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Xiaomi enters the US blacklist: what it entails and risks for other companies

di Michael Frosty

After Huawei, Xiaomi also entered the US blacklist. The Trump administration, 5 days before Biden's inauguration, blacklisted the Chinese giant of companies that according to the US have ties to the Chinese military. The measure incorporates a 1999 law according to which the Department of Defense is required to draw up a list of companies owned and controlled by the Chinese military.

The list was drawn up in 2020 with 20 companies included: among these was Huawei and now Xiaomi has also been added along with 9 other Chinese companies. At least for now, however, users of the brand's devices can breathe a sigh of relief: the restrictions are not as serious as those imposed on Huawei and do not affect users but only partners and investors.

What does the "ban" of Xiaomi entail

Le consequences the inclusion of the Chinese company in the US black list can be summarized in two points:

  • Companies and other American entities can no longer invest in Xiaomi.
  • US investors will be forced to dispose of their holdings by 11 November 2021.

Unlike what happened with Huawei, there is no revocation of the Android license and Google services will continue to be pre-installed on the manufacturer's smartphones, if that's what you were wondering. Furthermore US companies will be able to continue to supply the components necessary for the production of the devices without problems. But of course it is not possible to exclude other measures that exacerbate the one already taken by Donald Trump.

The reason why the measure is different from the one taken for Huawei derives from the fact that Xiaomi has been included in the blacklist of Department of Defense which prevents investments by US subjects, and not in that of the Department of Commerce which instead prevents having commercial relations with American companies without US authorization. Huawei is instead present in both lists.

The Department of Defense blacklist includes companies of various types, including companies in the chemical, aviation, aerospace, infrastructure and telecommunications sectors. As to why Xiaomi was also included, the decision could derive from the huge turnover recently achieved by the company in the IoT and internet services sectors. The fear would be that through these sectors and smartphones the Chinese military could operate espionage activities.

Right after the Trump administration's decision, Xiaomi's stock on the Hong Kong stock exchange collapsed.

The official answer

Xiaomi did not take long to provide an answer to the "soft ban" and he denied any connection with the Chinese military. The company has declared that it has complied with the law and has always operated in compliance with the provisions and regulations in the countries in which it operates. The company also claims that it is not a Chinese Communist military company and that it will take adequate measures to protect its interests and investors. We bring you the official press release, translated into Italian.

Xiaomi has always respected the law and acted in accordance with the provisions and regulations of the jurisdictions of the countries in which it carries out its business. The Company reiterates that it provides products and services for civil and commercial use. It also confirms that it is not owned, controlled or affiliated with the Chinese military and that it is not a "Chinese Communist Military Society" as defined by the NDAA. Xiaomi will take appropriate action to protect the interests of the Company and its shareholders and is also looking into the potential consequences of this act to get a more complete picture of its impact on the Group. There will be further announcements, if and when Xiaomi deems it appropriate.

What about other Chinese companies?

There are risks too OPPO and other major Chinese smartphone manufacturers in the future? At the moment it is impossible to say. For now, Xiaomi and Huawei are the only companies involved. There are those who think that with the arrival of Joe Biden the situation of the US towards China may change, but it is by no means something obvious. For now, however, no other Chinese mobile device manufacturers are involved and none of them have the "requirements" derived from the Trump administration's decisions to enter a blacklist.

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