US blacklists Xiaomi: Tech corp refutes Chinese military affiliation claim

After the US blacklisted Xiaomi citing affiliation with the "Communist Chinese military company", the Chinese tech company on Friday said it is reviewing the potential consequences

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.