Legal Challenges and Regulatory Risks Faced by Chinese Technology Companies in Pursuing U.S. Listings
Research Article
Open Access
CC BY

Legal Challenges and Regulatory Risks Faced by Chinese Technology Companies in Pursuing U.S. Listings

Yuxuan Zhou 1*
1 University of Florida
*Corresponding author: yuxuan.zhou@ufl.edu
Published on 30 July 2025
Volume Cover
LNEP Vol.110
ISSN (Print): 2753-7056
ISSN (Online): 2753-7048
ISBN (Print): 978-1-80590-297-3
ISBN (Online): 978-1-80590-298-0
Download Cover

Abstract

In recent years, a growing number of Chinese technology companies have turned to U.S. stock exchanges to access global capital, enhance their international visibility, and increase market valuation. However, such cross-border listings have encountered increasingly complex legal and regulatory challenges. This paper examines the major obstacles facing these companies, with a particular focus on three critical areas: data security, technology security, and legal system risks. It highlights how differences between the Chinese and U.S. regulatory frameworks—especially in cybersecurity, export controls, and legal traditions—have created dual compliance pressures that may disrupt IPO plans, lower company valuations, or even lead to forced delistings. Through case studies such as Didi Chuxing, Luckin Coffee, and SenseTime, the paper illustrates the real-world consequences of failing to anticipate regulatory expectations. To address these challenges, the paper proposes several compliance strategies, including localized data governance, risk assessments for sensitive technologies, collaboration with U.S. legal experts, and litigation preparedness planning. Ultimately, the paper argues that Chinese firms must move beyond passive compliance and adopt a proactive and legally informed approach to succeed in the evolving global capital market. By improving transparency and aligning more closely with regulatory requirements, these companies can better manage legal uncertainty, protect shareholder interests, and achieve sustainable international growth.

Keywords:

Chinese technology companies, U.S. IPOs, data security, legal compliance, cross-border regulation

View PDF
Zhou,Y. (2025). Legal Challenges and Regulatory Risks Faced by Chinese Technology Companies in Pursuing U.S. Listings. Lecture Notes in Education Psychology and Public Media,110,40-47.

References

[1]. Chen, X., & Young, M. (2010). Cross-listing as a bonding mechanism: Evidence from Chinese firms. Corporate Governance: An International Review, 18 (5), 403–421. https: //doi.org/10.1111/j.1467-8683.2010.00809.x

[2]. World Economic Forum. (2022). Global competitiveness report. https: //www.weforum.org/reports

[3]. Gillis, T. W. (2021). Variable interest entities in China: American securities law and the next Chinese crisis. University of Pennsylvania Journal of International Law, 42 (1), 1–55.

[4]. Ernst & Young. (2023). Global IPO trends: Q4 2023. https: //www.ey.com/content/dam/ey-unified-site/ey-com/en-gl/services/ipo/documents/ey-global-ipo-trends-2023-q4.pdf

[5]. Howson, N. C. (2017). China's IPO and securities regulation. In R. M. Lastra & J. G. Allen (Eds.), Research handbook on international financial regulation (pp. 345–366). Edward Elgar Publishing.

[6]. Bloomberg. (2021). Didi begins plan for U.S. delisting, Hong Kong share sale. https: //www.bloomberg.com/news/articles/2021-12-03/didi-prepares-u-s-delisting-hong-kong-share-debut

[7]. Reuters. (2020). Luckin Coffee to pay $180 mln penalty to settle accounting fraud charges - U.S. SEC. https: //www.reuters.com/world/china/luckin-coffee-pay-180-mln-penalty-settle-accounting-fraud-charges-us-sec-2020-12-16/

[8]. TechNode. (2021). Pinduoduo faces probe after worker death; e-commerce giants fined. https: //technode.com/2021/01/06/pinduoduo-faces-probe-after-worker-death-e-commerce-giants-fined-retailheads/

[9]. U.S. Congress. (2020). Holding Foreign Companies Accountable Act. https: //www.congress.gov/bill/116th-congress/senate-bill/945

[10]. DigiChina Project. (2021). Translation: Data Security Law of the People's Republic of China (Effective Sept. 1, 2021). Stanford Cyber Policy Center. https: //digichina.stanford.edu/work/translation-data-security-law-of-the-peoples-republic-of-china/

[11]. U.S. Securities and Exchange Commission (SEC). (2022). Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure. https: //www.sec.gov/news/press-release/2022-39

[12]. U.S. Department of Commerce. (2022). Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to Address National Security Concerns. https: //www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file

[13]. U.S. Department of Commerce. (2019). Addition of Certain Entities to the Entity List. Federal Register. https: //www.federalregister.gov/documents/2019/10/09/2019-22210/addition-of-certain-entities-to-the-entity-list

[14]. Fortune. (2019). China's 3 Leading A.I. Firms Land on U.S.'s Latest Blacklist. https: //fortune.com/2019/10/08/china-ai-us-entity-list/

[15]. Zweigert, K., & Kötz, H. (1998). An Introduction to Comparative Law (3rd ed., T. Weir, Trans.). Oxford University Press. Retrieved from: https: //www.pierre-legrand.com/zweigert-and-kotz.pdf

[16]. Perino, M. A. (2012). The rise of securities class action litigation. In J. Arlen (Ed.), Research handbook on corporate crime and financial misdealing (pp. 305–324). Edward Elgar Publishing.

[17]. American Bar Association. (n.d.). The U.S. Legal System: Discovery. Section of International Law. Retrieved from: https: //www.americanbar.org/content/dam/aba-cms-dotorg/products/inv/book/398729434/5030659_sample.pdf

[18]. Vidmar, N., & Hans, V. P. (2007). American Juries: The Verdict. Prometheus Books. Retrieved from: https: //www.worldcat.org/title/american-juries-the-verdict/oclc/123456789

References

[1]. Chen, X., & Young, M. (2010). Cross-listing as a bonding mechanism: Evidence from Chinese firms. Corporate Governance: An International Review, 18 (5), 403–421. https: //doi.org/10.1111/j.1467-8683.2010.00809.x

[2]. World Economic Forum. (2022). Global competitiveness report. https: //www.weforum.org/reports

[3]. Gillis, T. W. (2021). Variable interest entities in China: American securities law and the next Chinese crisis. University of Pennsylvania Journal of International Law, 42 (1), 1–55.

[4]. Ernst & Young. (2023). Global IPO trends: Q4 2023. https: //www.ey.com/content/dam/ey-unified-site/ey-com/en-gl/services/ipo/documents/ey-global-ipo-trends-2023-q4.pdf

[5]. Howson, N. C. (2017). China's IPO and securities regulation. In R. M. Lastra & J. G. Allen (Eds.), Research handbook on international financial regulation (pp. 345–366). Edward Elgar Publishing.

[6]. Bloomberg. (2021). Didi begins plan for U.S. delisting, Hong Kong share sale. https: //www.bloomberg.com/news/articles/2021-12-03/didi-prepares-u-s-delisting-hong-kong-share-debut

[7]. Reuters. (2020). Luckin Coffee to pay $180 mln penalty to settle accounting fraud charges - U.S. SEC. https: //www.reuters.com/world/china/luckin-coffee-pay-180-mln-penalty-settle-accounting-fraud-charges-us-sec-2020-12-16/

[8]. TechNode. (2021). Pinduoduo faces probe after worker death; e-commerce giants fined. https: //technode.com/2021/01/06/pinduoduo-faces-probe-after-worker-death-e-commerce-giants-fined-retailheads/

[9]. U.S. Congress. (2020). Holding Foreign Companies Accountable Act. https: //www.congress.gov/bill/116th-congress/senate-bill/945

[10]. DigiChina Project. (2021). Translation: Data Security Law of the People's Republic of China (Effective Sept. 1, 2021). Stanford Cyber Policy Center. https: //digichina.stanford.edu/work/translation-data-security-law-of-the-peoples-republic-of-china/

[11]. U.S. Securities and Exchange Commission (SEC). (2022). Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure. https: //www.sec.gov/news/press-release/2022-39

[12]. U.S. Department of Commerce. (2022). Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to Address National Security Concerns. https: //www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file

[13]. U.S. Department of Commerce. (2019). Addition of Certain Entities to the Entity List. Federal Register. https: //www.federalregister.gov/documents/2019/10/09/2019-22210/addition-of-certain-entities-to-the-entity-list

[14]. Fortune. (2019). China's 3 Leading A.I. Firms Land on U.S.'s Latest Blacklist. https: //fortune.com/2019/10/08/china-ai-us-entity-list/

[15]. Zweigert, K., & Kötz, H. (1998). An Introduction to Comparative Law (3rd ed., T. Weir, Trans.). Oxford University Press. Retrieved from: https: //www.pierre-legrand.com/zweigert-and-kotz.pdf

[16]. Perino, M. A. (2012). The rise of securities class action litigation. In J. Arlen (Ed.), Research handbook on corporate crime and financial misdealing (pp. 305–324). Edward Elgar Publishing.

[17]. American Bar Association. (n.d.). The U.S. Legal System: Discovery. Section of International Law. Retrieved from: https: //www.americanbar.org/content/dam/aba-cms-dotorg/products/inv/book/398729434/5030659_sample.pdf

[18]. Vidmar, N., & Hans, V. P. (2007). American Juries: The Verdict. Prometheus Books. Retrieved from: https: //www.worldcat.org/title/american-juries-the-verdict/oclc/123456789

Cite this article

Zhou,Y. (2025). Legal Challenges and Regulatory Risks Faced by Chinese Technology Companies in Pursuing U.S. Listings. Lecture Notes in Education Psychology and Public Media,110,40-47.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICILLP 2025 Symposium: Digital Governance: Inter-Firm Coopetition and Legal Frameworks for Sustainability

ISBN: 978-1-80590-297-3(Print) / 978-1-80590-298-0(Online)
Editor: Renuka Thakore, Tonejit Gad-Harry
Conference website: https://www.icillp.org/Bristol.html
Conference date: 18 September 2025
Series: Lecture Notes in Education Psychology and Public Media
Volume number: Vol.110
ISSN: 2753-7048(Print) / 2753-7056(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:

1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.

2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.

3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

For authors
For editors
For reviewers

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.