Xiaomi pushes to clear name after court suspends US investment ban on the firm
- A US court ruled against a Department of Defence ban, which prohibits US investors from owning shares in Xiaomi because of alleged Chinese military ties
- Xiaomi sued the US departments of defence and treasury in January, seeking to undo the ban
The US District Court for the District of Columbia on Friday ruled against the DOD’s enforcement of the ban, which prohibits US investors from owning shares in Xiaomi because of its alleged ties with the Chinese military.
“Xiaomi believes that the decision of designating it as a ‘Chinese Communist Military Company’ is arbitrary and capricious, and the judge agrees with it,” a spokeswoman for Xiaomi said in a statement on Saturday. “Xiaomi plans to continue to request that the court declare the designation unlawful, and permanently remove the designation.”
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In his ruling, US District Judge Rudolph Contreras in Washington said that the “defendants have not made the case that the national security interests at stake here are compelling”.
“Xiaomi reiterates that it is a widely held, publicly traded and independently managed corporation that offers consumer electronics products solely for civilian and commercial use,” the company’s spokeswoman said in the statement.
The previous Trump administration increased restrictions on Chinese companies, including Xiaomi, that could further curb access to the US market by Chinese tech hardware and software developers.
“The halt to the ban is good news to Xiaomi,” said Will Wong, research manager at IDC. Although the US restriction was not expected to affect Xiaomi’s supply chain, he indicated that the company’s unimpeded access to investments outside China helps make it more competitive in the international smartphone market.
IDC’s Wong said the court’s decision in favour of Xiaomi increased the potential for other affected Chinese companies to get the US investment ban removed, especially to those not involved in 5G network equipment.
