US Defence Department Imposes More Restrictions on Xiaomi

Credit: US Department of Defence

Outgoing US President Donald Trump included Xiaomi and other Chinese-based companies in the list of companies allegedly connected to the Chinese Military on 14 January 2021.

The US Department of Defence (DOD) classified Xiaomi, the world’s third-largest smartphone manufacturer, as a “Communist Chinese Military Company” along with eight other companies.

According to the US DOD’s press release on 14 January 2021, Xiaomi and the eight other companies are part of the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy – a strategy that guarantees the People’s Liberation Army (PLA) access to advanced technologies from PRC companies, universities, and even research programs that appear to be civilian companies.

The US DOD’s listing was in accordance with the National Defence Authorisation Act for Fiscal Year 1999 section 1237 wherein the Secretary of Defence is required to determine which persons or companies are a part of Communist Chinese military companies.

American investors have until 11 November 2021 to divest their investments in Xiaomi and the eight other companies.

Lei Jun, Xiaomi founder and CEO since founding the company in 2010. Credit: gizchina.com

Xiaomi has commented that the company has always complied with and operated within the relevant laws and regulations of where they conduct their business and that they only provide products for civilian and commercial use.

“The company confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a ‘Communist Chinese military company’ defined under the NDAA,” the company stated.

Xiaomi stock has plummeted by 14 per cent on 15 January 2021, a day after they received the ban, according to Markets Insider.

It should be noted that Xiaomi is not similar to Huawei’s ban. Xiaomi would lose the ability to do business with US-based companies like software and hardware companies if Xiaomi was banned like Huawei.

Huawei’s ban is due to an executive order signed by President Trump that bans American companies doing business with foreign firms classified as a national security risk and the use of their telecommunications equipment.

However, the 11 November deadline falls under the term of the incoming president, Joe Biden. This places Xiaomi’s ultimate fate on shaky ground much like President’s Trump’s banning of WeChat Pay, Alipay and other applications.

You can view the list of companies that are listed along with Xiaomi here.

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Written by John Paul M. Joaquin