Thinking of Starting a Subsidiary in the U.S.? Know These Requirements for a Successful Venture

Considering Establishing a Subsidiary in the United States? Understand These Key Conditions for Successful Entrepreneurship

In recent years, with the acceleration of global economic integration, more and more Chinese companies are choosing to go global in search of new growth opportunities worldwide. The United States, as one of the world’s largest economies, offers a mature market environment, strong innovation capabilities, and a vast consumer base, making it an important destination for Chinese enterprises seeking to establish overseas subsidiaries and expand their operations.

According to recent media reports, Chinese investment in the U.S. continues to grow steadily in 2025, particularly in the fields of technology, new energy, and high-end manufacturing. Many companies have achieved technological upgrades and brand internationalization by setting up local subsidiaries.

However, while the U.S. market is highly attractive, successfully establishing a subsidiary and achieving sustainable growth is no easy task. It requires not only sufficient capital but also a deep understanding of the American legal environment, business culture, and tax policies. Below are key conditions that companies should focus on when considering establishing a subsidiary in the United States.

1. Clarify Market Positioning and Strategic Goals

Before entering any new market, companies must clearly define their market positioning and strategic goals. While the U.S. market is large, it is also highly competitive, especially in technology and consumer goods, where strong local brands dominate and brand loyalty is high.

Before entering the market, companies should conduct thorough market research to understand the target customer base, competitors, and potential opportunities. For example, in the new energy vehicle sector, several Chinese automakers, such as NIO and XPeng, have established RD centers or branches in the U.S., leveraging local technological resources and talent. This technology-first strategy helps companies gradually build brand influence without directly challenging the local market.

2. Understand U.S. Legal and Compliance Requirements

The U.S. legal system is complex and strict, especially in areas such as company registration, tax reporting, and employment regulations-many of which differ significantly from China.

For instance, each U.S. state has its own corporate laws, and companies must consider factors such as taxation, regulation, and business convenience when choosing a location for incorporation. The U.S. also maintains strict oversight of foreign businesses, particularly in areas related to national security, data privacy, and export controls.

In 2025, the U.S. Department of Commerce updated the implementation rules of the Foreign Investment Risk Review Modernization Act FIRRMA, increasing scrutiny of foreign investments involving critical technologies, infrastructure, and sensitive personal data.

Before setting up a subsidiary, companies should thoroughly understand these regulations and consider hiring a professional legal team to ensure compliance.

3. Plan Company Structure and Tax Strategy Carefully

When establishing a subsidiary in the U.S., companies can choose from different legal entity types, such as Limited Liability Company LLC, C-Corporation C-Corp, or S-Corporation S-Corp. Each structure has different implications for taxation, liability, and financing capabilities, and the choice should be based on the company’s specific business needs.

Additionally, both federal and state governments in the U.S. impose corporate income taxes, and the rates can be relatively high. During the planning phase, companies should consider tax optimization strategies-for example, incorporating in tax-friendly states like Delaware or Nevada to reduce tax burdens. Effectively utilizing the existing tax treaty between China and the U.S. can also help avoid double taxation.

4. Focus on Talent Recruitment and Localization Management

Talent is one of the key factors for business success. The U.S. has a world-class higher education system and a rich talent pool, especially in innovation hubs like Silicon Valley, Boston, and Los Angeles.

When setting up a subsidiary, companies should actively recruit local talent to enhance the internationalization of their teams. Cultural differences in business practices also need to be addressed. U.S. companies generally emphasize efficiency, equality, and results-driven management.

To succeed in the U.S. market, Chinese enterprises must adapt their management philosophy, communication styles, and employee incentive systems to local expectations. This localization approach can significantly improve team cohesion and operational efficiency.

5. Build Strong Local Partnerships

Establishing strong local partnerships is crucial for doing business in the U.S. This includes collaborations with suppliers, distributors, industry associations, local governments, and media outlets.

By forming partnerships with local institutions, companies can integrate into the market more quickly, increase brand awareness, and gain policy support. For example, in recent years, several Chinese tech firms have actively collaborated with U.S. universities and research institutions when setting up subsidiaries, promoting technology transfer and joint RD.

This industry-academia-research model helps companies quickly access technological resources while enhancing their social influence.

Conclusion Opportunity and Challenge Go Hand in Hand

Establishing a subsidiary in the U.S. presents both opportunities and challenges. It requires sufficient capital, a clear strategic plan, and a deep understanding of the local market environment, legal framework, and cultural characteristics.

Only through thorough preparation can companies successfully establish a foothold in this highly competitive market and achieve long-term growth.