Xiaomi Corporation files legal complaint against the US ban

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Chinese multinational electronics company Xiaomi Corporation has filed a complaint against the US Defence and Treasury Departments in a Washington district court on Friday, seeking to remove its name from an official list of companies with ties to China’s military.

Under the Trump administration in mid-January, the Defence Department added Xiaomi and eight other firms to a list of companies allegedly having ties with the Chinese military. The companies listed will see American investors remove their holdings in the firms by a set deadline.

According to Reuters’ report, in the complaint, addressed to Biden-appointed Defence Secretary Lloyd Austin and Treasury Secretary Janet Yellen, Xiaomi said the company was not controlled by the People’s Liberation Army was called the judgement “unlawful and unconstitutional”. It added that the investment restrictions, which go into effect on March 15, 2020, would cause “immediate and irreparable harm to Xiaomi.”

Xiaomi said that under a weighted structure, 75% of the company’s voting rights were held by co-founder, Lei Bin and co-founder and CEO of the company, Lei Jun, with no ownership or control from an individual or entity affiliated with the military.

The Beijing-based company added that a “substantial number” of its shareholders were US based, and pointed out that three of its top-ten holders of ordinary shares were US institutional investment groups.

“The company’s strategic relationships with US financial institutions critical for Xiaomi to continue to access the capital it needs to continue to grow in a highly competitive market will be significantly damaged. Moreover, the public association of Xiaomi with the Chinese military will significantly impair the company’s standing with business partners and consumers, causing reputational harms that cannot be readily quantified or easily repaired,”  the complaint stated.

There have been no comments made by the US Department of Defence and the Treasury Department yet related to the matter.


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