Xiaomi, 8 other Chinese firms face US ban just days before Trump exit

NEW DELHI:  Just days before exiting the White House, the Trump Administration on Friday added nine Chinese firms, including smartphone giant Xiaomi, to its list of blacklisted companies. The US alleged that the companies had links to the Chinese military, terming them “Communist Chinese Military Compan(ies)”.

Xiaomi and the other banned companies will now have to comply with the executive order passed by US President Donald Trump in November 2020, which prohibits US investors from making investments in the blacklisted Companies. US investors will also have to divest their stakes in the banned Chinese companies by November this year. 

Beijing-based Xiaomi in an statement reiterated that it had no association with the Chinese military or the Chinese Communist party. “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 reiterates that it provides products and services for civilian and commercial use,” Xiaomi said, adding that it was not owned, controlled by, or affiliated to the Chinese military.

A senior expert speaking on the condition of anonymity said it was too early to gauge the impact of this decision. “It certainly is a setback for Xiaomi but fortunately it is not placed on the Commerce Department’s (USA) Entity List like Huawei. At present, it appears the ban is likely to have none to miniscule effect on its supply chain. However, there are concerns that it may impact Xiaomi’s Chip supply from the US as US chipmaker Qualcomm Inc is an investor,” he said, adding that the order’s implementation will also depend on the US-China relationship under the upcoming Joe Biden regime. 

The order will also not have any impact on Xiaomi’s India  operations where it is the market leader in the smartphone segment. According to the most recent data from the International Data Corporation,  Xiaomi secured the top spot in the Indian smartphone market in October 2020 with a 24.8 per cent market share. The company shipped 5.5 million units to India during the month.