What Happened: The US has unexpectedly added China’s second-largest phone maker, Xiaomi, to a blacklist of companies deemed to have military ties. This move bans investment from America, losing the company up to $10 billion in market value. The move forced US citizens to divest holdings and caused a tumble in shares, but there is no sign that Xiaomi will face export restrictions.
The Department released its initial list of companies to Congress in June 2020, followed by an executive order signed in November. As a result, the New York Stock Exchange announced it would delist three of China’s mobile giants — China Mobile, China Telecom, and China Unicom — a move that it later reversed multiple times.
Jing Take: Interestingly, the three delisted companies have already seen local investments ease their pain, leading Jing Daily to question the implications of the blacklist. Mainland investors came to the rescue of these telecoms providers, and their price drops were quickly recouped.
Until this blacklisting, Hong-Kong listed Xiaomi’s shares had risen over 130 percent over the last year, as demand for smartphones grew. According to Gartner, in the third quarter of 2020, the brand overtook Apple Inc. to become the world’s third-largest smartphone maker, likely putting it firmly on Trump’s radar. The US is continuing its anti-China grandstanding while we await President-elect Biden’s China strategy. But to what end? An act designed to punish may have only bolstered Chinese self-reliance or worse: it ended up looking irrelevant.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.