U.S. investors are forced to sell its holdings in Xiaomi by next November
During Mr. Trump’s four years as president, he placed Chinese phone and networking firm ZTE on the Entity List for failing to follow punishments placed on it by the U.S. Commerce Department. As a result, the company was not allowed to buy parts from its U.S. supply chain leaving ZTE in trouble. With the latter close to shutting its doors, ZTE was saved by someone you would have never expected. President Trump, surprisingly, sent out a tweet stating that too many ZTE workers in China had lost their jobs. The president wrote that he had directed the Commerce Department to help ZTE get back to business. “Too many jobs in China lost,” tweeted Trump. Eventually, the U.S. and ZTE reached a settlement and the company once again was manufacturing smartphones.
Xiaomi has been on the rise thanks to the success of its value for money approach in India. The second largest smartphone market in the world, India is also a developing country which means that consumers have to shop for value when it comes to smartphone purchases. During the third quarter of last year, Xiaomi finished third globally in smartphone shipments after Samsung and Huawei. Interestingly, Xiaomi has never ever sold any of its phones in the U.S. despite its comparisons to Apple. For years, rumors had spread calling for the firm to finally invade America, but at this stage this does not seem like it is high on Xiaomi’s list of things to do.
A U.S. law passed in 1999 forces the Defense Department to create a list of companies owned or controlled by the Chinese military. The Pentagon has put 35 names on this list including China’s top chipmaker SMIC and its oil giant CNOOC.
The big question is whether incoming President Joe Biden will reverse all of the new rules and Entity List placements initiated by his predecessor against Chinese companies.
