Shares in Chinese tech giant Xiaomi crashed as much as 11 percent on Friday after the Trump administration blacklisted it, along with nine other Chinese companies. Xiaomi, China's No. 2 smartphone maker that has huge markets across Europe and Asia was placed in the military blacklist by the US government on Thursday.
The top two executives at the company together lost more than $4.5 billion on a single day in the massive selloff on the markets. Lei Jun, the chief executive officer, is estimated to have lost a whopping $3 million, while Lin Bin, the vice-chairman, lost around $1.5 billion. Besides the two, the wealth of at least five other billionaire shareholders in Xiaomi suffered large erosion.
US Investors Have to Divest Stake
For Xiaomi, the setback comes at a glorious point in its track so far. The tech behemoth, which was widely seen in China as an answer to Apple, saw its market value surpassing $100 billion in December. Xiaomi's American investors will have to divest their stake in the company following the presidential order as it is listed in Hong Kong.
The blacklisting of Xiaomi was in line with the Trump administration's stated objective of taking on large Chinese corporations in the tech sector that allegedly have connections with the Chinese military. In December, the US blacklisted China's top chipmaker SMIC, raising the stakes in the ongoing trade spat between the two largest economies of the world. It was reported then that at least a dozen other companies will also be blacklisted along with SMIC.
Surpasses Apple in Smartphone Sales
Xiaomi, which was founded around ten years ago in Beijing, had recently surpassed Apple Inc.'s smartphone sales. It had done this, ironically, with the help of he US sanctions against another Chinese tech giant Huawei Technologies Co., which has been in the crosshairs of the US over alleged PLA-links.
In the face of the latest development, Xiaomi reiterated that it has no connection with the People's Liberation Army (PLA). It said it can confirm that it is "not owned, controlled or affiliated with the Chinese military, and is not a 'Communist Chinese Military Company' defined under the NDAA [National Defense Authorization Act]."
Xiaomi, which is China's No. 1 mobile device brand, has also expanded into a wider array of tech products including electric scooters, earphones and smart rice cookers, added: "The company will take appropriate course of actions to protect the interests of the company and its shareholders."
'US Weaponizes Trade'
The move, which burnishes Trump's sharp and tough China policy, comes just days ahead of his exit from the White House. China believes that the US is aiming to cripple China's rise as a global technological leader through these moves. Beijing also accuses Washington of trying to weaponize trade in order to win strategic goals. It also says the US is trying to resort to unfair means to retain its edge as a global technology powerhouse.
"The company is reviewing the potential consequences of this to develop a fuller understanding of its impact on the group. The company will make further announcements as and when appropriate," Xiaomi said, according to TechCrunch.