The United States of America have once again expanded their list of blacklisted companies, adding 10 more companies including Xiaomi to the list. The Trump administration has reportedly added nine Chinese firms to the blacklist of companies with alleged links with the Chinese military. Xiaomi Corp, plunged 14% after getting blacklisted.
The report will come as bad news for the company as its name on this blacklist would mean that it would face difficulties doing business with companies in the United States under Section 1237 of the National Defense Authorization Act for the Fiscal Year 1999 (Public Law 105-261). Interestingly, the list by the US Department of Defense classifies the list as “Communist Chinese military companies.”
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The U.S. has targeted a lot of Chinese companies for the stated purpose of protecting national security, but going after Xiaomi was unexpected. The Beijing based company has been viewed as China’s answer to Apple Inc., also makes electric scooters, household appliances and smart tv’s.
Other firms targeted include Luokong Technology Corp., Gowin Semiconductor Corp., Global Tone Communication Technology Co. and Advanced Micro Fabrication Equipment Inc.
It is also important to note that this list is different from the Commerce Department’s Entity List that the United States’ government had put Huawei in. Unlike that list, this one only puts Xiaomi under the scanner and American investors officially asked to “refrain” from dealing with them. However, there is no ban on dealings with them something that Huawei had to face last year.
Xiaomi was co-founded by billionaire entrepreneur Lei Jun about 10 years ago, with U.S. chipmaker Qualcomm Inc. as one of the earliest investors. It’s since expanded well beyond China’s borders, particularly into Europe and India, becoming one of the country’s more recognizable brands. It surpassed Apple in global smartphone sales in the third quarter, according to the International Data Corporation, and joined Hong Kong’s benchmark Hang Seng Index in September.
Xiaomi said in a statement it is not owned or controlled by the Chinese military, adding that it would take appropriate actions to protect its interests.
The Trump administration’s move to add Xiaomi to this list also means that Xiaomi could face further pressure in the future. However, much of it will depend on the incoming Biden administration which may or may not decide to take a more lenient approach towards Chinese companies like Xiaomi.
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