Xiaomi seems to have started doing measures so Huawei’s fate won’t happen to them. The Chinese OEM has filed an official and legal complaint against the US Defense and Treasure departments for blacklisting the company. A recent move had American investors being blocked from buying from stocks from Xiaomi. The Defense Department insists that Xiaomi is connected with the People’s Liberation Army. Xiaomi seeks to reverse the blacklisting for being unconstitutional. The designation was actually made before President Trump left the office.
The Designation is deemed to cause “imminent, severe, and irreparable harm” to Xiaomi if it remains in place. The restrictions are expected to affect the company in several ways. The lawsuit has name the other defendants Defense Secretary Lloyd Austin and Treasury Secretary Janet Yellen.
Xiaomi isn’t the only target of the former US President Trump’s ire. The last government targeted other Chinese tech brands like Huawei. Semiconductor Manufacturing International Corp. and SZ DJI Technology Co. have also been blacklisted.
Huawei was the worst hit and we have seen the past couple of years how the Chinese OEM was affected. Just recently, we learned Huawei went down to number five ranking in global shipments in Q4 2020.
Blacklisting Xiaomi, Other Chinese Companies
With the new blacklist, investors of Xiaomi like State Street Corp., the Vanguard Group Inc. , and BlackRock Inc. would then be required to divest their holdings by November this year. Qualcomm may also be affected as it has investments in Xiaomi.
Xiaomi said in the filing that it is “not owned or controlled or otherwise affiliated with the Chinese government or military, nor is it owned or controlled by any entity affiliated with the Chinese defense industrial base.”
In another report, Xiaomi said that a substantial number of its investors and shareholders with US citizens. Three of Xiaomi’s top-ten holders were U.S. institutional investment groups. The complaint also noted: “The company’s strategic relationships with U.S. financial institutions – critical for Xiaomi to continue to access the capital it needs to continue to grow in a highly competitive market – will be significantly damaged.”
No response has been made by the U.S. Department of Defense and the Treasury Department yet. This is a developing story so we’ll update you from time to time.