The Chinese manufacturer of smart devices is seeking to remove them from the official list of companies with ties to the Chinese military.
The US Defense Department, under the Trump administration in mid-January, added Xiaomi and eight other companies to the list, which requires American investors to withdraw their investments in those companies by a specific deadline.
The company directed the complaint to Biden-appointed Defense Secretary Lloyd Austin and Treasury Secretary Janet Yellen.
Xiaomi described the ruling as illegal and unconstitutional, because it deprives Xiaomi of its freedom and property rights without following due process.
She said: The company is not under the control of the People’s Liberation Army The investment restrictions, which will take effect on March 15, 2020, cause immediate damage that Xiaomi cannot repair.
The technology company indicated that it is not owned, controlled or affiliated with the Chinese government or the Chinese army, nor is it owned or controlled by any entity of the Chinese defense industrial base.
The company clarified that 75 percent of the voting rights in the company are owned by the co-founders (Lin Bin) and (Li Jun) Lei Jun, without ownership or control of an individual or entity affiliated with the military.
It added that a large number of its shareholders were American people, with American investors making up the third largest group of Xiaomi shareholders.
The complaint against the Pentagon and the US Treasury Department states that the company’s strategic relationships with US financial institutions – which is critical for Xiaomi in order to continue accessing the capital it needs to continue growth in the highly competitive market – could be severely damaged.
Moreover, Xiaomi’s general association with the Chinese military greatly affects the company’s standing with business partners and consumers, causing reputational damage that cannot be easily identified or repaired.
Unlike Huawei, the Chinese leader in the field of fifth generation networks, Xiaomi focuses on consumer products only, such as: smart phones and smart home devices.