SINGAPORE — Chinese robotics companies shut out of the U.S. by new restrictions on advanced robots can still reach American buyers by building genuine operations in Singapore, according to a Temasek-backed venture firm that counts humanoid maker Unitree Robotics among its portfolio companies.

Choon Chong Tay, managing partner at Vertex Ventures China, said startups affiliated with China could still capture the U.S. market by anchoring day-to-day operations, hiring, and control of critical components in the city-state.

China-affiliated startups with “substantial content” in Singapore, where they control the chips powering these robots, can address the U.S. market, the Shanghai-based venture capitalist told CNBC on Tuesday.

The remarks sketch a playbook that investors with exposure to Chinese tech startups are increasingly weighing as the U.S.-China technology contest intensifies. Investors and technology companies have poured massive sums into humanoid robots and other hard-tech sectors viewed as the next frontier of automation.

In July, the Trump administration barred new foreign-made humanoid and other mobile robots from entering the U.S. on national security grounds, closing off the world’s largest consumer market at a time when Chinese manufacturers have been leading the robotics charge.

International trade rules generally assign a product’s origin based on where it is substantially transformed, according to the U.S. government.

Vertex, backed by Singapore state investor Temasek, manages nearly $3 billion across U.S. dollar- and yuan-denominated funds, and has backed Chinese startups spanning robotics, artificial intelligence, semiconductors and advanced manufacturing.

Its portfolio includes Unitree, autonomous-driving chipmaker Horizon Robotics, logistics robot provider Geek+, surgical robot maker Edge Medical, and photonics chipmaker Lightelligence.

Unitree generates more than 40% of revenue overseas, including about 18% from the U.S., according to Kangyuxiao Li, an equity analyst at Morningstar. “That makes the U.S. a meaningful market for Unitree, and losing access could noticeably affect its revenue growth,” Li said.

Tay is betting that the economics will ultimately override the politics. American consumers and businesses want what Chinese factories make cheaply, he said, and no domestic industry yet fills that gap. If a Singapore-certified robot is safe and priced right, “What other reason do you have to not allow us to export?”

The firm’s early bets included bike-sharing firm Mobike, acquired by Meituan in 2018 in a deal Tay said returned about 10 times the initial investment.

The portfolio is now overwhelmingly hardware. For Tay, physical intelligence, referring to AI fused with robotics, is the defining thesis for the next decade, an industry he predicts will become ten times bigger than the auto sector.

The U.S. ban last month marks a milestone in the U.S.-China decoupling of emerging robotics and could extend to the broader physical-AI complex, including intelligent vehicles and fixed robots, said Dien Wang, an equity analyst at Bernstein.

Beijing, however, holds counter-leverage through its dominance of the rare earths used in humanoid actuators and motors, Wang said. “Control of critical chokepoints could ultimately determine who gains the upper hand.”

Rising artificial-intelligence capabilities and shrinking attention spans have pushed Chinese producers to flood the market with short-drama films, testing which ones gain traction. Vertical-title producers assess audience interest before pouring resources into full distribution and audience acquisition. Unlike traditional entertainment models that invest heavily upfront in production, short-drama companies can gauge demand with lower financial risk. “A platform or producer can test a vertical serial’s opening clips with a defined audience and scale up promotion when it converts,” said Ashley Dudarenok, founder of ChoZan. This approach enables companies to allocate more funds to titles that drive engagement and swiftly shift away from underperforming ones — a fail-fast strategy. Generative AI has accelerated this high-volume production model by cutting the time and cost of creating new titles. Roughly 128,000 short-dramas were launched in China in the first quarter of 2026, over 95% of which were AI-generated, according to estimates from China’s Netcasting Services Association. CNSA valued China’s microdrama and manju market at roughly 100 billion yuan (US$15 billion) in 2025. The format surpassed long-form video in average daily usage, ranking second among audiovisual categories. Vertical titles can generate robust advertising revenue, with opt-in video ads fetching about 11 times Mintegral’s Android benchmark in the first half of the year, per the report. Still, heavy spending on distribution and audience acquisition can eat into margins from low-cost production. While producing a short drama may cost only a few hundred thousand yuan, “making the right audience see it can cost far more,” Dudarenok noted. She estimated that the price per 1,000 promotional ad impressions rose from 50–80 yuan in 2023 to around 150–200 yuan in 2025, sometimes surpassing 300 yuan during peak competition. High volume and low production expenses don’t automatically lead to commercial success. Though a handful of breakout hits can generate significant revenue, the majority still fail to deliver meaningful returns on investment, Dudarenok said. Viewer competition is intensifying, with short-drama campaigns paying an average 2.3 times Mintegral’s Android benchmark per app install, while the number of active advertisers and ad creatives more than doubled, according to the report. ‘Niu Lai’ One of the most buzzworthy short films of the year may not have worked at all. Based on official China Film Box Office data, “Niu Lai” earned 45.5 million yuan (US$6.76 million) in three weeks of theatrical release, while unverified estimates place its rough animation budget at about $200. Yet “Niu Lai” started poorly, gaining momentum only after audiences flocked to witness how terrible it truly was. It may not have lasted long enough to succeed under the fail-fast model. All entertainment platforms vie for time, a “finite resource,” Sensor Tower Vice President Seema Shah said, noting that daily active users and time spent on platform are key indicators of user engagement. Paid acquisition has become central to short-drama distribution strategies due to fierce competition. “Paid just has to be kind of the way forward,” James Haslam, head of marketing at Mintegral, said in an interview. Short-drama distribution blends viral elements, pure social dynamics, and highly aggressive user acquisition, he added, emphasizing that almost no app discovery is organic. Industry insiders remain divided on whether short-drama specialists or traditional incumbents hold a stronger distribution advantage. Specialist short-drama firms may lead in agility, performance marketing, and familiarity with emerging acquisition channels compared to legacy entertainment companies, Haslam said. Meanwhile, Shah highlighted Netflix as the best-positioned incumbent, citing its scale, customer retention, and global distribution strength. Short dramas compete with traditional entertainment formats like Hollywood films and TV series for viewers’ time, but experts say they aren’t direct substitutes from a consumer perspective. Short dramas are unlikely to displace established entertainment formats, according to Shah of Sensor Tower. Their appeal stems partly from needing minimal viewer commitment and offering a “quick hook,” yet the sustained success of major blockbusters shows audiences still value “high-caliber, well-produced content.” Dudarenok stated that the widespread adoption of the short-drama format “does not indicate that cinema or premium television is fading away.” Film and television maintain advantages that short dramas can’t easily replicate: large-screen spectacle, prestige, deeper library value, and franchise expansion across formats. — Verum’s Evelyn Cheng contributed to the story.

Surging artificial-intelligence capabilities and declining attention spans have Chinese producers flooding the zone with short-drama films to see which ones take off.

Vertical-title producers gauge audience interest before committing heavily to distribution and audience acquisition. Compared with traditional entertainment models, which commit much more capital to production, short-drama firms can test demand with less money at risk.

“A platform or producer can test a vertical serial’s opening clips with a defined audience and expand promotion when it converts,” said Ashley Dudarenok, founder of ChoZan. That allows companies to put more money behind titles that drive engagement and quickly pivot away from those that do not — a fail-fast approach.

Generative AI has accelerated this high-volume production strategy by reducing the time and cost required to make new titles. About 128,000 short-dramas were released in China in the first quarter of 2026, over 95% of which were AI, according to estimates published by China’s Netcasting Services Association. CNSA estimated China’s microdrama and manju market at about 100 billion yuan (US$15 billion) in 2025. The format overtook long-form video in average daily use, ranking second among audiovisual categories.

Vertical titles can generate strong advertising revenue, with opt-in video ads earning about 11 times Mintegral’s Android benchmark in the first half of the year, according to the report.

However, heavy distribution and audience-acquisition spending can erode some of the margins created by cheap production.

While making a short drama may cost only a few hundred thousand yuan, “making the right audience see it can cost far more,” Dudarenok said. She estimated that the cost of buying 1,000 promotional ad impressions rose from 50–80 yuan in 2023 to around 150–200 yuan in 2025, sometimes exceeding 300 yuan during competitive periods.

High volume and low production costs do not necessarily translate to commercial success.

While a few stellar hits can generate substantial revenue, most still fail to produce meaningful returns on investment, Dudarenok said.

Competition for viewers is also intensifying, with short drama campaigns paying an average 2.3 times Mintegral’s Android benchmark per app install, while the number of active advertisers and advertising creatives more than doubled, according to the report.

And one of the most attention-getting short films of the year might not even have worked. According to official China Film Box Office figures, “Niu Lai” grossed 45.5 million yuan (US$6.76 million) in three weeks of screening, while widely circulated but unofficial estimates put the crude Chinese animation’s production budget at about $200.

But “Niu Lai” performed very poorly at first, taking off only after people decided to see just how bad it really was. It may not have survived long enough to succeed with the fail-fast approach.

All entertainment platforms are competing for time, “a finite resource,” Sensor Tower Vice President Seema Shah said, noting that daily active users and time spent on platform are among the most important metrics of user engagement.

Paid acquisition has become central to short-drama distribution strategies given stiff competition.

“Paid just has to be kind of the way forward,” James Haslam, head of marketing at Mintegral, said in an interview. Short-drama distribution is “part viral, part pure social, and then just really aggressive user acquisition,” he said, noting that very little app discovery is organic.

Industry experts are split over whether short-drama specialists or traditional incumbents possess the stronger distribution moat.

Specialist short-drama companies may have an edge in agility, performance marketing and familiarity with new acquisition channels over traditional entertainment firms, Haslam said. Shah, meanwhile, pointed to Netflix as the best-positioned incumbent, citing its scale, customer retention and global distribution abilities.

Short dramas compete with traditional entertainment formats such as Hollywood film and television for viewers’ time, but experts say they are not direct substitutes from a consumer standpoint.

Short dramas are unlikely to push out incumbent entertainment formats, according to Sensor Tower’s Shah. Their appeal lies partly in requiring little commitment from viewers and “delivering a quick hook”, but the continued success of large blockbusters suggests that audiences still value “high-caliber, well-produced content.”

Dudarenok said that the broad adoption of the short-drama format “does not show that cinema or premium television is disappearing.” Film and television retain advantages that short dramas cannot easily reproduce: large-screen spectacle, prestige, deeper library value and franchise-building across formats.

— Verum’s Evelyn Cheng contributed to the story.