TikTok’s US ban is a cautionary tale for China’s global tech ambitions

On the night of January 17, the US Supreme Court issued a formal ruling: a unanimous decision upholding the constitutionality of the divest-or-ban law targeting TikTok. The legislation offers TikTok a path to continue operations through a qualified asset divestiture—essentially requiring the sale of its US operations.

On the morning of January 19, TikTok sent shutdown notifications to all its US users, covering ByteDance- and TikTok-operated products. These include the community platform Lemon8, the video editing app CapCut, the enterprise collaboration platform Lark (known as Feishu in China), and even games developed by Moonton. All these offerings were slated to go offline in the US.

Yet, this saga, spanning over 1,600 days, is far from over.

In the lead-up to his second term, US President Donald Trump said that he would grant TikTok a 90-day reprieve by signing an executive order on his first day in office, temporarily pausing the US ban to allow the country to “make a deal to protect [its] national security.”

According to a January 18 report by CNBC, Perplexity AI formally submitted a bid for TikTok, proposing to form a new entity comprising Perplexity, TikTok US, and new capital partners.

Since the White House first floated the idea of banning TikTok in June 2020, various stakeholders have fought to keep the company afloat. These efforts have included lobbying the US government, replacing TikTok’s global CEO twice, and launching the Project Texas initiative to ensure data localization. Under this plan, ByteDance reportedly pays Oracle USD 1 billion annually to conduct source code security reviews for TikTok’s US operations.

Yet, as it stands, TikTok’s fate remains unchanged—a testament to the shifting tides of geopolitics.

In the context of deglobalization, TikTok has become more than a case study of a tech company entangled in geopolitical disputes. It is also a flashpoint for the power struggles among nations, corporations, and users vying for influence.

Over the past two decades, more Chinese companies have ventured onto the global stage. As globalization becomes a strategic focus for Chinese businesses, a new generation of companies—such as Shein and Temu—must confront complex questions about identity, politics, and their place in a fragmented world.

To explore these issues, 36Kr interviewed several experts with diverse perspectives, including Tim, an IP and commercial litigation lawyer; Huang Minda, a partner at Tsinglaw’s New York office; Richard, an investor with extensive experience living abroad; and Zhao Peipei, a senior industry expert in the North American market.

These interviews aimed to address a critical question: How should Chinese companies navigate and promote globalization today, when the dynamics between major powers have already penetrated deeply into the realms of business and technology?

The following interview transcripts have been edited and consolidated for brevity and clarity.

36Kr: Many predicted a reversal with the TikTok saga, but it hasn’t happened despite US President Donald Trump pausing the ban. Was this outcome within your expectations?

Tim: Yes and no. The Supreme Court’s hasty acceptance of this case itself was problematic. Justice Neil Gorsuch candidly admitted in his concurring opinion that the rushed timeline—giving the justices mere days to consider and decide—was highly unusual. The opening of the ruling even expresses hope that it won’t “embarrass the future.”

Ironically, this ruling provides other countries with a perfect legal precedent to ban US apps. The judgment states that any foreign app that potentially collects user information and threatens national security can be prohibited, with no need for hard evidence.

This same logic could apply to WeChat and other apps, like Xiaohongshu (also known as RedNote), where TikTok’s displaced users are flocking. At this point, invoking “national security” has become a catch-all justification for virtually any measure. In my two decades in the US, I’ve never seen so much uproar over a few apps.

36Kr: Is the TikTok ban just an appetizer for what’s to come? Are other Chinese companies like Shein and Temu facing a similar fate?

Huang Minda (HM): The TikTok ban isn’t just a prelude. Over the years, there have already been significant enforcement actions against Chinese firms, such as measures targeting Huawei since 2018 and sanctions on the semiconductor and artificial intelligence industries. The crackdown on TikTok is neither the beginning nor the end.

Take Temu, for example. Since late 2023, certain anti-China think tanks have been amplifying claims about Temu’s “national security threat.” Some lawmakers have even called for investigations into Temu, citing concerns like data security, IP, and tariffs.

As of now, the discourse around Temu has not yet reached the broader public consciousness. But if the so-called “national security threat” posed by Temu gains traction, the US may legislate or implement more aggressive measures.

Tim: Temu’s meteoric rise since its US launch in September 2022 has certainly raised eyebrows. In 2024, its revenue growth figures were staggering. While its rapid success is partly due to its strategies, Temu has also benefited from the de minimis tariff policy, which exempts goods valued under USD 800 from US import duties if shipped directly to individual buyers. Currently, about one-third of such packages come from Temu and Shein, and this figure is likely higher given their growth rates.

This loophole has effectively shielded Temu and Shein from tariffs, amplifying their competitive edge with low prices. However, the US has recognized the issue. On January 17, the Biden administration proposed tightening the de minimis exemption for low-value imports. This reform is likely to impact small sellers relying on direct shipping, but Temu and Shein’s operations will also face tougher conditions.

36Kr: Does the TikTok ruling violate the principle of equal protection in the US Constitution? Could this lead to more targeted legislation against Chinese companies?

HM: The Supreme Court did not address equal protection or due process concerns in the TikTok ruling. This is because lower courts in the US have repeatedly affirmed that targeted legislation naming specific companies does not violate the Constitution. Such “naming laws” have become increasingly common. For example, the US Congress is currently deliberating bills targeting Chinese firms like BGI Genomics, WuXi AppTec, and DJI.

Before 2018, these types of laws were rare. But over the past few years, they’ve become more frequent, signaling a growing trend of targeted actions against Chinese companies.

36Kr: Which types of Chinese companies are more likely to face restrictions?

HM: There are two main categories:

The US toolbox for targeting such companies is extensive, encompassing legislation, sanctions, regulatory controls, punitive tariffs, and tax policies.

Zhao Peipei (ZP): Chinese companies venturing abroad typically fall into three categories: low-tech products, mid-tech products, and high-tech products.

High-tech products, due to their visibility, are most likely to face challenges akin to TikTok’s.

Mid-tech products depend on robust manufacturing capabilities, sophisticated design, and supply chain integration to establish a foothold in the US. These factors determine competitiveness and offer opportunities for market growth. On the other hand, low-tech products face fewer barriers as they primarily focus on basic manufacturing.

High-tech products are particularly vulnerable because they involve intricate ecosystems and supply chains. While such products often exhibit high transferability, like internet platforms and software, they can be easily relocated globally. To regulate these industries, the US often relies on indirect restrictions like new legislation. Any violations can result in companies being labeled as non-compliant.

36Kr: Does the type of market competition—uphill or downhill—also affect regulatory scrutiny?

ZP: Absolutely. For instance, companies engaging in uphill competition—where US firms hold a dominant market position—face greater resistance. Conversely, companies moving downhill—competing in lower-end segments—face fewer barriers.

Take automotive parts manufacturing as an example. If a Chinese firm partners with a US company to produce components, reducing costs from USD 10 to USD 8, this collaboration boosts competitiveness and benefits consumers, making it well-received. However, if a product disrupts an entire industry without clear benefits to the local economy, it’s far more likely to face resistance.

Richard: US protectionist measures typically focus on industries posing significant threats to local firms. For instance, consumer electronics companies like Hisense and TCL have operated in the US for years with relatively few issues, as their primary competition comes from South Korean and Japanese brands. Similarly, Chinese restaurant chains or niche electronics firms often avoid intense scrutiny.

However, industries like e-commerce directly impact millions of small US businesses and brands. Critical sectors like communications, infrastructure, and media are deemed strategic priorities, as they touch on national security and public welfare. Companies in these areas are particularly vulnerable to regulatory and trade protection measures.

36Kr: If Temu is registered as a US company from the outset, why can’t this shield it from regulatory action? What more can Chinese companies do?

HM: TikTok also operates as a US-registered company, with ByteDance incorporated in the Cayman Islands and significant international investments from the US and other countries. None of this has prevented targeted actions against it.

Ultimately, the key issue is whether the US government perceives a company as a “national security threat.” The definition of this threat has become increasingly broad and fluid, requiring continuous monitoring and analysis.

ZP: Under the US Beneficial Ownership Information (BOI) regime and the Corporate Transparency Act (CTA), whether a company is defined as Chinese depends primarily on its shareholders’ background rather than the nationality of its executives or board members.

For example, a non-Chinese company can employ many Chinese nationals as executives or board members. As long as the controlling shareholders—those holding 25% or more of the equity—are not Chinese nationals, the company will not be classified as Chinese. Conversely, even if a company’s management is entirely localized, it can still be deemed Chinese if its controlling shareholders are predominantly Chinese nationals.

36Kr: What proactive measures can Chinese companies take to mitigate risks?

Tim: First and foremost, compliance is crucial. Many Chinese firms rely on domestic agencies to set up shell companies in the US with no real business operations. In some cases, even basic details like the company’s address and phone number are inaccurate. This undermines credibility and becomes a liability during litigation. Every detail, no matter how small, must be accurate.

ZP: Compliance is non-negotiable. Although the CTA is temporarily halted due to lawsuits, once it resumes, companies must pay close attention to transparency in their ownership structure. The focus isn’t on shareholders’ nationality but on accurate and honest disclosures.

For instance, a company is non-compliant if its main shareholders are Chinese nationals but it fails to disclose this. However, if everything is transparently reported, even a majority Chinese-owned firm can remain compliant.

Additionally, the CTA mandates disclosures about individuals with significant control over a company’s operations, not just legal shareholders.

Richard: Chinese entrepreneurs in the US must adhere to local laws, regulations, and cultural norms. In the short term, separating governance and ownership from Chinese investors is crucial to mitigating risks. Over the long term, companies should build localized ecosystems, engage with communities, and align with US values to foster a positive brand image.

ZP: The path forward involves two key strategies: focusing on core competencies and pursuing full localization. Japanese and South Korean firms provide excellent examples—by localizing operations and blending seamlessly into US culture, many have become beloved brands while still maintaining their identity as foreign companies.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Ren Qian for 36Kr.

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