India "blackhands" Chinese enterprises again? This time, vivo and ZTE were targeted. On May 31, it was reported that after taking measures against Xiaomi, the Indian side expanded the scope of investigation to other Chinese companies. At present, it is investigating the suspected "financial misconduct" of ZTE and vivo subsidiaries in India. In response, foreign ministry spokesman zhaolijian said that the Chinese government is paying close attention to this matter.
India suddenly launched an investigation, which may be a bit unexpected for vivo. Vivo has always placed high hopes on the Indian market. It plans to invest 35billion rupees (about 3billion yuan) in India by 2023 for the production of smart phones, with an annual production capacity of 120million.
The Indian mobile phone and Electronics Industry Association, which is composed of apple, Xiaomi, oppo, local brands lava, Foxconn, Wistron and other technology enterprises, warned the Indian government that the continuous investigation on "illegal payment of patent fees" of technology companies may strike the domestic technology manufacturing industry chain in India, or cause fear and panic among other technology giants.
India is investigating vivo and ZTE
After Xiaomi, India launched investigations on vivo and ZTE.
In this regard, zhaolijian said that the Chinese government is paying close attention to this matter. The Chinese government has always required Chinese enterprises to operate legally and in compliance overseas. At the same time, we firmly support Chinese enterprises to safeguard their legitimate rights and interests. The Indian side should act in accordance with the law and provide a fair, just and non discriminatory business environment for Chinese enterprises to invest and operate in India.
According to Bloomberg news, a person familiar with the matter disclosed that the relevant documents showed that the Indian Ministry of enterprise affairs would carefully review the audit reports of ZTE and vivo mobile communications, and had received information from unnamed sources, which indicated that there might be violations including fraud.
In April this year, India has started an investigation into vivo to find out whether there are "major violations in ownership and financial reporting". At the same time, it also asked relevant departments to study ZTE's books and "urgently" submit the investigation results.
The above insiders further disclosed that the Indian enterprise affairs department may have started the inspection procedures for the books of more than 500 Chinese companies, including Xiaomi, oppo, Huawei Technology and several Indian subsidiaries of Alibaba group, such as alibaba com India E-commerce Pvt。
On May 31, ZTE's share price was not significantly affected. As of the close of the day, ZTE's H shares rose 4.1% and ZTE's a shares also closed up 1.38%.
Earlier, Reuters reported that the Indian anti money laundering agency said that Xiaomi and its subsidiaries illegally remitted money abroad in the form of "camouflage payment of copyright fees", and had seized about 4.8 billion yuan ($725million) of assets belonging to Xiaomi Technology India PVT. (hereinafter referred to as "Xiaomi India").
It is also reported that manu Jain, the global vice president of Xiaomi, has been summoned by the Indian law enforcement agency to investigate its foreign exchange compliance. However, according to the LinkedIn page, Manu Jain's positioning has become Dubai, and his position has also erased the identity of "head of Xiaomi India" and only retained the position of global vice president of Xiaomi.
At present, the dispute is still waiting for the final ruling of the Indian court. Xiaomi group responded that the money involved in the incident was royalties for the use of patented technology, and all bills were legal and true. It was only because it was a Chinese company that it became the target of the Indian authorities.
On May 31, www.globegroup.com quoted the financial times as saying that Indian legal experts said that modi government was very radical in tracing enterprises. The Chinese Embassy in India expressed the hope that "the Indian side can provide a fair, just and non discriminatory business environment for Chinese enterprises".
Too sudden
The investigation suddenly launched by India may be a bit unexpected for vivo.
Because vivo has always placed high hopes on the Indian market. According to previous reports by Indian media PTI, vivo plans to invest 35billion rupees (about 3billion yuan) in India by 2023 for the production of smart phones. At that time, vivo's annual Smartphone Production Capacity in India will increase from 60million at present to 120million, and will be exported from India to various markets.
Paigam Danish, vivo's business strategy director in India, said that this investment is part of vivo's 75billion rupee investment commitment for India, and has already invested 19billion rupees in 2021.
Danish said that vivo now has more than 100million consumers in India, reflecting its gains in the Indian market in the past seven years. From 2022, vivo will export smartphones from India to other countries, increase the capacity of Indian smartphones from 60million to 120million, and hire 5000 more employees on the basis of the current 10000 employees.
Some analysts said that the Indian government suddenly investigated and reviewed Xiaomi and vivo on the grounds of improper finance, perhaps in order to support local mobile phone brands in India.
At present, Chinese mobile phone manufacturers such as Xiaomi, vivo and oppo occupy most of the market share in India. According to the latest data released by counterpoint, India's smartphone market revenue exceeded US $38billion in 2021, a year-on-year increase of 27%. The shipment volume increased by 11% year-on-year in 2021, reaching 169million units.
In terms of specific share, Xiaomi (including poco) ranks first in India with a 24% shipment share, and its share in the high-end market has also reached the highest level in history. In addition, vivo accounted for 16%, ranking third; Realm accounts for 15%, ranking fourth; Oppo accounted for 12%, ranking fifth. This means that Chinese mobile phone manufacturers account for almost half of the Indian market.
In fact, as early as October 2021, the Indian government began to "challenge" Chinese mobile phone manufacturers. At that time, the Ministry of electronics and information technology of India sent a notice to vivo, oppo, Xiaomi and Yijia, requesting to obtain the relevant data and details of these mobile phones and their components, and said that a second notice might be issued in the next few weeks, involving the requirement to test these mobile phones.
After the completion of the investigation, in January 2022, the Indian Ministry of finance required Xiaomi India to pay a supplementary import tax of 6.53 billion rupees (about 550 million yuan).
What is puzzling is that Samsung, which ranks second in the Indian market share, is not included in the Indian government's investigation list.
ZTE, another Chinese enterprise investigated this time, has long been "treated differently" by the Indian government. It is reported that the 5g test equipment of the three largest telecom operators in India all adopt the 5g equipment of Ericsson and Nokia, and none of them adopts the equipment of Huawei and ZTE.
In the 4G era, the shares of Huawei and ZTE in the Indian market are not low. Among the 4G devices of the top two operators VIL and Airtel, Huawei accounts for 40% and 30% respectively; ZTE occupies nearly 50% of bsnl among India's top five operators.
"Solidarity" of technology giants
While the Indian law enforcement departments have continuously "challenged" Xiaomi, vivo and ZTE, they are causing dissatisfaction from other technology giants.
The Indian mobile phone and Electronic Products Association (ICEA) has sent letters to a number of relevant departments in India, urging the federal government to intervene, and accusing India's law enforcement agencies of "lack of understanding" of royalties in the technology industry.
It is reported that the members of the mobile phone and electronic products association of India include apple, Xiaomi, oppo, local brands lava, Foxconn, Wistron and other technology giants.
ICEA further explained that royalty is a conventional and simple way to transfer money out of India. However, the Indian law enforcement agencies obviously do not fully understand the situation. The implementers of science and technology patents in India are facing a double dilemma. On the one hand, they have to pay heavy patent fees, and on the other hand, they also need to be wary of Indian law enforcement actions.
The mobile phone and electronic products association of India warned the Indian government that the continuous investigation on "illegal payment of patent fees" of technology companies may cause a serious blow to the domestic technology manufacturing industry chain in India and trigger fears and panic among other technology giants.
It is worth mentioning that when the dispute between the Indian government and foreign technology companies heated up, Vietnamese Prime Minister fanmingzheng visited Apple's headquarters in California in mid May, promising to create a "fair, transparent and market-based business environment", hoping to strive for apple to increase its industrial chain layout in Vietnam.
According to the data of counterpoint research, in 2021, India accounted for 3.1% of Apple manufacturing territory, while the total of other Southeast Asian countries was only 1%. Analysts pointed out that if the business environment in India continues to deteriorate, the possibility that technology enterprises such as apple, Foxconn and Xiaomi will migrate their industrial chains to other Southeast Asian countries cannot be ruled out.