Xiaomi Corp scored a rare victory on Wednesday as it became one of the first Chinese tech giants to scrape its name off a US government trade blacklist and the smartphone maker’s success could give hope to others caught in the crosshairs of the US-China tech war, analysts say.
The Beijing-based company reached an agreement with the US Department of Defense to set aside it’s blacklisting, which had prohibited US investors from owning shares in the company and which would have led to delisting from US exchanges and deletion from global benchmark indices.
The agreement came after Xiaomi filed a lawsuit in January against the ban, which was implemented after former US President Donald Trump designated the firm as having military links with the ruling Chinese Communist Party. A US court sided with Xiaomi in March, placing a temporary halt on the ban.
The 11-year-old firm, founded by billionaire Lei Jun, took several key steps to create an effective solution for its US problems, according to Cameron Johnson, a partner at Tidal Wave Solutions.
“Xiaomi used the US legal system as its ally, including filing a lawsuit and getting it before a judge quickly,” said Johnson. As the company was suing the government, it simultaneously started negotiations with the US government in an attempt to mitigate their concerns, he added.
Xiaomi, currently the third-largest smartphone vendor in the world according to research firm IDC, claimed in its lawsuit that affiliating it with the Chinese military was “unconstitutional” as it would deprive the company of its rights “without due process of law”.
Xiaomi, which also sells a wide collection of consumer goods ranging from robot vacuum cleaners to underwear, was also an unexpected target for the Trump administration, which may have helped its case, according to analysts. The company was placed under restrictions in a batch with eight other Chinese companies.
