US Declares Xiaomi a “Chinese Communist Military Company”, Bans Investments

The latest shot in the US government’s war on major Chinese smartphone vendors is directed at Xiaomi, which has today landed on the US government’s list of “Communist Chinese Military Enterprises” via a new executive order. The statement prohibits US citizens from owning Xiaomi shares.

The United States and China have been trading for a year and a half now on Huawei, which has been added to the “entity list” by the US Department of Commerce. When on the entity list, US companies cannot collaborate with Huawei or export products to Huawei. It becomes illegal for Huawei to import products “of American origin”. American origin doesn’t just mean products made in the United States by American companies; There is also a “viral” element in the act, where any product manufactured internationally with certain components of American origin also counts as a product of American origin.

Although Huawei has secured a blanket ban, it doesn’t look like Xiaomi is in the same boat just yet. Huawei landed on the Ministry of Commerce’s entity list, while Xiaomi is now on the Defense Ministry’s list of “Communist Chinese Military Enterprises” (Huawei is also on this list). The DOD designation appears to only ban U.S. investments in Xiaomi, and all U.S. stakeholders must divest their stakes by November 11, 2021 (Xiaomi is a public company and had an IPO in 2018.) The restrictions stifling supply chain stresses that apply to Huawei do not (yet?) apply to Xiaomi.

According to the DOD, the list is intended to “highlight and counter the development strategy of the merger between the armed forces and civilians of the People’s Republic of China (PRC),” which, according to the government, is a plan to to channel advanced technology to the Chinese military through “PRC companies, universities, and research programs that appear to be civilian entities.”

Xiaomi issued answer on Twitter, saying that it “is not owned, controlled or affiliated with the Chinese military, and is not a” Chinese Communist Military Company “as defined by the NDAA” (the NDAA is the law on the authorization of national defense which gives the DOD the power to make this list).

The IDC has Xiaomi as the world’s number 3 smartphone maker, behind Samsung and Huawei, and a place ahead of Apple. Xiaomi regularly pumps high-end and low-cost Android phones to compete in the Chinese and Indian markets. It started life as an Apple clone maker, but today Xiaomi is one of the fastest in the business and consistently outperforms the biggest companies by shipping new technology and components to the market. It delivered the world’s first Qualcomm Snapdragon 888 phone, the Xiaomi Mi 11, and is leading the charge for under-display cameras. Being Chinese is a business advantage for Xiaomi. A company like Apple needs to make American designers communicate with Chinese manufacturers with a 12-hour time difference and language barrier, while Chinese designers and Chinese manufacturers of Xiaomi can communicate easier and faster, which can allows the company to develop products faster.

Since Xiaomi may be the third-largest smartphone maker in the world, any sort of ban on the company in the United States won’t do much. Xiaomi years ago gave hints about entering the US smartphone market, but it never got the belly and only launched the US version of Mi.com as a seller. small accessories. In the US, you can buy a Xiaomi Android TV box, headphones, security cameras, and batteries, as well as stranger things like air purifiers, light bulbs, and toy robots.