Chinese embassy slams India’s tech firm probes after Vivo, Xiaomi and Huawei investigations, fines

The Chinese embassy said New Delhi’s ‘frequent investigations’ could ‘impede the improvement of the business environment’
Multiple office raids have put at risk Chinese smartphone brands’ success in India, an important growth market, following a rise in international tensions

Smartphones

Jiaxing Li

Published: 10:00pm, 8 Jul, 2022

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The Chinese embassy in India has spoken out against New Delhi’s “frequent investigations” into Chinese companies and warned about the implications for India’s business environment and investor confidence after the local offices of Chinese smartphone maker Vivo were raided by authorities in an investigation into alleged money laundering.

Indian authorities conducted the raid on dozens of Vivo’s offices earlier this week. The Enforcement Directorate, the country’s financial crime watchdog, said on Thursday that it had seized 119 bank accounts linked with Vivo India containing a combined US$58.7 million. The investigation followed similar moves against Xiaomi, another Chinese smartphone maker, and Chinese telecoms equipment giant Huawei Technologies Co.

The investigations have disrupted normal business activities and will “impede the improvement of the business environment in India” by hurting the “confidence and willingness” of foreign entities seeking to do business in the country, Counsellor Wang Xiaojian, a spokesman for the local Chinese embassy, said in a statement on Wednesday.

Indian investigators raid offices of Chinese smartphone maker Vivo

The embassy said it is following the issue closely and hopes that India will provide a fair, just and non-discriminatory business environment for Chinese companies operating in the country.

Chinese business operations in India, which may have already overtaken China as the world’s most populous country, have faced growing regulatory scrutiny since a deadly border clash in 2020.

In June that year, two weeks after the conflict, New Delhi targeted Chinese tech firms including Tencent Holdings, Baidu and Alibaba Group Holding, owner of the South China Morning Post. It also banned 59 mobile apps on national security grounds, including TikTok.

The government has since banned more Chinese apps, surpassing 200 to date, hurting tech firms’ ambitions in what is considered the next great growth market.

India remains an important market for Chinese tech companies given its size and young population. At home, Chinese brands have been contending with market saturation, a crackdown on the technology sector and a rapidly ageing population.

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The rise of Chinese smartphones

Chinese smartphone brands have dominated the market in India, home to 8 billion internet users, owing to their affordable price point, according to research firm Counterpoint. In the first quarter this year, Xiaomi was the top-selling smartphone brand in India with a 23 per cent market share, beating South Korean smartphone giant Samsung Electronics, which had 16 per cent.

Vivo is the third Chinese tech brand to be investigated and penalised for financial crimes in India in the past year. In May, the Enforcement Directorate said it seized US$725 million from Xiaomi, accusing the Beijing-based firm of illegal remittances. The company was later asked by India’s finance ministry to pay US$87.8 million in import taxes that it allegedly owed.

Huawei offices were similarly searched by India’s tax authority earlier this year over accusations of tax evasion.

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All three of the companies said they always comply with local laws and regulations and will cooperate with authorities.

In China, though, the moves are seen as targeted attacks against its companies. “India has been politicising economic issues with China since the two countries’ tensions broke out in June 2020, with a growing clampdown on Chinese companies operating in the country,” reads one piece published by the state-run Global Times, a publication under the Communist Party newspaper People’s Daily.