Chinese Firms To File Lawsuits Vs. US Government Following Xiaomi’s Win

by Jay Ahon / Mar 17, 2021 06:09 AM EDT

The logo of Xiaomi in front of its headquarters building in Shanghai, China.

Chinese companies are considering suing the US government for the targeted sweeping investment ban that was imposed by former President Donald Trump after a Federal judge suspended a similar blacklisting on Friday (March 12) for Xiaomi, a Beijing-based Smartphone Company.

Some of the banned Chinese companies were said to be in talks with various law firms like Steptoe & Johnson and Hogan Lovells, as they were encouraged after US District Judge Rudolph Contreras ordered the exclusion of Xiaomi to the list of companies subject to investment ban as they are allegedly military companies of Communist Chinese.

Around USD 10 billion were knocked off Xiaomi's market share and went down to 9.5 percent in January as investors were forced to divest their shares in the company after Trump's administration blacklisted the said company.

One of the key criteria of the ban is that the company's development of 5G technology and artificial intelligence (AI) that the Defense Department alleged "essential to modern military operations." Another reason for the ban is the award that was given by the Chinese government to Xiaomi's Lei Jun, founder, and Chief Executive Officer. The company allegedly helps China eliminate the barriers between the commercial and military sections.

But the judge posed that 5G and artificial intelligence technologies are becoming a consumer electronics standard and that there are around 500 entrepreneurs and more who had received the said award from the Chinese government, the same award as Lei and including leaders from infant formula company, since the year 2004.

US Department of Justice's spokeswoman declined to give a statement. The Justice Department is assigned to defend the case.

The company Xiaomi and 43 others were included on the blacklist in the last months of former US President Trump's administration as mandated by law in 1999, which requires the Defence Department to issue a compilation of "owned or controlled" companies by the Chinese military.