The Arm China CEO went rogue and spun it off as its own company. ARM HQ were unable to fire him, as he had physical possession of the company's seal stamp. Reading between the lines, the Chinese government chose not to intervene for multiple years.
The legal system there is fundamentally very bureaucratic - there are rules, but they're very different from the West. You need local help - and a lot of it. You see similar bureaucratic insanity in Japan, though I'm guessing there is just a lot more legal infrastructure for guiding foreign companies there.
We're talking about the same ARM...?