The U.S. banned Chinese smartphone major Xiaomi Corp (OTC: XIACF) (OTC: XIACY) over alleged military ties triggered by an award given to its founder his service to the state, the Wall Street Journal reports.
What Happened: Xiaomi CEO Lei Jun received the award of “Outstanding Builder of Socialism with Chinese Characteristics” in 2019 from the Ministry of Industry and Information Technology (MIIT). Xiaomi promoted the award on the CEO’s biography page on its website and its annual report.
The designation barred Americans from investing in the company.
The U.S. justification for adding Xiaomi to its list was laid out in a court filing in response to a U.S. lawsuit filed by Xiaomi seeking to overturn the military designation. The filing, which appeared last week for the first time, disclosed the reasoning behind the listing.
Why It Matters: Xiaomi was added to the Defense Department’s list during the fading days of the Trump administration on Jan. 14, together with eight other Chinese companies, including aerospace and chip firms. The department added 44 companies to its list, including telecom giant Huawei Technologies Corp. and computing chip maker Semiconductor Manufacturing International Corp (OTC: SMICY), both of which have also denied the military links.
Xiaomi stock which more than tripled in Hong Kong last year, has shed 25% since its Jan. 14 close.
Xiaomi’s designation surprised various analysts considering its key focus on consumer electronics. Additionally,…