Must-Know Guide to Establishing a Company in the U.S. Key Points and Process of ODI Setup Revealed

How to Successfully Establish a Business in the U.S. Key Points and Procedures of ODI You Must Know

In recent years, with China's sustained economic growth and the acceleration of globalization, more and more Chinese companies have chosen to expand overseas through Outbound Direct Investment ODI, especially into the United States - one of the world’s largest economies. According to data released by the Ministry of Commerce in 2025, Chinese investment in the U.S., after a brief period of fluctuation, is gradually recovering, particularly in fields such as new energy, intelligent manufacturing, and technology RD.

However, due to significant differences between the legal systems, business environments, and cultural backgrounds of the two countries, many enterprises face numerous challenges during actual implementation. This article will systematically outline the essential knowledge and procedures for Chinese companies planning to establish businesses in the U.S., based on ODI policies and recent developments, to help them smoothly complete overseas expansion.

1. What is ODI, and Why Does It Matter?

ODI stands for Outbound Direct Investment, which refers to the filing or approval system established by China to regulate overseas investment activities and mitigate risks. According to regulations from the National Development and Reform Commission NDRC and the Ministry of Commerce, domestic companies must complete the required filing or approval procedures before investing abroad, acquiring assets, or engaging in project cooperation.

For example, at the end of 2025, a well-known new energy vehicle company completed ODI filing before building a factory in the U.S., while also submitting applications for U.S. federal and state-level approvals, laying the foundation for subsequent financing and capital remittance. This demonstrates that ODI compliance is not only a prerequisite for legal operations but also serves as a gateway for enterprises going global.

2. The Main Steps in the ODI Application Process

The ODI application typically includes the following steps

1. Preparation Phase Clarify Investment Direction and Structure

Before deciding to invest in the U.S., companies should conduct thorough market research, including tax policies, labor laws, and environmental regulations. For instance, Tesla’s announcement in early 2025 to expand its Texas plant spurred a large number of upstream and downstream Chinese suppliers to set up factories in the U.S., all of whom conducted detailed market assessments in advance.

2. Submission of Documents Submit Application to Relevant Authorities

Depending on the investment amount and industry type, ODI can be handled either through filing or approval. Generally, non-sensitive projects are filed with provincial commerce and development authorities; however, projects involving sensitive areas such as energy, minerals, and military affairs require national-level approval. Required documents include

Copy of the company's business license

Feasibility study report for the overseas investment project

Proof of funding sources

Draft cooperation agreement

Overseas registration documents if applicable

3. Review Phase Wait for Approval

The review process usually takes between 15 to 30 working days, depending on the completeness of the materials and the complexity of the project. It is advisable to start this process early to avoid delays in overall deployment.

4. Foreign Exchange Registration and Capital Repatriation

After completing ODI filing, companies must also register with the State Administration of Foreign Exchange SAFE before legally transferring funds overseas. This is often overlooked but is a critical step.

3. Common Modes of Setting Up a Company in the U.S. and Key Considerations

There are several ways to establish a presence in the U.S.

1. Subsidiary

Suitable for long-term strategic investors, a subsidiary has independent legal status, making it easier to finance and operate locally. However, setup costs are higher, and compliance requirements are stricter.

2. Branch Office

Ideal for short-term business expansion, branch offices are simpler to establish but do not have independent legal status, meaning the parent company bears full legal liability.

3. Mergers Acquisitions MA

This method has become increasingly popular, especially in high-tech and biotech industries. For example, in June 2025, a Chinese AI company acquired a startup in California, quickly gaining access to local customers and technical teams. However, MA deals often involve scrutiny from CFIUS Committee on Foreign Investment in the U.S., particularly those related to critical technologies or infrastructure, so companies must prepare accordingly.

4. Tax Planning and Compliance Are Crucial

The U.S. federal and state tax systems are complex, with various taxes such as corporate income tax, sales tax, and payroll tax. It is recommended that companies hire professional accounting firms from the outset to develop effective tax strategies and take advantage of the Sino-U.S. tax treaty to reduce the risk of double taxation.

Moreover, the U.S. has strict laws regarding anti-money laundering, data security, and intellectual property protection. In August 2025, the SEC strengthened its review of financial disclosures from foreign companies, requiring greater audit transparency. While this poses challenges for Chinese enterprises, it also presents an opportunity to improve internal governance.

5. Case Study Learning from Success and Failure

Take Xiaomi Group as an example. As early as 2025, the company began preparing to establish a research center in Silicon Valley, strictly following ODI procedures and closely collaborating with U.S. law firms and accounting firms to ensure compliance. Ultimately, the center was officially launched in 2025 and became a key node in Xiaomi’s global innovation network.

In contrast, another medical device company failed to complete ODI filing and was denied capital transfer by a bank, resulting in a six-month delay and significant losses. This serves as a reminder that compliance is not just formalism - it is the cornerstone of stable enterprise development.

6. Conclusion Take Every Step Carefully for a Stable Global Expansion

Amid increasing global economic uncertainty, Chinese enterprises going global must seize opportunities while avoiding risks. As the first hurdle of overseas investment, ODI not only affects whether a company can successfully enter the market but also impacts future capital flows, financing capabilities, and brand reputation.

Therefore, companies planning to set up in the U.S. should start the ODI process early, assemble professional legal and financial teams, and closely monitor policy changes in both countries. Only by operating within the bounds of legality and compliance can enterprises truly achieve internationalization and succeed globally.

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