Xiaomi, DOD Agree to Drop Firm's 'Military Company' Designation

The Department of Defense has agreed to a final order dropping the designation of Chinese consumer electronics giant Xiaomi Corporation as a Communist Chinese Military Company (CCMC), according to a May 11 joint status report filed in the U.S. District Court for the District of Columbia. Xiaomi supports the order, the report said, leaving the parties to negotiate over specifics before a final proposed order is to be submitted on or before May 20.

The update on Xiaomi's CCMC designation comes after Judge Rudolph Contreras granted the tech giant a preliminary injunction against the label, which would have forbidden U.S. citizens from purchasing Xiaomi securities (see 2103150035). Contreras found that the designation lacks substantial evidence and questioned the "national security" grounds for the designation. The judge said DOD failed to identify any transfers of technology from Xiaomi to the Chinese government. He also found suspect the lack of use of the CCMC designation tool over the last 20 years only to see a flurry of designations in the waning days of the Trump administration.