The United States has added smartphone maker Xiaomi to its list of blacklisted Chinese manufacturers, following an executive order signed by President Trump that serves as his final sanction on China before leaving office this week.
Xiaomi – along with eight other Chinese entities including an oil company and plane manufacturer – was added to the blacklist that famously includes fellow smartphone specialist Huawei. All companies on the list are alleged to have links to the Chinese military.
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Much as Huawei was blacklisted at the peak of its popularity, having overtaken American giant Apple and become the world's dominant smartphone manufacturer, so Xiaomi had just achieved its greatest ever success, toppling Apple late last year as the third biggest phone producer on the planet.
Ironically, it assumed this position by filling the void left by Huawei – which is now expected to crash to seventh place (opens in new tab) and by virtue of producing 125 million fewer phones this year due to US sanctions. Huawei was also forced to sell off Honor (opens in new tab), its secondary phone brand, in an effort to regroup.
In short, we can likely expect a similar effect on the fortunes of Xioami – a real tragedy, given the strength of product being produced by the company, and a genuine loss to the consumer, as there will be one less viable choice in an increasingly binary marketplace.
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Indeed, it sets concerning precedents for the future of technological development. Today, China is the political enemy of choice for the current administration; if tomorrow it decides that South Korea is politically problematic, then it could torpedo Samsung by leveling similar sanctions. Ditto Japan, which would sink the future of the entire camera industry.
According to Trump's executive order, American investors have until November to divest their interests in companies on the blacklist. It is possible that President-elect Biden could overturn the order before then, just as he intends to overturn many of Trump's decisions with a flurry of his own executive orders.
However, while the health of the smartphone industry may depend on it, issues with China have become so dogmatized that it may be too thorny an issue for a President-elect already sailing into a maelstrom of division.