- The Trump administration has added Xiaomi to a blacklist reserved for companies with alleged ties to the Chinese military.
- US-based investors will need to remove any and all investments with the Chinese company.
- Xiaomi has denied any affiliation with the Chinese military.
Update: January 15, 2020 (2:26 AM ET): A day after it was added to a US blacklist for firms with supposed ties to the Chinese military, Xiaomi has responded officially by denying any such connections. The company has issued the following statement to Android Authority:
The company has been in compliance with law and operating in compliance with the relevant laws and regulations of jurisdictions where it conducts its businesses. The company reiterates that it provides products and services for civilian and commercial use. The company confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a “Communist Chinese Military Company” defined under the NDAA. The company will take appropriate course of actions to protect the interests of the company and its shareholders.
The company is reviewing the potential consequences of this to develop a fuller understanding of its impact on the Group. The company will make further announcements as and when appropriate.
Original article: January 14, 2020 (4:02 PM ET): According to Reuters, the Trump administration in the United States added nine Chinese companies to a blacklist today. Of those nine companies is Chinese smartphone manufacturer Xiaomi.
To be clear, this is not the same list to which Trump added Huawei’s name in 2019. That list is related to firms that have supposed ties to the Chinese government directly and forbids US-based firms from working with them. This list is related specifically to the Chinese military. Apparently, the Trump administration thinks Xiaomi’s ties to the military are close enough that it poses a potential threat to the US.
This blacklist has been in existence since 1999. However, it lacked any real teeth until Trump granted an executive order which forbids US investors from investing in blacklisted firms. With Xiaomi’s name added to the blacklist, things just got tough.
Xiaomi blacklist: What does this mean?
If you are concerned that this news will decimate Xiaomi’s business as we’ve seen with Huawei, that is likely not the case. Xiaomi’s presence on this blacklist simply prevents investors based in the US from investing in Xiaomi. It won’t affect Xiaomi’s supply chain and won’t prevent US-based firms from selling equipment and materials to Xiaomi.
It will, however, cause Xiaomi’s stock to drop. It will also cause the company to lose a lot of liquid capital, as American investors will need to sell their stock in Xiaomi by November 11, 2021.
Time will tell whether or not these changes will be crippling for Xiaomi, a hindrance, or merely an annoyance. Either way, it definitely won’t be good or helpful.
Donald Trump will only be President of the United States for a few more days. However, it’s possible he could use his last days in office to make as many sweeping changes as possible such as today’s example.