The Trump administration has added Xiaomi to a blacklist reserved for companies with alleged ties to the Chinese military. The blacklist is not the same as the “Entity List” that Huawei and ZTE was placed on, but its still not good to be on it.
According to Reuters, Xiaomi is one of nine companies added by the US Department of Defense to the list (there are over 35 companies on the list). The blacklist was established in 1999 without much effect until Trump signed an executive order that banned US investors from investing on blacklisted companies.
So what does this mean for Xiaomi? The good news is that Xiaomi can continue with their business of providing bang-for-buck smartphones, and quality gadgets and accessories. In the short run, it won’t affect their supply chain and it won’t stop US companies from selling equipment and technology to Xiaomi.
However, it can affect the company’s valuation. As restrictions set in place stop the flow of US capital into the mobile phone manufacturer, stock price will go down.
At this time, the long term effects of the blacklist is not clear, but being on the list is definitely a bad sign.
In a statement, Xiaomi confirms that it is not owned, controlled or affiliated with the Chinese military, and denies being a “Communist Chinese Military Company” as defined by the US Department of Defense.