Xiaomi denies ties to Chinese military, calls US decision “unconstitutional”

One of the last acts of the Trump administration in mid-January was to declare Chinese smartphone maker Xiaomi a “Chinese Communist Military Enterprise”. The Department of Defense decision (which is different from the Commerce Department’s export ban against Huawei) bans US citizens. to hold Xiaomi shares or other investments from March 15, 2021. Over the weekend, Xiaomi released a response to the decision, which came in the form of legal complaints to the Defense departments and from the United States Treasury.

Xiaomi’s complaint is now directed to the new Defense and Treasury Secretaries appointed by Biden, saying the ruling was “factually incorrect and deprived the company of due process.” Xiaomi calls the decision “illegal and unconstitutional”, denies being controlled by the Chinese military and would like to see the decision overturned.

As Reuters reports, Xiaomi claims that a “substantial number” of its investors are US citizens – including three of the top ten shareholders of common stock – and that the decision would cause “immediate and irreparable harm to Xiaomi.” The company continues, “Moreover, Xiaomi’s public association with the Chinese military will significantly affect the company’s reputation with business partners and consumers, causing reputational damage that cannot be easily quantified or repaired. “

Xiaomi had an IPO in 2018 and today is one of the most valuable smartphone companies in the world, with a market cap of $ 96 billion. Until that decision, Xiaomi had been a big winner in the government’s war on Huawei, reclaiming a market share abandoned by Huawei after the stifling export ban. Worldwide, the IDC places Xiaomi in third place in smartphone market share, behind Samsung and Huawei and ahead of Apple.