Chinese Startups Try to Make It Big in the U.S.—but Without the Backlash

But to avoid the kind of backlash as they expand that short-video app TikTok especially has faced, they are moving their headquarters out of China or creating a separate entity in countries such as the city-island state of Singapore. Some are also renaming themselves and dropping references to their China roots, or developing separate products for the Chinese and international markets to underscore a separation of data or product management.

In two dozen interviews, founders, executives, and investors outlined strategies to let China-founded firms maintain access to resources and markets across the world’s two largest economies, while seeking to avoid the kind of attention that comes with being labeled a Chinese company.

Chris Pereira, head of North American Ecosystem Institute, a consulting firm helping Chinese companies expand abroad, said his nearly 40 clients are taking steps to minimize the geopolitical risks associated with their China connections.

He advises clients to put less emphasis on their origin and more on their products. Some are creating subsidiaries in the U.S., Canada and Singapore with different names or management teams from their parent companies to avoid unwanted scrutiny, he said.

Following a crackdown on private education in China last year, English-language learning platform

China Online Education Group

COE -1.79%

spun off its domestic business, shifted to overseas markets and renamed itself 51Talk Online Education Group to refashion itself into a global company, it said in a statement to The Wall Street Journal.

The company also switched its headquarters to Singapore to drive its international expansion, it said, while maintaining a research-and-development center in Beijing.

In the process of its restructuring, the U.S. Securities and Exchange Commission marked the New York Stock Exchange-listed company as at risk of being delisted, amid a yearslong standoff between Washington and Beijing over whether to allow U.S. regulators to inspect the auditing records of U.S.-listed Chinese firms.

To address the concerns—and with its revenues coming only from outside of China—51Talk switched its auditor from PricewaterhouseCoopers China to Marcum Bernstein & Pinchuk LLP in the U.S., the company said.

With these actions, the company has mitigated its geopolitical risks, it said, adding that it is growing rapidly.

Before U.S. and China relations really soured, entrepreneurs born in China and educated in the West sought to take advantage of their bilingual skills and cross-border networks to build companies that could compete globally. Geopolitics has since created new obstacles, but their ambitions haven’t changed, founders and investors said.

In developing their globalization strategies, many have looked to ByteDance and Shein. The companies have shown the success that can come from combining the talent, supply chains, capital and markets in the U.S. and China. They have also highlighted the kind of consumer and government backlash that can pummel Chinese companies and would best be avoided, entrepreneurs said.

As TikTok’s popularity has soared—becoming the world’s most visited platform on the internet in 2021—U.S. government officials have balked at its links to China, citing concerns that user data could fall into the hands of Chinese authorities. India banned the app after a border clash with China, saying it posed data privacy and national security concerns.

In July, TikTok published a blog post saying that the company had taken steps to minimize employee access to U.S. user data as well as cross-border data transfers, including to China.

Meanwhile, Shein, which ships products from China overseas, faces growing resistance for its environmental footprint and possible links to forced labor in Xinjiang, as well as dozens of lawsuits for copying fashion designs.

A Shein spokesman said the company has a zero-tolerance policy against forced labor and has worked with leading agencies to conduct ongoing, unannounced audits of its supply chain that have confirmed no forced-labor violations.

Both companies have since taken steps to distance themselves from their Chinese origins. TikTok’s chief executive and chief operating officer are based outside China, as are its data centers, which means they aren’t subject to Chinese law, TikTok has said in its blog posts. Shein at the end of last year changed its parent company from a Hong Kong-registered firm to a Singapore-incorporated entity, Roadget Business Pte. Ltd., according to corporate records. Shein didn’t respond to requests for comment on the change.

Yifan He, the founder and chief executive of Red Date Technology, moved the company’s headquarters to Hong Kong, a special administrative region of China with its own financial and judicial systems, while maintaining his engineering team in Beijing.

The company is the main developer for a global decentralized cloud service called Blockchain-based Service Network, or BSN, to help companies and governments build applications using distributed-ledger technology. It builds two separate versions for the Chinese and international markets.

After BSN’s initial rapid expansion in China, where the service is a collaboration between Red Date, several state-run companies and a branch of Beijing’s planning agency, some in Washington contended that it could create a global standard for blockchain infrastructure aligned with Chinese Communist Party priorities.

Late last year, in a continued effort to distinguish BSN’s global and Chinese versions, Mr. He formed a Singapore-based nonprofit that will govern the former through the collective vote of multinational companies who join the organization as members. Red Date also open-sourced the service’s code for anyone to examine.

“People just don’t trust Chinese companies,” Mr. He said. “It takes us twice or three times as long to convince them we’re doing the real thing, that we’re not an agent for the Chinese government.”

In September, Chinese e-commerce company

Pinduoduo Inc.

PDD 6.43%

entered the U.S. market with its global e-commerce site, Temu. Like Shein, it manufactures and ships many of its products from China and boasts extremely competitive prices.

Initially, the site made no mention of its links to Pinduoduo. Now the website says it is a Pinduoduo-affiliated company that started in Boston and runs its U.S. business through a Delaware-based company. A Singapore-based entity works with its customers outside the U.S.

Pinduoduo didn’t respond to requests for comment.

Tony Wu, partner of Northern Light Venture Capital, a cross-border venture-capital firm focused on early-stage tech startups, said one of his portfolio companies also switched its Chinese-sounding name in favor of one sounding Japanese. “Americans are just more familiar with Japanese culture,” he said.

Not all companies have shied away from their Chinese origins. In April, Fiture, a Shanghai-based smart-fitness startup, launched its first product for the U.S. market, an AI-powered workout mirror that consumer-technology reviewers said rivaled a similar offering from

Lululemon Athletica Inc.

Its executives say its cross-border team and operations helped it develop a product that can be sold globally, adding that the company hasn’t hit geopolitical snags.

“We are a generation of globalization,” said Maggie Lu, 38, the CEO of Fiture’s U.S. entity. “There are a lot of things that are pointing the other direction. But I feel quite emotional and proud to bring a brand that was started in China to a global stage.”

Write to Karen Hao at karen.hao@wsj.com and Shen Lu at shen.lu@wsj.com

But to avoid the kind of backlash as they expand that short-video app TikTok especially has faced, they are moving their headquarters out of China or creating a separate entity in countries such as the city-island state of Singapore. Some are also renaming themselves and dropping references to their China roots, or developing separate products for the Chinese and international markets to underscore a separation of data or product management.

In two dozen interviews, founders, executives, and investors outlined strategies to let China-founded firms maintain access to resources and markets across the world’s two largest economies, while seeking to avoid the kind of attention that comes with being labeled a Chinese company.

Chris Pereira, head of North American Ecosystem Institute, a consulting firm helping Chinese companies expand abroad, said his nearly 40 clients are taking steps to minimize the geopolitical risks associated with their China connections.

He advises clients to put less emphasis on their origin and more on their products. Some are creating subsidiaries in the U.S., Canada and Singapore with different names or management teams from their parent companies to avoid unwanted scrutiny, he said.

Following a crackdown on private education in China last year, English-language learning platform

China Online Education Group

COE -1.79%

spun off its domestic business, shifted to overseas markets and renamed itself 51Talk Online Education Group to refashion itself into a global company, it said in a statement to The Wall Street Journal.

The company also switched its headquarters to Singapore to drive its international expansion, it said, while maintaining a research-and-development center in Beijing.

In the process of its restructuring, the U.S. Securities and Exchange Commission marked the New York Stock Exchange-listed company as at risk of being delisted, amid a yearslong standoff between Washington and Beijing over whether to allow U.S. regulators to inspect the auditing records of U.S.-listed Chinese firms.

To address the concerns—and with its revenues coming only from outside of China—51Talk switched its auditor from PricewaterhouseCoopers China to Marcum Bernstein & Pinchuk LLP in the U.S., the company said.

With these actions, the company has mitigated its geopolitical risks, it said, adding that it is growing rapidly.

Before U.S. and China relations really soured, entrepreneurs born in China and educated in the West sought to take advantage of their bilingual skills and cross-border networks to build companies that could compete globally. Geopolitics has since created new obstacles, but their ambitions haven’t changed, founders and investors said.

In developing their globalization strategies, many have looked to ByteDance and Shein. The companies have shown the success that can come from combining the talent, supply chains, capital and markets in the U.S. and China. They have also highlighted the kind of consumer and government backlash that can pummel Chinese companies and would best be avoided, entrepreneurs said.

As TikTok’s popularity has soared—becoming the world’s most visited platform on the internet in 2021—U.S. government officials have balked at its links to China, citing concerns that user data could fall into the hands of Chinese authorities. India banned the app after a border clash with China, saying it posed data privacy and national security concerns.

In July, TikTok published a blog post saying that the company had taken steps to minimize employee access to U.S. user data as well as cross-border data transfers, including to China.

Meanwhile, Shein, which ships products from China overseas, faces growing resistance for its environmental footprint and possible links to forced labor in Xinjiang, as well as dozens of lawsuits for copying fashion designs.

A Shein spokesman said the company has a zero-tolerance policy against forced labor and has worked with leading agencies to conduct ongoing, unannounced audits of its supply chain that have confirmed no forced-labor violations.

Both companies have since taken steps to distance themselves from their Chinese origins. TikTok’s chief executive and chief operating officer are based outside China, as are its data centers, which means they aren’t subject to Chinese law, TikTok has said in its blog posts. Shein at the end of last year changed its parent company from a Hong Kong-registered firm to a Singapore-incorporated entity, Roadget Business Pte. Ltd., according to corporate records. Shein didn’t respond to requests for comment on the change.

Yifan He, the founder and chief executive of Red Date Technology, moved the company’s headquarters to Hong Kong, a special administrative region of China with its own financial and judicial systems, while maintaining his engineering team in Beijing.

The company is the main developer for a global decentralized cloud service called Blockchain-based Service Network, or BSN, to help companies and governments build applications using distributed-ledger technology. It builds two separate versions for the Chinese and international markets.

After BSN’s initial rapid expansion in China, where the service is a collaboration between Red Date, several state-run companies and a branch of Beijing’s planning agency, some in Washington contended that it could create a global standard for blockchain infrastructure aligned with Chinese Communist Party priorities.

Late last year, in a continued effort to distinguish BSN’s global and Chinese versions, Mr. He formed a Singapore-based nonprofit that will govern the former through the collective vote of multinational companies who join the organization as members. Red Date also open-sourced the service’s code for anyone to examine.

“People just don’t trust Chinese companies,” Mr. He said. “It takes us twice or three times as long to convince them we’re doing the real thing, that we’re not an agent for the Chinese government.”

In September, Chinese e-commerce company

Pinduoduo Inc.

PDD 6.43%

entered the U.S. market with its global e-commerce site, Temu. Like Shein, it manufactures and ships many of its products from China and boasts extremely competitive prices.

Initially, the site made no mention of its links to Pinduoduo. Now the website says it is a Pinduoduo-affiliated company that started in Boston and runs its U.S. business through a Delaware-based company. A Singapore-based entity works with its customers outside the U.S.

Pinduoduo didn’t respond to requests for comment.

Tony Wu, partner of Northern Light Venture Capital, a cross-border venture-capital firm focused on early-stage tech startups, said one of his portfolio companies also switched its Chinese-sounding name in favor of one sounding Japanese. “Americans are just more familiar with Japanese culture,” he said.

Not all companies have shied away from their Chinese origins. In April, Fiture, a Shanghai-based smart-fitness startup, launched its first product for the U.S. market, an AI-powered workout mirror that consumer-technology reviewers said rivaled a similar offering from

Lululemon Athletica Inc.

Its executives say its cross-border team and operations helped it develop a product that can be sold globally, adding that the company hasn’t hit geopolitical snags.

“We are a generation of globalization,” said Maggie Lu, 38, the CEO of Fiture’s U.S. entity. “There are a lot of things that are pointing the other direction. But I feel quite emotional and proud to bring a brand that was started in China to a global stage.”

Write to Karen Hao at karen.hao@wsj.com and Shen Lu at shen.lu@wsj.com