The last few months are bringing bad news for Chinese Businesses. No, we are not just talking about India banning Chinese apps. In a recent jolt to China’s business fraternity, the US has banned Xiaomi. Trump administration called Xiaomi a company of Communist Chinese Military. With Xiaomi, other 10 lesser-known Chinese companies are also banned.
Current US Blacklisting and Related Issue
The whole world is surprised by the Xiaomi ban in the US. Xiaomi shares went down 10% after the news spreads. Xiaomi is China’s number 2 smartphone maker.
This blacklisting is done by the Trump administration that will leave office soon. Investors are hopeful with the Biden administration. It will overtake the US administration in a few days. Biden may revoke the ban.
Xiaomi is joined by lower-profile firms, including Luokong Technology Corp., Gowin Semiconductor Corp., and Global Tone Communication Technology Co.
Lerner Group spokesperson said that we are sure that this decision will be overturned before November by the Biden team. Lerner Group is one of the main investors in Xiaomi. Financial Experts believe that the decision will not have an impact on Xiaomi in the long term. It is a temporary sentimental issue.
Defense and Commerce departments of the USA who banned these companies told the press that these companies have ties with the Chinese Military. This blacklisting prohibits American investors from buying their securities. As per the order, investors have to release any holdings of these companies by November.
Qualcomm chip maker from the US is the main investor and chip supplier of Xiaomi. Other than the local market of China, Xiaomi is very popular in Europe and India. Smart TVs and Chinese Mobile Phones are very popular in India. Recently, Xiaomi achieved the largest share in the Indian mobile industry surpassing Samsung.
Chinese Businesses Current Issue and Xiaomi’s Global Status
Chinese companies are facing stiff heat in and out of China. First, Chinese companies are not getting favorable conditions in China. We all aware of the Jack Ma episode. Alibaba owner Jack Ma, also One of the biggest business tycoon of Asia, is missing from last few months. The Chinese government has formed strong rules and regulations internally that is hampering Chinese business.
Second, different countries are considering that Chinese businesses are very loyal to the communist regime of China. Chinese business operations are cut short in few countries like India, the US on the ground of national security and privacy.
At the global level, Xiaomi recently surpassed Apple to achieve the number 3 position in mobile manufacturing. Xiaomi also crosses $100 billion in valuations in December 2020. Chinese billionaire Lei Jun cofounded Xiaomi 10 years ago. From the beginning, Xiaomi is known as the Apple of China.
Xiaomi is known for the power of its features packed slick designs smartphones at affordable price. Other than mobiles, it also makes different electronic gadgets like electric scooters, smartwatches, smart TVs, air purifiers, and other electronic items.