US listed Xiaomi China because of an award given to its founder

The award – along with Xiaomi’s ambitious investment plans in advanced technologies such as 5G and artificial intelligence – was enough for the Department of Defense in January to add Xiaomi to a list of companies supporting China’s military, according to the seed. The designation prohibits Americans from investing in the company, the world’s third-largest smartphone vendor.

The U.S. philosophy of adding Xiaomi to its list was leaked in a court file by the Department of Defense in response to a lawsuit in U.S. District Court in Washington, DC, by the Chinese company that trying to reverse the army’s designation. The filing, which appeared last week but has not been reported before, for the first time sheds light on the department’s rationale in adding a company to the list.

A Xiaomi spokesman did not immediately comment on the filtering. The company has denied any links with Chinese weapons and says it sells products and services only for civilian and commercial use.

Xiaomi was added to the Department of Defense list in the narrow days of the Trump administration on Jan. 14, along with eight other Chinese companies, including aerospace and chip companies. In total the division has added 44 companies to its list, including telecom giant Huawei Technologies Corp. and computer chip maker Semiconductor Manufacturing International Corp.

, both of whom have also refused military ties.

Shares of Xiaomi, which more than tripled in Hong Kong last year, have fallen 25% since closing on January 14th.

Xiaomi ‘s specification surprised many analysts as it focused heavily on consumer electronics. In addition to smartphones, the company makes internet-connected devices such as air purifiers, scooters, bodyweight blades and fitness bands. Unlike Huawei, the main Chinese competitor in handsets, it does not sell communications infrastructure or other equipment that is generally seen as sensitive.

Xiaomi’s fortune in the cutthroat smartphone market has increased in the past year as it builds market share from Huawei. Globally, its handsets rose nearly a third in the fourth quarter, leaving it as the No. 3 retailer behind Apple Inc.

and Samsung Electronics Co.

, according to the International Data Corp.

In its lawsuit, Xiaomi said the department did not provide any explanation for its decision, nor did it give the company an opportunity to respond.

Mr Lei’s award was taken from MIIT China, the government agency that oversees China’s technical and industrial policy and said the Department of Defense will help regulate China’s policy on civilian fusion, in which Beijing will jump on a private initiative to help develop weapons technology.

The award is presented once every five years to leading private sector entrepreneurs. The final prize, in 2019, was awarded to 100 people. Other notable leaders who made the cut also include Ding Lei of internet and videogame company NetEase Inc., Inc.

Wang Gaofei from the social media company Weibo Corp.

, Wang Chuanfu of automotive manufacturer BYD Co.

A second reason was that the Department of Defense announced Xiaomi’s plans to invest 50 billion Yuan, equivalent to $ 7.7 billion, over five years in 5G technology and artificial intelligence. Mr Lei outlined the investment plans in the New Year’s message to staff in January 2020. In his file, the Department of Defense said: “Both of these technologies are of great interest to the PRC, and are a focus of the pre- Civil Military tactics. , ”Calling China by its full name, the People’s Republic of China.

On Thursday, Luokung Technology Corp.

, a Chinese big data company added to the Department of Defense listing with Xiaomi in January, also a U.S. lawsuit seeking to remove it.

– Jing Yang contributed to this article.

Write to Dan Strumpf at [email protected]