In January, just before the new government moved into the White House, the American Chinese blacklisted Xiaomi. The company is red-hot and is now the third largest manufacturer of smartphones in the world, taking advantage of Huawei’s fall out of grace. US investors are now banned from investing in the company and those who already have an investment in Xiaomi should get rid of these investments by November 11th. Xiaomi’s shares are traded via the Over The Counter Pink Sheets in the form of US Depositary Receipts (ADR). They closed at $ 15.34 a share on Friday, down 25% since the blacklist was announced.
Award to Xiaomi founder Lei Jun blacklisted the U.S. Department of Defense
Xiaomi, along with eight other Chinese companies, has been blacklisted by the U.S. Department of Defense over alleged ties to the Chinese military. After we blacklisted our article in January, we received a statement from Xiaomi stating, “The company has complied with the law and has complied with the applicable laws and regulations of jurisdictions in which it operates. The company reiterates that it provides products and services for civilian and commercial use, confirming that it is not the Chinese army, controlled or affiliated with it and that it is not a “Communist Chinese military company” defined under the NDAA is not a course of action to protect the interests of the company and our stakeholders. “
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An award handed over to Xiaomi founder and CEO Lei Jun led the U.S. to Xiaomi’s blacklist earlier this year
Yesterday, the Wall Street Journal quoted a lawsuit filed with the U.S. Department of Defense for conducting a report claiming it was the real reason for Xiaomi’s blacklist. The report says that an award given to Xiaomi founder and CEO Lei Jun for his service to the state was the reason why Trump’s government has decided in recent days to proclaim Xiaomi. Lei was one of the 100 executives in China who received an award in 2019 for ‘Excellent builder of socialism with Chinese characteristics’. Xiaomi promotes the award listed in the executive’s biography page on Xiaomi’s corporate website and annual report.
The legal submission also mentions Xiaomi’s investment in advanced technologies, including 5G and artificial intelligence. Xiaomi is trying to use the courts to remove the blacklist and has filed a case in the U.S. District Court in Washington, DC. The U.S. Department of Defense responded with its own submission containing the report on the award given to Lei Jun. prominent names on the Department of Defense’s list include smartphone maker Huawei, whose problems with U.S. restrictions were discussed in an earlier story today, and China’s largest foundry SMIC.
Lei’s award was presented to him by China’s MIIT; it is the government agency that oversees the country’s technology and industrial policy. The U.S. Department of Defense says this agency manages China’s civil-military amalgamation. Under this program, China is working with private companies to create technology for the military.
There has been talk over the years about Xiaomi selling its devices in the US, currently it offers limited products in the states, including power banks, and its popular Mi Band fitness tracker can be purchased in the US via Amazon. Former Xiaomi vice president Hugo Barra said in 2016 that the company would eventually sell its devices in the US, although enough time has passed since then. The US government has also become much cooler in its relations with Chinese technology companies, and outside of OnePlus, such phone manufacturers have not had much success in the US lately.
