks is essential to ensure compliance with foreign exchange rules.

Step 5 Establishing a U.S. Entity or Completing MA

Once funds are transferred, companies may proceed to register subsidiaries, joint ventures, or finalize acquisitions in the U.S. Engaging local legal and accounting professionals is highly advisable to manage incorporation, tax compliance, and labor-related matters.

Step 6 Post-Investment Supervision and Reporting

ODI is not a one-time process. Companies must regularly submit progress reports, financial statements, and other relevant information to domestic authorities and remain open to inspections.

4. Case Studies Based on Recent News

In late 2025, a Chinese new energy company planned to acquire a battery technology firm based in California but was asked to withdraw its application during CFIUS review. The reason cited was the target company’s prior collaboration with the U.S. Department of Defense, raising national security concerns. This case highlights the tightening trend in U.S. foreign investment scrutiny and underscores the importance of early risk assessment.

Conversely, in early 2025, a Chinese medtech firm successfully established a research center in New York focused on AI-assisted diagnostic systems. The project passed all regulatory checks smoothly due to its non-sensitive nature and clear technological complementarity. These contrasting examples demonstrate that although the environment is more challenging, success is still achievable with careful sector selection, proper planning, and strict adherence to compliance requirements.

5. Conclusion

Applying for U.S. ODI is a complex and multifaceted process that tests both strategic foresight and operational rigor. In an era of heightened global uncertainty, Chinese enterprises must prioritize risk management, strengthen internal governance, and leverage professional expertise to enhance the likelihood and sustainability of overseas success. As U.S.-China relations evolve and technological barriers shift, ODI policies may also change. Therefore, staying informed about policy updates and maintaining flexibility will be key to seizing future international opportunities.