Technology

Chinese telecom enterprises receive ‘bitter fruit’ in India


Observers say that increasing geopolitical tension between the two countries is one of the main reasons.

This week, Indian authorities launched the latest raid campaign against smartphone manufacturers from China with a series of accusations ranging from tax evasion to foreign exchange fraud.

While officials say they are targeting specific violations, experts say the main reasons are due to Chinese telecommunications companies increasingly dominating the market as well as diplomatic tensions between New Delhi and New Delhi. and Beijing.

Time to start

The move took place in December last year when authorities raided the offices of smartphone giant Xiaomi, along with Oppo and OnePlus on suspicion of tax evasion by these companies.

At the same time, India’s anti-smuggling agency also searched the Bharat FIH’s office, the facilities of Foxconn and Dixon Technologies, two companies that have manufacturing contracts with Xiaomi but did not specify what they were looking for.

Developments

In January of this year, Xiaomi’s branch in India was fined $88 million in import tax for the period from 2017 to 2020. In April, the anti-money laundering agency froze about $730 million of this company on allegations of violations. violation of foreign exchange regulations.

Xiaomi said that its employees were threatened with beatings during interrogation and forced to testify, but authorities dismissed the allegation as “untrue and baseless”.

This week, another Chinese smartphone maker, vivo, and its business partners were simultaneously searched at 48 locations across the country. On July 7, the anti-money laundering agency accused the company of evading more than $8 billion in taxes, with most of the money remitted to China.

New Delhi is also targeting several other areas of Chinese business here. The country has banned telecom equipment companies Huawei and ZTE from participating in 5G trials and blocked more than 200 Chinese apps, including TikTok, the world’s most popular video streaming platform.

Reason

Observers say that the crackdown on Chinese businesses reflects the neighboring countries’ diplomatic relations after the two sides’ armies clashed in the Himalayan border region in 2020.

Next, they note that Chinese manufacturers have captured more than 60% of the smartphone market share in India, pushing domestic companies here to the brink of bankruptcy.

Forecast

Gyanendra Kumar, a partner at the law firm Cyril Amarchand Mangaldas, said Chinese firms would appeal the fines and draconian rules in court.

However, it is almost certain that Chinese smartphone manufacturers will not leave a large market like India. Deloitte, an international consulting firm, predicts that the South Asian country will have 1 billion smartphone users by 2026, up from 750 million currently.

Vinh Ngo

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