Xiaomi has filed a complaint in a Washington court against the US Defense and Treasury Departments over the ban of the company. The suit filed on Friday 29th January 2021 is seeking to remove the Chinese company from an official list of companies with ties to China’s military.

The Defense Department, under the Trump administration, created the list in mid-January. Xiaomi and eight other companies were added to the list, which requires American investors to divest their holdings in the firms by a set deadline.

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Xiaomi sent a complaint to Biden-appointed Defense Secretary Lloyd Austin as well as Treasury Secretary Janet Yellen. The company calls the judgment “unlawful and unconstitutional” and says that the company is under the control not controlled by the Chinese army. It says the restriction will cause “immediate and irreparable harm to Xiaomi”.

Xiaomi says that 75% of its voting rights are held by co-founders Lin Bin and Lei Jun; and that the two also have no ownership or control from an individual or entity affiliated with the military. It also states that the company has a substantial amount of US investors. Xiaomi reveals that three of its top-ten holders of ordinary shares are US institutional investment groups.

“The company’s strategic relationships with U.S. financial institutions – critical for Xiaomi to continue to access the capital it needs to continue to grow in a highly competitive market – will be significantly damaged. Moreover, the public association of Xiaomi with the Chinese military will significantly impair the company’s standing with business partners as well as consumers; causing reputational harms that cannot be readily quantified or easily repaired,” the complaint stated.

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