Xiaomi
The latest shot in the U.S. government’s war against leading Chinese smartphone sellers is aimed at Xiaomi, which ended up on the U.S. government’s list of “Communist Chinese military companies” via a new executive order today. The statement makes it illegal for U.S. citizens to own Xiaomi shares.
The US and China have been trading blows on Huawei for a year and a half now, which has been added to the “entity list” by the US Department of Commerce. While on the list of entities, US companies can not cooperate with Huawei or export products there. It becomes illegal for Huawei to import any ‘US-Origin’ product. US Origin does not just mean products manufactured in the US by US companies; there is also a ‘viral’ component to the law, where any product manufactured internationally with some components from the US also applies as a US product.
While Huawei has received a comprehensive ban, it does not appear that Xiaomi is currently in the same boat. Huawei ended up on the Department of Commerce entity list, while Xiaomi is now on the Department of Defense’s list of “Communist Chinese military companies” (Huawei is also on this list). It appears that the appointment of DOD only bans U.S. investments in Xiaomi, and any U.S. stakeholders should reduce their holdings by November 11, 2021. (Xiaomi is a public company and had a stock market in 2018.) The suffocating supply chain restrictions that apply to Huawei do not (yet?) Apply to Xiaomi.
The DOD says the list is intended to develop “the People’s Republic of China (PRC)’s strategy for military and civilian integration, which the government believes is a plan to lead advanced technology to the Chinese military through ‘PRC companies, universities, and research programs that are seemingly civic entities. ‘
Xiaomi has released a reaction on Twitter, saying that it “is not owned, controlled or affiliated with the Chinese military, and that it is not a” Communist Chinese military company “as defined by the NDAA” (the NDAA is the Law on the National Defense Authorization giving the DOD the power to make this list).
The IDC has Xiaomi as the number 3 smartphone maker worldwide, behind Samsung and Huawei, and a place ahead of Apple. Xiaomi regularly pumps out high-spec, cheap Android phones to compete in the crucial Chinese and Indian markets. It started as an Apple clone manufacturer, but today Xiaomi is one of the fastest developers in the industry and regularly beats larger companies that are launching new technologies and components to the market. It sent the world’s first Qualcomm Snapdragon 888 phone, the Xiaomi Mi 11, and is leading the charge in cameras that are not displayed. Being Chinese is a market advantage for Xiaomi. A company like Apple should allow US designers to communicate with Chinese manufacturers across a 12-hour time zone difference and a language barrier, while Xiaomi’s Chinese designers and Chinese manufacturers can communicate more easily and faster, allowing the company to develop products faster.
Since Xiaomi is the number 3 smartphone maker worldwide, any ban on the company in the United States is not going to do much. Years ago, Xiaomi gave tips on entering the US smartphone market, but it never had the guts to go through with it and instead introduced the US version of Mi.com as a seller of small accessories. In the US, you can buy a Xiaomi Android TV box, headphones, security cameras and batteries, along with weird things like air purifiers, light bulbs and toy robots.