Daily Management Review

Chinese Firms Facing Trump Investment Ban Considering Suing US Government After Xiaomi Win Against Ban


Chinese Firms Facing Trump Investment Ban Considering Suing US Government After Xiaomi Win Against Ban
Following the decision of a Federal judge in the United States suspending a blacklisting of the Beijing based smartphone maker Xiaomi by the administration of the former US president Donald Trump, a host of Chinese firms that have also been included in the sweeping investment ban and blacklisting are considering to file cases against the US government to get their bans overturned,
Negotiations for such law suit filing is being currently being undertaken by the banned Chinese companies and law firms including Steptoe & Johnson and Hogan Lovells, said reports quoting lawyers familiar with the matter. The Chinese companies targeted by the former Trump administration have gained confidence after the preliminary ruling by US District Judge Rudolph Contreras which essentially halted the inclusion of Xiaomi on a US list of alleged Communist Chinese military companies which are barred from getting any investments from America. 
Under the measure of the former Trump administration to include Xiaomi in the blacklist would have meant that all American investors would have had to completely divest their investment in the company. The since the announcement was made by the trump administration. The Chinese smartphone maker lost more than $10 billion from its market value as its shares slumped by more than 9.5 per cent in January this year.
"Companies are reaching out to lawyers to challenge the listings and the grounds for the listings," said Wendy Wysong, managing partner of the Hong Kong office of Steptoe & Johnson, a worldwide law firm headquartered in Washington. However the Chinese companies involved in discussions were not named by Wysong as well as another source person familiar with Hogan Lovells, said reports.
The "deeply flawed" process for including the Chinese company in the investment ban of the US government was also criticised by Contreras. According to the court, the Trump administration used only two important criteria – the development of 5G technology and artificial intelligence by Xiaomi that the US Defense Department alleges are "essential to modern military operations," and an award given to the founder and chief executive of the Chinese firm Lei Jun by organization that is alleged to help the Chinese government in eliminating barriers between commercial and military sectors
The use of 5G and AI technologies were such that these were fast being seen as 5G and AI technologies, the Federal judge noted, and said that the same award had been received by more than 500 entrepreneurs as Lei since 2004 which included the leaders of an infant formula company.
"The facts that led to Xiaomi's designation are almost laughable, and I think it absolutely is going to lead to additional companies seeking relief," said Washington lawyer Brian Egan, a former legal adviser in both the White House and State Department who also works at Steptoe.