Reuters reports that the Trump administration is about to add several Chinese firms to the Entity List including tech behemoth Xiaomi. The impacts of this addition, however, may be much greater than those of Huawei and ZTE.
The largest immediate hurdle for companies placed on the Entity List by the Commerce Department is that they will not be able to rely on American vendors to provide goods and services to them unless they apply and receive an elusive special license to do so. One of the consequences that hasn’t mattered to those in the smartphone media bubble as much up until now is the requirement for U.S. investors in the company to divest their holdings in the company.
Whereas Huawei and ZTE are backed primarily by government-held funds or domestic traders, for Xiaomi — which raised billions of dollars for a public listing in 2018 — this may not only affect its consumer output of smart home appliances and accessories not to mention its smartphones, but its prized presence in foreign markets including Western Europe.
According to the unpublished order, investors would be given until November 11 to clear their stakes — perhaps enough time to let the government or patriotic stock buyers ease the sting.
Donald Trump’s White House has been pushing big position appointments and trade procedures ahead of the inauguration of President Joe Biden seemingly in attempts to make lasting marks on the federal government. Chinese drone maker DJI was recently added to the Entity List.
Xiaomi share price on over-the-counter markets dropped 9% in U.S. daytime trading. Its Hong Kong listing is expected to follow suit when the floor opens.
If you’re looking to import a Mi 11 with that fancy new Snapdragon 888, you may need to do it now.