Americans invested billions in Chinese companies, now their money is stuck

When investors use the term “zombie” companies, they typically refer to struggling startups that are unable to grow and are unlikely to recoup the funds raised. However, in the context of the recent discussions surrounding the sale of China-based TikTok, a new type of zombie company has emerged: China zombies. These companies have successful businesses but are caught in geopolitical tensions, which make it unlikely for investors to see immediate returns. Selling these companies has become increasingly difficult, and Chinese tech companies face obstacles in selling to US buyers. IPOs have also become more challenging, with fewer Chinese companies listing in the US and increased scrutiny on listings in China. The stakes are high for investors, with billions of dollars invested in Chinese companies. Despite the limited options for liquidity, investors can explore borrowing against their investments or waiting for improved China-US relations.