Can Registering in the U.S. Make You a U.S. Company? Busting This Common Myth

Does Registering in the U.S. Make You an American Company? Debunking the Myth

In recent years, as globalization has accelerated and cross-border business activities have become increasingly common, more and more Chinese companies, entrepreneurs, and even individuals have turned their attention to overseas markets-particularly the United States, the world's largest economy.

In this context, registering a company in the U.S. has come to symbolize international status. Many people believe that simply registering a company in the U.S. is enough to become an American company, thereby gaining access to advantages such as the U.S. market, financing channels, and brand credibility. But is that really the case? Does registering in the U.S. truly make a company American? Behind this belief lies a significant misconception.

1. Registration ≠ Ownership The Difference Between Legal Status and Actual Operations

A common misunderstanding is that as long as a company is registered in a U.S. state-such as Delaware, California, or New York-it automatically becomes a U.S. company. In reality, registration is just the first step in setting up a business. True company identity depends on more than just where it was registered.

Under the U.S. legal system, the state of registration determines which state laws apply. However, the company’s true identity is determined by factors such as its controlling shareholders, where it operates, where its revenue comes from, and where its employees are based.

For example, a company registered in Delaware by a Chinese team but primarily operating in China-with Chinese-based staff, business activities, and financial flows-would still be seen internationally as a Chinese company.

Recently, the U.S. Securities and Exchange Commission SEC has increased scrutiny on shell companies with Chinese backgrounds. Many of these firms are registered in the U.S., but are in fact controlled from overseas. As a result, they face stricter reviews or even delisting when applying for IPOs or fundraising. This shows that registration alone cannot conceal a company’s true nature.

2. The Reality Behind the Brand Easy to Register, Hard to Operate

Many people choose to register in the U.S. in hopes of enhancing their brand image. After all, having a U.S. company name sounds more international and can help build trust with overseas clients.

However, this brand advantage comes with real challenges.

First, the cost of operating a company in the U.S. is significantly higher than in many other countries. Annual fees, tax filings, and compliance with both federal and state regulations can be burdensome-especially for companies not actually conducting business in the U.S.

Second, U.S. compliance requirements are strict. Whether it’s tax reporting, labor laws, environmental regulations, or data privacy rules, even small missteps can lead to heavy fines or legal action. For instance, a new law passed in California in 2025 requires all companies operating in the state to meet stricter data protection standards, or face large penalties. For a shell company registered in the U.S., these requirements can be overwhelming.

Moreover, foreign investment in the U.S. is under increasing scrutiny. The Committee on Foreign Investment in the U.S. CFIUS has tightened its review of Chinese investments, and even seemingly routine acquisitions can be blocked over national security concerns. This further shows that simply being registered in the U.S. does not guarantee market access.

3. Why Do People Still Register in the U.S.? Tax, Funding, or Just Image?

So why do so many still rush to register companies in the U.S.? There are often multiple motivations.

First, some companies hope to optimize their tax structure through offshore arrangements. While U.S. tax rates are not low, states like Delaware offer more flexible corporate structures and tax handling, attracting many companies to register there. However, with global tax reforms underway-especially the OECD-backed global minimum tax rate-these tax-avoidance strategies are becoming less effective.

Second, access to U.S. capital markets is a major draw. The U.S. financial system is mature and offers diverse funding channels. Many startups register in the U.S. hoping to attract venture capital or go public. But in reality, very few Chinese companies successfully list on U.S. exchanges. Most remain as shell companies, unable to secure real financial support.

Lastly, some companies register in the U.S. purely for branding purposes. For example, some e-commerce sellers claim to be American brands, but in reality, they’ve only registered a shell company in the U.S., while their products are still made in China and sold mainly to Chinese consumers. While this may bring short-term benefits, it can damage brand reputation in the long run if discovered.

4. Understanding the Core Substance Over Form

To truly be considered an American company, the key lies not in where the company is registered, but in who controls it, how it operates, where its markets are, and how it complies with laws.

Registration is just a formality-real operations define the substance.

Take Tesla, for example. While it operates globally, its headquarters, core management, RD centers, and production facilities are all based in California. Therefore, it is clearly recognized as an American company.

In contrast, some so-called U.S. companies are nothing more than shell entities with a U.S. address, while everything else-from operations to ownership-remains identical to a Chinese company. This kind of superficial setup is not sustainable in the long term.

5. Conclusion

In the wave of globalization, it’s natural for companies to go international. However, we must not be misled by surface appearances. Registering in the U.S. does not make a company American. What truly defines a company’s identity is its operational structure, legal compliance, and market presence.

Instead of chasing the image of being a U.S. company, businesses should focus on building real international competitiveness. After all, a company’s true value lies not in where it’s registered, but in what it delivers to the market and its customers.