Earlier this year, towards the end of former US President Donald Trump’s term, the US Department of Defense placed Xiaomi on a list of companies deemed to be associated with the Chinese military.
As a “Chinese Communist military company” or CCMC, US investors were given an ultimatum to divest their equity from November 11th this year. Following that order, Xiaomi hit back at the end of January, terming the classification “unlawful and unconstitutional.”
To the relief of Xiaomi, a US judge has concurred with it and has additionally issued a preliminary injunction to block the move. According to the judge, the new order will prevent “irreparable harm” to the Chinese technology company.
Furthermore, the designation was termed as “arbitrary and capricious.” The court order was effective immediately.
The ban was to go into effect starting today, March 15th, under conditions that no US investors could invest in the company. And those with existing equity had until November to forcefully sell their Xiaomi shares.
Xiaomi said the title would cause “immediate and irreparable harm to” them in a legal complaint. It claimed a substantial number of its investors are from the US and three US investment groups are among the top-ten holders of its ordinary shares.
Responding to the court injunction, the company expressed relief and was pleased with the decision. Additionally, Xiaomi said they’re determined to fight back to have the CCMC title removed.
Unlike Huawei, which was classified as a national security threat as it could reportedly be used to spy on US citizens, Xiaomi’s CCMC designation is less strict.
The company will continue to import and use US technology in its wide array of products, from smartphones to IoT. But what the company is majorly concerned about is the harm that this particular decree could mean to their overall business, especially when it comes to consumers and its partners.
It said this decree “will significantly impair the company’s standing with business partners and consumers.”