Chinese smartphone maker Xiaomi has filed a complaint against the US Department of Defence and Treasury Department in a bid to be removed from a list of companies that allegedly has ties to the Chinese military.
In a voluntary statement on the Hong Kong stock exchange yesterday, Xiaomi said the lawsuit aims to protect its interest against the US government.
The company filed proceedings in the US District Court for the District of Columbia against the Department of Defence and the Department of the Treasury of the US on 29 January.
“In relation to the news release issued by the Department of Defence of the United States on 14 January 2021 adding the company to the list of qualifying entities prepared in response to section 1237 of the National Defence Authorisation Act (NDAA) for fiscal year 1999, the company announced on 15 January 2021 that it will take appropriate courses of action to protect the interests of the company and its shareholders,” says Xiaomi.
On 14 January, the Department of Defence released the names of additional “Communist Chinese military companies” operating directly or indirectly in the US in accordance with the statutory requirement of Section 1237 of the NDAA.
“The department is determined to highlight and counter the People’s Republic of China’s (PRC’s) military-civil fusion development strategy, which supports the modernisation goals of the People’s Liberation Army 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 said.
The department released its initial list of companies to Congress in June 2020 and will continue to update the list with additional entities as appropriate.
Click here for the latest list.
The US government has been targeting Chinese tech giants such as Huawei, Xiaomi, TikTok and ZTE, accusing them of posing national security risks because of their alleged close ties with the Chinese government.
However, the Chinese companies have frequently denied these allegations, arguing they are victims of a trade war between the US and China – the two biggest economies in the world.
In its statement, Xiaomi says it believes the decision to include the company as a “Communist Chinese Military Company” under the NDAA by the Department of Defence and the Department of the Treasury of the US was factually incorrect and has deprived the company of legal due process.
“With a view to protecting the interests of the global users, partners, employees and shareholders of the company, the company has pleaded to the courts to declare the decision illegal and that it be reversed.”
According to market analyst firm IDC, during the third quarter of 2020, Xiaomi climbed to third position with 13.1% market share and witnessed a considerable growth of 42% year-over-year.
Xiaomi trails Samsung and Huawei in the global smartphone market, says IDC.
It points out that Xiaomi’s growth was mainly driven by the strong performance in India and established presence in China in 2020Q3.
“Xiaomi's low-end portfolio, particularly the Redmi 9 Series, did well in both India and China. In India, Xiaomi's production capacity recovered to nearly 85% of its pre-pandemic level, which helped it cater to strong demand,” says IDC.
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