May 12, 2022 10:19 Last update: 10:46
You may have heard in the past few days that Xiaomi, a Chinese technology company, has been targeted by India.
The United States forced India to boycott Russian energy, but India was reluctant to boycott, but instead shot to Chinese companies.
Earlier this month, the Indian law enforcement agency issued an announcement saying that Xiaomi India’s subsidiary illegally sent money to three overseas entities, including Xiaomi Group, and the law enforcement agency froze the assets of Xiaomi India’s 55.5 billion rupees (about 4.806 billion yuan).
After the news was exposed, Xiaomi immediately jumped out and said that all his operations were compliant and would clarify with the Indian authorities.
On May 6, Xiaomi filed a lawsuit in an Indian court against the decision of India’s financial crime agency. The Indian court temporarily postponed the asset freezing time for Xiaomi. During the period, Xiaomi can pay wages in India, but cannot remit money to overseas institutions.
When Xiaomi’s money can be “freely used” depends on the trial on May 12.
That is, today.
Killing chickens to warn monkeys?
Xiaomi was one of the first Chinese mobile phone companies to enter India.
In 2015, at the Xiaomi conference in India, Xiaomi founder Lei Jun also contributed the famous emoticon package “Are you OK”.
Lei Jun contributed the expression pack “Are you OK”.
During Lei Jun’s visit to India in 2017, Indian Prime Minister Narendra Modi personally received him.
With such deep cultivation, Xiaomi has secured the throne of India’s first mobile phone brother. In 2021, Xiaomi’s mobile phone shipments will remain the first in India for four consecutive years with a shipment of 40.4 million units, and its share of the Indian mobile phone market is as high as 25.1%.
Xiaomi phone.
Xiaomi’s success in India is inseparable from its “high degree of localization”.
In addition to building a large number of factories in India, Xiaomi has also recruited a large number of Indians to cooperate with local suppliers in India, seeking an “original taste and original ecology”. Under such a strategy, many Indians even think that Xiaomi is a local brand in India.
But if you think that the relationship between Xiaomi and India is a win-win cooperation, you are wrong.
India has been eyeing Xiaomi for a long time. In December 2021, Xiaomi was investigated by the Indian authorities on suspicion of tax evasion.
In January this year, the Ministry of Finance of India claimed that Xiaomi India was suspected of serious tax evasion from 2017 to June 2020, and issued a sky-high fine of 6.53 billion rupees (about 558 million yuan) to Xiaomi.
You know, since Xiaomi entered the Indian market, it has made drizzle, and the highest annual profit is 350 million yuan.
India’s penalty directly makes Xiaomi work in vain for a year, and has to pay back money.
Even so, India has not let Xiaomi go, and started a new round of review in February.
On April 27, the Indian Bureau of Enforcement issued an announcement stating that since 2015, Xiaomi (India) has remitted 55.51 billion rupees of foreign exchange to three unrelated foreign entities on the grounds of “remitting patent fees”. Accordingly, the Law Enforcement Bureau seized the same amount of money in the bank account of Xiaomi India in accordance with the Indian Foreign Exchange Control Act promulgated in 1999.
What they seized was the 55.5 billion rupees in the accounts of Xiaomi India. As a result, Xiaomi India could not even pay the wages of employees.
It was really exhausting for Xiaomi to be engaged in this way. They originally said that they would clarify with the Indian side, but later it was estimated that they found that they could not tell the Indians clearly, so they directly filed a lawsuit with the local court.
Subsequently, the court issued documents overriding the enforcement bureau’s decision, suspending the freeze on Xiaomi’s funds, allowing them to pay employees first. But whether Xiaomi’s funds can be completely “unblocked” depends on the trial on May 12.
02 How to replace?
It is not a matter of a day or two that India will not deal with Chinese companies.
From June 2020 to February 2022, India has successively removed and blocked more than 300 Chinese mobile APPs on the grounds of maintaining “national security”.
Many of the apps banned in India include products from major Chinese companies, many of which have invested in India. Rao is so, India still wants to seal it, and it is not relentless.
At the risk of the withdrawal of Chinese capital, India will also remove the Chinese APP, what is the benefit? Judging from the current situation, the biggest benefit of removing Chinese apps is to free up the market and create momentum for domestic apps in India.
Take Tik Tok (the overseas version of Douyin) as an example. After Tik Tok received the ban from India, dozens of local Indian companies launched short video application software, springing up to snatch Tik Tok’s short video hegemony.
Xiaomi is the overlord of the Indian mobile phone industry, and it is normal for India to be targeted.
In addition to Xiaomi, companies such as OnePlus and OPPO are also being investigated. As for the reason, I am afraid that domestic mobile phones are too good. As of the third quarter of 2021, the market share of Chinese mobile phones in India exceeds 60%. Who are you?
Xiaomi was fined more than 500 million yuan for the front foot, and the company’s assets were frozen on the back foot. It is estimated that the heart is cold.
Therefore, in addition to filing a lawsuit with the court, Xiaomi has also been breaking the news these days, saying that Xiaomi India executives were threatened by the law enforcement bureau officials when they were questioned, saying that if they did not confess according to the requirements of the law enforcement bureau, they would face” dire consequences”.
Over the years, there has been a talk in the community that the rise of India will replace China. After all, India is a populous country second only to China, with room for development and even greater labor dividends.
But in practice, this is not the case. Many foreign capitals went to India to invest in India, but in the end they all exited at a loss.
Ford, an American car company, entered the Indian market as early as 1995, persisted for more than 20 years and lost more than 2 billion US dollars.
The same is true for American motorcycle company Harley-Davidson, which lost $1.15 billion in India and fled in a panic.
Like India in earlier years, Vietnam has also become a rising star this year. Many Chinese are worried that Vietnam’s take-off will lead to accelerated departure of Chinese foreign capital to Southeast Asia, where tariffs are lower and labor costs are cheaper.
In fact, there are indeed some signs of this matter, but it is not enough to become a serious problem for the confidant. Because the situation in Vietnam is similar to that in India, the local industry is not developed, and most of the people who go to Vietnam to build factories are clothing brands, and the wages in Vietnam have been soaring, and it is difficult to recruit workers to open a factory.
From the perspective of foreign direct investment (FDI), in the first quarter of 2022, FDI inflow into China was US$59.7 billion, a year-on-year increase of 25.6%. In the same period, FDI inflows to Vietnam were US$4.42 billion, a year-on-year increase of 7.8%; FDI inflows to India were less than US$10 billion.
The volume and growth rate are not comparable to China, so how can we surpass it?
Now that Xiaomi has been tossed so much, it is estimated that companies that invest in India in the future will have to weigh themselves!
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