US blacklists Xiaomi: Tech corp refutes Chinese military affiliation claim

Topics Xiaomi India | US sanctions | Xiaomi

After the US government blacklisted Chinese conglomerate Xiaomi as a "Communist Chinese military company", the company on Friday said it is reviewing the potential consequences to develop a fuller understanding of its impact on the Group.

Xiaomi's stock nosedived more than 10 per cent in early Friday trading after the news broke.

In a fresh list, the US Department of Defense targeted Xiaomi, which means that the company is also vulnerable to the outgoing President Donald Trump's executive order that can ban the US firms from investing in such companies. The move may also force US companies and other investors to divest in Xiaomi this year.

A Xiaomi spokesperson said in a statement shared with IANS that the company has been in compliance with law and operating in compliance with the relevant laws and regulations of jurisdictions where it conducts its businesses.

"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 will take appropriate course of actions to protect the interests of the Company and its shareholders," the spokesperson said.

According to Counterpoint Research, Xiaomi was the third largest smartphone maker globally in the third quarter of 2020, and India is its biggest market.

The Department of Defense said in a statement late Thursday: "The Department is determined to highlight and counter the People's Republic of China's (PRC) Military-Civil Fusion development strategy, which supports the modernisation goals of the People's Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programmes that appear to be civilian entities."

The Department released its initial list of companies to Congress in June 2020 and has now included Xiaomi.

Most of the other companies on the list are more industrially oriented, specialising in aviation, aerospace, shipbuilding, chemicals, telecommunications, construction, and other forms of infrastructure.

In July 2020, the US Federal Communications Commission (FCC) designated Chinese telecom companies, Huawei and ZTE, as national security risks to America's communications networks.

"Both companies have close ties to the Chinese Communist Party and China's military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country's intelligence services.

"The Bureau also took into account the findings and actions of Congress, the Executive Branch, the intelligence community, our allies, and communications service providers in other countries," the FCC said.

 



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel