Can a U.S. Company Be Controlled by a Domestic Company? In-depth Analysis of This Key Issue

Can a U.S. Company Be Controlled by a Chinese Company? A Comprehensive Analysis

In today’s increasingly integrated global economy, cross-border investment has become a crucial strategy for companies to expand markets and optimize resource allocation. For Chinese enterprises, investing in or acquiring control over U.S. companies not only enhances international competitiveness but also allows them to leverage the United States’ mature technology, well-established brands, and extensive market channels for rapid development.

So, is it possible for a Chinese company to control a U.S. company? What legal, policy, and practical considerations are involved in this process? This article offers a comprehensive analysis of these key questions.

I. Legal Perspective Basic Foreign Investment Regulations in the U.S. and China

From a legal standpoint, it is entirely feasible for a Chinese company to control a U.S. company. The United States maintains a generally open attitude toward foreign investment, particularly in non-sensitive sectors, allowing foreign investors to acquire control through mergers and acquisitions, capital increases, or other means.

According to the Foreign Investment and National Security Act FINSA, foreign investments in the U.S. are subject to review by the Committee on Foreign Investment in the United States CFIUS, especially those involving national security, critical technologies, key infrastructure, or sensitive personal data. CFIUS has the authority to recommend that the President block or unwind transactions that may threaten U.S. national security.

In recent years, CFIUS reviews have become more stringent, particularly in high-tech sectors such as semiconductors and artificial intelligence. For example, in 2025, a Chinese tech company’s attempt to acquire a U.S. chip design firm was rejected by CFIUS due to concerns over critical technology. This illustrates that while such investments are legally permissible, national security considerations can significantly impact outcomes.

Meanwhile, China has also tightened its oversight of outbound investments. According to the overseas investment management measures issued by China’s National Development and Reform Commission NDRC and other agencies, Chinese companies must complete filing or approval procedures before investing abroad. Investments in sectors such as real estate, hotels, movie theaters, and sports clubs face stricter scrutiny.

II. Practical Perspective Paths and Case Studies

There are several common methods through which Chinese companies can gain control over U.S. firms

1. Cross-border Mergers and Acquisitions The most common approach, involving the purchase of equity or assets using cash, stock, or a combination.

2. Joint Venture Establishment Collaborating with a U.S. partner to set up a new entity, gradually increasing the Chinese company’s stake.

3. Capital Increase Injecting capital into an existing U.S. company to dilute the original shareholders’ stakes and gain control.

Several successful cases illustrate this trend

Geely’s Acquisition of Volvo Although Volvo is a Swedish company, its significant operations in the U.S. highlight the capabilities of Chinese firms in global MA.

Haier’s Acquisition of GE Appliances This deal involved U.S. assets and was ultimately approved by CFIUS, serving as a model for successful Chinese control of U.S. assets.

These examples demonstrate that as long as regulatory and national security requirements are met, Chinese companies can lawfully and compliantly acquire U.S. firms.

III. Sectoral Differences Which Industries Are More Accessible?

Not all industries are equally accessible to Chinese investors. Generally, the following sectors face relatively lower regulatory barriers

Consumer Industries Such as food, daily necessities, and retail, which typically do not involve sensitive technologies or data.

Manufacturing Especially in non-high-end sectors, such as automotive parts and general machinery.

Non-core Infrastructure Including logistics, warehousing, and non-critical energy projects.

Conversely, the following industries face high regulatory scrutiny

Semiconductors and Electronic Components Due to their technological sensitivity.

Artificial Intelligence and Big Data Concerns over data security often trigger CFIUS attention.

Defense and Aerospace Virtually off-limits to Chinese ownership.

Chinese investors should prioritize non-sensitive sectors and conduct thorough compliance assessments and communications in advance.

IV. Tax and Legal Structure Optimizing the Holding Arrangement

Acquiring a U.S. company involves more than just purchasing shares-it also requires careful planning around tax efficiency, corporate governance, and intellectual property rights.

Chinese companies often establish offshore holding platforms-such as entities in the Cayman Islands or Singapore-to facilitate indirect control. These structures can help optimize tax liabilities and reduce regulatory exposure.

U.S. federal and state tax laws significantly affect investment structures. For instance, U.S. tax regulations on corporate profits, capital gains, and transfer pricing are complex. Chinese investors must work closely with legal and tax professionals to ensure compliance and efficiency.

V. Future Outlook Investment Prospects Amid Evolving U.S.-China Relations

In recent years, the uncertainty in U.S.-China relations has introduced challenges to cross-border investments. Nevertheless, the U.S. remains one of the most attractive investment destinations globally, and Chinese companies continue to demonstrate strong financial and technological capabilities.

According to Bloomberg, despite rising tensions, dozens of Chinese investments in the U.S. were completed in the first half of 2025, including projects in technology, healthcare, and new energy sectors. This indicates that as long as sensitive areas are avoided and regulatory requirements are met, investment opportunities still exist.

Looking ahead, as global supply chains evolve and Chinese companies deepen their international strategies, the phenomenon of Chinese firms controlling U.S. companies will likely become more common. However, greater emphasis must be placed on compliance, transparency, and long-term strategic planning.

Conclusion

In summary, Chinese companies can indeed control U.S. companies, provided they comply with relevant laws and regulations. Whether through mergers, joint ventures, or capital injections, success depends on careful evaluation of sectoral sensitivities, robust compliance preparation, and the support of professional advisors.

In the broader context of global economic integration, there remains significant potential for collaboration between Chinese and U.S. companies. The key lies in navigating the complex regulatory landscape wisely-seizing opportunities while effectively managing risks.