What the sale and troubles of Manus reveal about the US-China AI race

Manus did everything it could to shed its China links.

- Tan Dawn Wei

Its sale to Meta and China's probe into the company show that matters little in today's Al geopolitics.When Chinese artificial intelligence (AI) startup Butterfly Effect scored a US$2.5 billion (S$3.2 billion) deal in December with Meta for its autonomous AI agent, Manus, its founders probably thought they had done everything right.

Just a year after founding the company in Beijing in 2022, developer and entrepreneur "Red" Xiao Hong, 33, registered it in Singapore with paid-up capital of $100,000.

By mid-2025, shortly after Manus launched to global buzz that some described as a "second DeepSeek moment", Mr Xiao shut down the product's Chinese social media accounts, retrenched most of his roughly 120 employees, and essentially said goodbye to much of what he and his teammates had built in their homeland.

The core team of around 40 including co-founders "Peak" Ji Yichao and "Hidecloud" Zhang Tao relocated their global headquarters to OUE Downtown in Singapore's Central Business District.

Butterfly Effect never set out to be a Chinese champion, nor did it intend to play only in the domestic league. The founders said transplanting to Singapore was a strategic move, aimed at gaining access to international markets, global talent and US capital. The positioning was clear: The company was no longer meant to be seen as a Chinese startup, but a global company that happened to have been born in China.

Mr Zhang, its chief product officer, said at a tech event in 2025 that the company had set its sights on international users from Day One.

Singapore, he argued, was the "best choice" for its global headquarters because "it is the only country in the whole world outside of China where we can find so many people who can speak Chinese", while also being "the best country to find talent with financial, legal, marketing experience around the world".