Xiaomi was "blocked" by Trump !
On January 14, local time, the Trump administration included 9 Chinese companies on the blacklist "related to the Chinese military".
On January 14, local time, the Trump administration included 9 Chinese companies on the blacklist "related to the Chinese military". The newly added 9 companies include Xiaomi, COMAC, China Micro Semiconductor Equipment, and Luokung Technology. , Beijing Zhongguancun Development and Investment Center, Gowin Semiconductor, Grand China Airlines, GTCOM, and AVIC Group. At this time, there are still 6 days before Trump leaves office.
According to an executive order signed by Trump in November 2020, US investors are prohibited from holding relevant securities of companies on the blacklist, and the effective time is 365 days after the company is blacklisted. In June, August and December of last year, the US Department of Defense successively included 35 companies including Huawei, Hikvision, and SMIC on the list.
In response, Xiaomi issued a clarification announcement on the Hong Kong Stock Exchange, stating that the company’s services and products are used for civilian or commercial purposes, confirming that it is not owned, controlled or related by the Chinese military, nor is it a Chinese military company as defined under the US NDAA law.
Limited impact on Xiaomi
In the past year, the Trump administration has used two main lists to sanction Chinese companies-the "Military-Related Companies" list formulated by the Department of Defense and the "Entity List" formulated by the Department of Commerce. The former restricts U.S. investors on the list. Corporate investment, which restricts American companies from doing business with listed companies.
Xiaomi was included in the list of companies related to the Chinese military. At present, it appears that the impact of US investors’ investment behavior in Xiaomi is not involved in chip and other supply chain sanctions. At the same time, the list does not restrict Xiaomi's business development in the United States, and because Xiaomi has not entered the U.S. market, its impact on sales is also very limited.
In terms of the only influential investment, according to the Hong Kong Stock Exchange’s disclosure document, Xiaomi’s current shareholder list is as follows:
Among them, ARK Trust is a Hong Kong-based trust company, Morningside Ventures is the major shareholder Wuyuan Capital (formerly Morningside Capital), and Smart Mobile Holdings, Sunrise Vision Holdings Limited and Parkway Global Holdings Limited are the stock agents controlled by several layers of Lei Jun , Apex Star LLC is Lin Bin’s stock agent, and Lei Jun and Lin Bin are Xiaomi executives.
Generally speaking, among Xiaomi's major shareholders, there is no US capital. The only thing related to US investors is the dual currency fund Wuyuan Capital. Regarding whether the U.S. investors of Wuyuan Capital will be affected, a dual currency fund financial officer told Geek Park that it depends on how serious the executive order is and whether it will penetrate to the last layer of the capital structure.
According to the executive order, for companies on the blacklist, the buffer period for investors in the United States to divest capital is 365 days. A lawyer familiar with U.S. law told Geek Park that according to U.S. law, the Biden administration has the right to overturn the executive order issued by the Trump administration in terms of procedures and rights.
The lawyer also said that because the US society still has important issues including epidemic control and economic recovery waiting to be dealt with, it is not yet possible for the Biden government to deal with the list of various companies in China and when it will be able to deal with it. Make anticipation.
A secondary market analyst told Geek Park that the focus of future events is whether the United States will impose sanctions on Xiaomi's mobile phone chips. But at present, the biggest impact of the executive order is Wall Street. "They can't make money anymore." The analyst also said that as long as the supply chain of Xiaomi's own products is healthy, the problem is not big.
Regarding the most fundamental question, why Xiaomi was listed as "related to the Chinese military" by the Trump administration is still unclear. One possible explanation is that Chinese companies have been affected in this internal struggle in American politics.
Xiaomi's overseas map
Although Xiaomi has not entered the US market, its overseas business ambitions are significant.
Lei Jun mentioned in his speech on the tenth anniversary of Xiaomi that Xiaomi's overseas business expansion started in 2014 and entered the Indian market, and it took three years to achieve the No. 1 market share in India.
In the past two years, Xiaomi’s main overseas strength has been concentrated in the European market. In his tenth anniversary speech, Lei Jun mentioned that he wanted to prove that Xiaomi can not only be the first in developing markets, but also in developed markets. This coincides with the high-end route that Xiaomi has adhered to in recent years.
According to Xiaomi's third quarter 2020 financial report, its overseas market revenue reached 39.8 billion yuan, accounting for about 55% of Xiaomi's total revenue in the third quarter. In Europe, India, the Middle East, Africa, and Latin America, Xiaomi’s market share has reached 18.7%, 26.1%, 17.4%, 10.7%, and 9% respectively.
In the third quarter earnings conference call, Xiaomi President Wang Xiang said that despite the current gratifying achievements of Xiaomi in overseas markets, there is still a lot of room for development. In the markets it has entered, Xiaomi will continue to make efforts to cover more market shares.
As of press time, Xiaomi has not made any additional responses to the blacklist incident other than the above clarification announcemen