TikTok resorts to Singapore Washing to escape DOJ's scrutiny

There has been a new term that has been going around, called "Singapore Washing", describing how Chinese companies like Alibaba, Shein, ByteDance have been trying registering their company offshore as a method to mask the Chinese identities of their companies. The phenomenon has been so pervasive that in private equity and asset management industries it is often characterized as "Singapore Washing" - whereby Chinese firms relocate their headquarters or parent companies to mitigate the geopolitical risks and scrutiny they face at home. By why specifically Singapore, and what is so special about Singapore that makes it the perfect hiding place for these foreign companies?

TikTok harvesting private information for personal agenda

One of these companies is Tiktok, who is fighting an ongoing lawsuit following claims from the Department Of Justice (DOJ) that TikTok has been using the app to both manipulate and survey its users for its own personal agenda. The U.S government is now giving the company an ultimatium: either you sever all ties with ByteDance, or the app will face a ban in the U.S.

If you think this case has nothing to do with me, then you are wrong because Bytedance is storing all of the data they have collected from its consumers in data centers here in Singapore, making Singapore an accomplice to ByteDance's crimes. But this still doesn't answer the question of why Singapore? Could it be because the CEO of TikTok Chew Shou Zi is a Singaporean himself? Sounds about right!

"No, I'm Singaporean"

This phrase "No, I'm Singaporean" has been going viral over the internet. This was the rebuttal that the CEO of TikTok, Chew Shou Zi, gave the congress when he was pressured by the judge to reveal his alleged association with China. That is when he made his identity as a Singaporean clear, and he had no association at all with China nor the Chinese Communist Party.(CCP)

So who is Chew Shou Zi? Chew was born and grew up in Singapore. After completing his national service, he went to the U.S to further his studies. He graduated from Harvard Business school with a Masters in business administration.

So is it his Singaporean identity the reason why he chose Singapore as one of the primary data collection centres?

ByteDance heavy investment in Singapore

One of the reasons why Singapore is so attractive to these chinese tech companies is because it is often seen as a top innovation hub. Many would even see Singapore as second to Silicon Valley. Following the increased tension between China and the U.S, could it be that China came to the realisation that they could no longer depend on Silicon Valley and have to find an alternative to house their technological plans? Then wouldn't it make a lot of sense for them to turn to their second best option, Singapore?

China's interest in Singapore also stems from the abundance of talents in these regions. Setting its base in Singapore would allow TikTok to tap into the talents in Singapore, and that seems like exactly what TikTok seems to be doing. Just last year, the company announced that it was scouting for talents in Singapore by offering them job opportunities with the company.

Making use of the regulatory loopholes

Another reason why this business is so attracted to Singapore is because of Singapore's supervision measures. Following the introduction of a new legal structure in 2020 called the Variabe Capital Company, which was intended to attract the assets of fund managers and family offices registered in low-tax jurisdictions such as Cayman Islands, it attracted more chinese illegal activities, although that was not the intended purpose of the Singapore government in the first place. Many of these chinese companies use Singapore-registered forms to make their businesses look less connected to China.

Implications on Singapore

Now we know the reason TikTok chose Singapore. Then what should Singapore do? Singapore should be concerned, but about developing an image as a haven for money laundering and companies sactioned for human rights violation. Furthermore, like other Ameircan partners in Asia, it has strong economic linkages with China as well as deep military ties with the U.S. It would be wise not to sabotage one for another-signaling which side it chooses in this cold war. Alternatively, Singapore should clamp down on Chinese companies using it as a gateway to the American and other markets.