Geopolitics Forces Manus AI Creator to Abandon China for Singapore

In a stark illustration of the growing impact of geopolitical tensions on the global technology sector, Butterfly Effect, the startup behind the viral AI agent Manus, has shut down its entire China-based team. The move signals a strategic pivot to mitigate risks associated with its Chinese origins as it targets the U.S. market and seeks to navigate the complex landscape of international AI competition. The company, which is relocating its headquarters to Singapore, has laid off most of its 120-person team in China, with about 40 key technical staff being moved to the new base of operations.[1] This restructuring underscores a broader trend of Chinese tech companies with global ambitions seeking neutral ground to sidestep the escalating tech rivalry between the United States and China.

The decision to dismantle its Chinese operations is a direct response to the mounting geopolitical pressures that cast a shadow over companies with significant ties to China. For a startup like Butterfly Effect, which recently secured a substantial USD 75 million in funding led by the prominent Silicon Valley venture capital firm Benchmark at a valuation of USD 500 million, the perception of a Chinese connection is increasingly seen as a liability in Western markets.[1][2] The U.S. government has implemented investment restrictions targeting Chinese AI companies, creating significant compliance hurdles for American investors and making it difficult for Chinese-based startups to access U.S. capital.[1] Furthermore, concerns over data security, potential for state influence, and censorship have led to suspicion and even bans of Chinese-developed technology in the U.S.[3] By moving its headquarters to Singapore and shedding its China-based workforce, Butterfly Effect is attempting to create a clear separation and establish itself as a global company, rather than a Chinese one, to appease international investors and customers.[4][1][5]

The rise of Manus AI itself has been a double-edged sword. Launched in March 2025, the AI agent garnered significant attention for its ability to autonomously perform complex tasks like analyzing resumes, comparing stocks, and planning travel itineraries.[1][6] Its capabilities, which some reports claimed surpassed those of OpenAI's models on certain benchmarks, quickly created a frenzy, with early access codes reportedly selling for thousands of dollars on secondary markets.[1][7] However, this success also brought heightened scrutiny. The autonomous nature of Manus, operating without direct human oversight, has raised concerns about its potential for misuse in areas like disinformation or cyber warfare.[8] These risks, combined with its Chinese origins, created a potent mix of concerns that prompted swift action from some U.S. state governments, who banned the technology from their networks citing security vulnerabilities and the risk of propaganda.[3] The company's subsequent move to Singapore and the severing of its China team appear to be a direct attempt to address these fears and build trust in key international markets.

The implications of Butterfly Effect's drastic move extend far beyond a single startup. It is a powerful example of the "technological decoupling" between the U.S. and China, where intertwined ecosystems of talent, capital, and innovation are being forcibly separated.[9] The intense "war of a hundred models" in China's domestic AI market, characterized by fierce competition and oversaturation, is also pushing startups to look abroad for more favorable market conditions.[1] Singapore, with its strategic location and political neutrality, is emerging as a key beneficiary of this trend, becoming a haven for Chinese tech companies seeking to go global.[1] This strategic relocation is not unique to Butterfly Effect; other Chinese AI startups like HeyGen and WIZ.AI have made similar moves to navigate the geopolitical minefield.[1] This emerging geography of AI innovation is a direct consequence of national security concerns and trade restrictions reshaping the global tech landscape.[10][1]

In conclusion, the shutdown of Butterfly Effect's China team is a watershed moment for the AI industry, vividly demonstrating how geopolitical fault lines can dictate corporate strategy. The startup's journey from a celebrated innovator to a company forced to sever its roots highlights the immense challenges facing technology firms in an era of great power competition. The move to Singapore and the focus on hiring in the U.S. and Japan represent a calculated strategy to build a global identity untethered from the political baggage of its home country.[4][1] As the U.S.-China tech rivalry continues to intensify, the story of Manus AI will likely serve as a cautionary tale and a blueprint for other ambitious startups caught in the crossfire, forced to choose between their national origins and their global aspirations. The long-term impact on the pace of innovation and the very structure of the international technology community remains a critical and unfolding story.