Chinese authorities prohibit the Manus acquisition case, what is being prohibited?

First, what is prohibited is the non-compliant practice of companies engaging in "bathing-style overseas expansion". In March 2025, Butterfly Effect company launched Manus, which quickly gained popularity in the market. However, in June of the same year, Manus headquarters moved to Singapore, drastically reducing the domestic team and completely ceasing services and operations in China. In December 2025, Meta announced a high-profile acquisition of Manus for about 2 billion dollars. As an AI company developed relying on Chinese engineers and infrastructure environment, Manus suddenly "cut off" its Chinese elements after receiving American investment, sparking controversy. A well-known lawyer in the industry told reporters that the Manus acquisition case involved transferring domestic AI business assets overseas and ultimately selling them to the overseas company Meta. According to the "Regulations on the Review of Foreign Investment Security", even if the previous outward migration occurred between related entities controlled by the founder, the subsequent transaction would still be included in the scope of foreign investment security review. Manus relocated its headquarters to Singapore while its core business was still in China at the time. Subsequently, the company gradually transferred key assets related to core business such as main personnel and technology overseas, while the domestic Manus company was gradually detached from the core business, retaining only the operation of non-core business. The entire operation ultimately achieved the overall transfer of Manus-related companies' core business from China to overseas, triggering compliance risks in cross-border investment transactions. Second, what is prohibited is the security risks in openness. The fundamental purpose of establishing the foreign investment security review system in China is to balance the relationship between openness and national security. This is a common practice in many countries around the world. To ensure the effectiveness of supervision, security review systems in various countries generally adopt substantive penetration review that is greater than formalities, as well as proactive regulatory intervention when necessary, and China's security review system is no exception. Specifically, Manus mainly conducted research and development in China in the early stages, with a technical team of Chinese engineers. These key features determine that the flow of personnel, technology, and data will inevitably be associated with Chinese interests. According to the "Regulations on the Review of Foreign Investment Security", such technology-related investment activities should undergo security review in accordance with the law. Expanding high-level opening to the outside world and creating a new situation of win-win cooperation has already been included in China's "15th Five-Year Plan". Lawful supervision is a necessary measure for orderly opening to the outside world, and it is not contradictory to encourage foreign investment to prosper in China. Development and security need to be dynamically balanced and mutually reinforcing. The more open we are, the more we need to emphasize security, clarify the security boundaries, so that compliant foreign investment can take a "tranquilizer", strengthen long-term confidence, which is also an important manifestation of high-level opening up.