One after another, Chinese smartphone makers find themselves in the soup and the latest of the batch is Vivo. The Inspection Directorate (ED) invaded no less than 44 locations of the company and entities linked to it.
Because? The action was part of a money laundering investigation that was launched after Delhi police filed an FIR based on a complaint accusing an entity linked to Vivo of “deceiving government officials and banks”.
The alleged forgery, ED suspects, was done to launder illegally generated funds using shell or paper companies. Some of these so-called ‘proceeds of crime’ were diverted, according to the ED, to remain under the radar of officials. The searches were carried out under sections of the Money Laundering Prevention Act (PMLA).
China’s opinion on the matter
Although Vivo India has said it is cooperating with the authorities, China has stepped in and its Foreign Ministry Spokesperson Zhao Lijian said this when asked about the matter: “We expect the Indian authorities to abide by the laws as they carry out investigation and enforcement activities and provide a truly fair, just and non-discriminatory business environment for Chinese companies investing and operating in India.”
Chinese brands undoubtedly dominate the Indian smartphone market and Vivo is right in the mix, behind only Xiaomi and Realme. But his regular run-ins with the government must remain on people’s minds here, as the scenario repeated itself again.
Does India target Chinese companies?
India has increased scrutiny of Chinese companies since the 2020 Galwan Valley border clashes, and the fact remains that money laundering cases against a Chinese smartphone company are not few and far between since then, with assets worth million rupees being ordered to be seized by the ED.
Xiaomi, for example, was accused of making illegal payments to third parties under the guise of royalties and the ED in April ordered the seizure of Rs 5,551 crore in Xiaomi India deposits for alleged breach of the Foreign Exchange Management Act (FEMA). The company appealed against the seizure order and the Karnataka High Court responded by ordering its suspension. But the matter is far from resolved.
In February, the Income Tax (IT) department raided Huawei, a Chinese telecommunications company, for allegedly manipulating its accounting books to reduce taxable income in India. At the end of 2021, the IT department had raided the premises of several Chinese smartphone companies for alleged unaccounted for revenue amounting to more than Rs. 6500 crores.
Why should you be concerned
Bilateral trade volume between India and China exceeded US$100 billion in 2021 and Indochina’s economic and trade cooperation continues to be beneficial to both nations. But, these activities of Chinese companies should worry the common man, because transparency, despite the lack of a front, is often applied to others as well.
In the first quarter of 2022, Vivo sold 5.5 million devices in India and held a 15% market share and became the top 5G brand at Rs. Price range from 10,000 to 20,000 in the country.