In-depth Investigation: The Military Tied Network Behind Xiaomi’s Founder and CEO Lei Jun
Hello, everyone, welcome to “Inconvenient Truths”. I am your host Jennifer Zeng.
Have you ever heard of Xiaomi? It’s China’s second-largest, the world’s third-largest, cell phone maker, and was recently added to the blacklist of Chinese firms that are owned or controlled by the CCP's military. In theory, no Americans should invest in it after Nov. this year. But Xiaomi furiously denied its military connection.
What is the truth? Through some in-depth investigation of The Epoch Times, it was found that Americans have bought as much as 24% of Xiaomi’s shares, and Xiaomi not only has very strong military connections, but also plays an important role in a plan that aims to shorten the gap with the US to less than 2 years.
Surprised? Let me tell you the story in detail.
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Well, now let’s go back to Xiaomi’s story.
Xiaomi: Blacklisted and Denial
On Jan. 14, the Trump administration added nine Chinese firms, including Xiaomi, to a list of companies that are owned or controlled by the CCP's military. Businesses on the list are subject to restrictions, including a ban on American investment.
Xiaomi quickly issued a statement on the following day, saying that "The company confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a 'Communist Chinese military company'."
According to public information, Xiaomi was founded in 2010 and is headquartered in Beijing. It is the fourth company globally after Apple, Samsung, and Huawei to have self-developed mobile system-on-chip (SoC) capabilities.
However, Xiaomi's attempts to develop its own chips have not been successful. But despite that, its global expansion moved on very rapidly, with major markets in India, Southeast Asia, and Europe.
Digging Deeper: The People Behind Xiaomi
If one only looks at the business operations or shareholding structure, one might not be able to find any direct ties between Xiaomi and the CCP’s military. However, if we check a more important factor-the people who founded, controls, and runs it-we will come to a different conclusion.
Xiaomi’s founder Lei Jun is a senior executive and shareholder of a software company called Kingsoft. He joined the company in January 1992 and became the general manager as a young man of only 25 years old in 1994. In 2007, under his leadership, Kingsoft became a listed company in Hong Kong.
Then who founded Kingsoft? It was Zhang Kaiqing from China.
Zhang Kaiqing: Bypassing Western Restriction and Shipping Computer Chips to China
Zhang Kaiqing was born in Mauritius. He went back to China in 1935. After graduating from Tongji University in Shanghai, he joined the Communist Army's Southward Service Corps in Fujian, where he was in charge of education and culture at the Quanzhou Military Management Committee and later served as the director of the teaching department at the Quanzhou School of Health.
In 1972, Zhang Kaiqing’s mother died in Hong Kong. So he went to Hong Kong in the hope to inherit some sort of wealth, but ended up not getting anything. After that, he stayed in Hong Kong and started up a computer chip business.
During that time, western countries were restricting technology exports to China under the agreement of the “Coordinating Committee for Export to Communist Countries”. As a result, the CCP couldn’t buy chips directly from the west. So Zhang Kaiqing used his personal connections and shipped many chips to China from abroad.
Later on the CCP’s Commission for Science, Technology and Industry for National Defense said to him, "Why don't you set up a company? We'll buy all the chips from you in the future.”
Since then the chips obtained through Zhang were used by the CCP to build submarines, satellites, and other applications.
Zhang Xuanlong: A Favorite of Both Jiang Zemin and Hu Jintao
In 1978, after supplying chips for the CCP for several years, a new Kingsoft was set up. Three years later, in 1981, Zhang Kaiqing’s son Zhang Xuanlong took over the company and specialized in chip businesses.
In 1984, Zhang Xuanlong moved to Zhongguancun in Beijing, and eventually won himself the title “Godfather of Zhongguancun”. Zhongguancun is a technology hub in Haidian District in Beijing. Many high tech companies are located there.
Zhang Xuanlong became so successful that he later accompanied both Jiang Zemin and Hu Jintao when they went overseas to attend APEC as a member of the entrepreneurial delegation.
Qiu Bojun: Winning an Award Personally Handed by Jiang Zemin
In the late 1980s, Zhang Xuanlong decided to build & sell his own software. He opened an office in Shenzhen and recruited then 24-year-old Qiu Bojun, who developed WPS, a Chinese processing software similar to Microsoft.
Kingsoft was later moved to Beijing in 1988, and handed over to Qiu Bojun.
Qiu Bojun graduated from the National University of Defense Science and Technology of the PLA, People’s Liberation Army of the CCP. In 2001, he won the second prize of the National Science and Technology Progress Award and was personally received by CCP head Jiang Zemin. This was the highest national honor ever awarded to the software industry.
Lei Jun and Qiu Bojun: Brothers and Comrades of 30 years
In 1992, Qiu Bojun recruited one of his big fans, then 23-year-old Lei Jun, to become the 6th employee of Kingsoft.
Since then Qiu Bojun and Xiaomi’s Lei Jun have been as close as “brothers” and “comrades”, In an article entitled “Thirty Years of Qiu Bojun and Lei Jun”, Lei Jun was quoted as saying, “thirty years of my life, thirty years of brotherhood, all are so dear to my heart.” He was very emotional about the time and the experiences he and Qiu Bojun shared in all those years.
In 1998, 28-year old Lei Jun was promoted to the CEO.
In 2007, he resigned as the CEO and was re-designated from an executive director to a non-executive one in August 2008.
Lei has been the Chairman and CEO of Xiaomi since 2010, and he is still also the director of the issuer and the honorary chairman of the board of Kingsoft.
Xiaomi and Kingsoft: Interwoven against a Military Background
From the above facts, we can see that Xiaomi’s founder Lei Jun’s deep ties with Kingsoft, which has a strong military background. It was actually established under the request of a CCP’s military commission, the Commission for Science, Technology and Industry for National Defense
Lei Jun and GalaxySpace
However, Lei Jun’s ties with the CCP’s military doesn’t stop at Kingsoft. He is also an “investor” of GalaxySpace, whose mission is to “mass produce low-cost, high-performance small satellites” and “to create a global converged 5G communication network.”
Interestingly, Lei Jun’s name is only listed on the “about” page of the Chinese version of GalaxySpace, as one of the only three most important figures, but not on the English version of its “about” page. One would wonder what the company wants to hide from the English speaking readers.
The other two most important figures on the about page of the Chinese version of GalaxySpace are its Chairman and Founder Xu Ming and Chairman of the Technical Committee Deng Zongquan.
National Defense Project 973
Deng Zongquan also owns the following titles: “Director of Aerospace Institutions and Control Technology National Defense Key Discipline Laboratory”, “National Defense Project 973 Chief Scientist. Head of The National ‘111’ Project.”
Then what is the “National Defense Project 973”?
According to the Chinese search engine Baidu, the full name of the "National Defense Project 973" is ‘the National Security Major Basic Research Program’, also known as Military 973. National Defense Project 973 are strategic, fundamental, and forward-looking projects. They are national-level key basic research projects selected by the Ministry of General Armaments of the CCP in conjunction with the trend of future equipment technology development, and is conducted in cooperation with leading research institutions in related fields in China. ”
Mysterious GalaxySpace: Setting Starlink As its “Benchmark”
The background of GalaxySpace is even more mysterious.
According to its own website, GalaxySpace was founded in 2016.
After only over a year, it has developed China's first low-orbit broadband communication satellite with a communication capacity of 10Gbps. The satellite was launched on January 16, 2020. The rocket was Kuaizhou 1A developed by China Aerospace Science and Industry Corporation.
One of GalaxySpace’s missions is to provide “a global coverage with a 5G communication network”. This mission can easily remind one of SpaceX's ‘Starlink’ program, which the CCP is closely watching and cares about a lot. According to a report in Chinese media, “the main target competitor for GalaxySpace's business is SpaceX's ‘Starlink’ program”.
According to a report by China Galaxy Securities, Xu Ming, the CEO of GalaxySpace once said that after GalaxySpace launched its first satellite, it compared its technical indicators with those of the public tests of "Starlink", and came to two conclusions: firstly, it is possible to create satellite Internet through low-orbit satellites and to provide 4G and 5G network connections; secondly, Chinese satellite Internet companies can fully use "Starlink" as a benchmark in terms of technology.
Catching Up with the US within 2 Years
On Nov. 11, 2020, the Chinese version of the Global Times published an article titled “GalaxySpace Receives New Financing. CEO Xu Ming: Building China's Internet Satellite".
According to the article, GalaxySpace's second independently developed broadband communications satellite has now entered the final assembly stage. Xu Ming was quoted as saying, "Next, GalaxySpace will focus on building a super factory...to produce 300 to 500 satellites per year. Upon completion, the factory will be the first smart production line in China's commercial space industry to match the Starlink program, and is expected to shorten the gap between China's next-generation satellite production capacity and that of the United States to within two years.”
Xu Ming: Connecting GalaxySpace and Kingsoft
According to the GalaxySpace website, Xu Ming is also the co-founder and former president of Cheetah Mobile.
According to Cheetah Mobile’s own website, in 2010, “Kingsoft Security merges with Conew Image to create Kingsoft Network (later renamed Cheetah Mobile)”.
From this, one can see that Xu Ming also has ties with Kingsoft, which has strong military ties.
Satellite Internet: New Infrastructure for the CCP
In April 2020, the Development and Reform Commission of the CCP’s Central Committee also included satellite Internet in the scope of "new infrastructure", and GalaxySpace obviously plays a big role in the new industry.
Starlink Targeted by the CCP as the Core Strategic Interests of the U.S.
We all know that Starlink is a satellite internet constellation project proposed by SpaceX to provide high-speed Internet access worldwide through satellites.
It plans to provide services that can almost cover the entire earth by the end of this year.
In November of last year, the U.S. Indo-Pacific Command revealed the U.S. Space Force's Starlink program, stating that the U.S. Space Force was working with SpaceX to deploy a massive space satellite network chain, adding military satellites to the Starlink program.
The CCP’s media has repeatedly and publicly claimed that the CCP's development of satellite Internet is in the context of the CCP's national defense and that it targets the U.S. "Starlink" program. What it wants to challenge is the core strategic interests of the U.S.
Lei Jun and Shunwei Capital’s Role in the CCP's Satellite Internet Program
As a member of the CCP’s National People's Congress, Lei Jun has put forward proposals at the CCP's Two Sessions for two consecutive years. If you don’t know much about “Two Sessions”, just understand them as the most important annual political conferences of the CCP, in which all big issues are discussed and decided.
At the 2019 congress, Lei Jun proposed "Proposals on Improving Innovation Capability and Vigorously Developing the Industrial Space Industry". In the 2020 session, he proposed "A Proposal on Promoting the Development of the Satellite Internet Industry".
Lei Jun also used his "Shunwei Capital" to directly invest in a number of aerospace enterprises.
After GalaxySpace successfully launched its first satellite, Lei Jun said on Weibo, "We at Shunwei Capital are very fortunate to have invested in GalaxySpace early and become a major investor in GalaxySpace.”
Lei Jun said, from 2018 to 2019, Shunwei Capital had been keeping on investing in GalaxySpace.
The public information shows that Shunwei Capital was founded by Lei Jun and Xu Dalai in 2011. It manages a 2.96 billion US dollar fund and a 2 billion RMB yuan fund.
According to China’s National Business Daily, from 2017, Shunwei Capital has invested in four commercial space companies, including Interstellar Glory and Deep Blue AeroSpace in the rocket field, Qiansheng Exploration and GalaxySpace in the satellite field.
Just one day before Xiaomi was blacklisted by the US government, on January 13, Beijing Securities Regulatory Bureau announced that Interstellar Glory planned to go public and thus become the first listed private rocket company.
How Much Have Americans Invested in Xiaomi?
Under former President Trump's executive order, U.S. investors are required to divest their securities in nine Chinese entities, including Xiaomi, by Nov. 11, 2021.
The Trump administration has argued that U.S. investment in Chinese companies that support the development of the CCP’s military will support the expansion of the CCP’s military, which has been pursuing a strategy of integrated civil-military development. This strategy supports the CCP’s military modernization goals by ensuring that the military has access to Chinese companies, universities and research programs that appear to be civilian entities to acquire and develop advanced technology and expertise.
In 2015, Xi Jinping also proposed for the first time to elevate "military-civilian integration and development" to a national strategy of the CCP.
According to public information, as of Feb 9, U.S. firms hold a large proportion of Xiaomi's shares.
Among them, JP Morgan holds 2.468 billion shares, accounting for 9.79% of the issued share capital; Citibank holds 2.327 billion shares, accounting for 9.23%; Goldman Sachs holds 722 million shares, accounting for 2.86%; Morgan Stanley holds 469.8 million shares, accounting for 1.86%.
Altogether, these four US companies hold 23.74% of Xiaomi’s shares.
Does this make any sense? The US investors are supporting a company that obviously involves industries and businesses aiming at catching up with or perhaps taking down the US.
Unfortunately, the executive order, signed by Trump before he left office, was amended by Biden to push back the effective date of the investment ban to May 27 from the previous Jan. 11.
Biden has so far undone, or revised many things and policies of Trump. I don’t know how much more damage we have to suffer for enough people to wake up and stop the stupidity.
That’s all I will say for today. Thank you for watching. Once again, please support me in any form that you feel comfortable in doing. I rely on you to sustain my channel and to survive the big tech’s suppression.
Thank you! See you soon!
2/10/2021
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