Chinese smartphone maker Xiaomi is suing the US government over its inclusion on an official list of companies with ties to the Chinese military.
In January, under the Trump administration, the Defense Department added Xiaomi and a further eight companies to a list of companies purported to have ties with the Chinese military. When a company is placed on the list, US investors are required to divest their holdings in the firm by a set deadline.
Xiaomi Corp filed its complaint against the US Defence and Treasury Departments in a Washington district court on Friday. The complaint was addressed to Biden appointees Lloyd Austin and Janet Yellen.
The company is seeking to be removed from the list, to which it characterises its inclusion as “unlawful and unconstitutional” and claims it is not controlled by the People’s Liberation Army. It states in its complaint that 75% of the company’s voting rights are held by co-founders Lin Bin and Lei Jun under a weighted structure.
Should the investment restrictions come into effect on 15 March as designated, they would cause “immediate and irreparable harm to Xiaomi”, the lawsuit adds, as a “substantial number” of its shareholders are US residents.
The firm also claims that its designation on the list “deprives Xiaomi of its liberty and property rights without due process of law.”
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Xiaomi is the world’s third-largest smartphone manufacturer, having benefited greatly from sanctions placed on rival Huawei by the US and other western nations. It shipped 43.3 million units in Q4 2020, up more than a third, and controls 11.2% of the global smartphone market.
