China has criticized the Indian authorities for “frequent investigations” into local units of Chinese companies, saying that such moves disrupt normal business activities and hinder India’s business environment for foreign investors. The statement from the Chinese embassy in India came after last week’s raids on smartphone maker Vivo and its partner offices.
The embassy said that it is following the events closely.
“The frequent investigations by the Indian side into Chinese enterprises not only disrupt the enterprises’ normal business activities and damage the goodwill of the enterprises, but also impedes the improvement of business environment in India and chills the confidence and willingness of market entities from other countries, including Chinese enterprises to invest and operate in India,” said Wang Xiaojian, a spokesperson for the Chinese embassy in New Delhi.
India’s Enforcement Directorate raided 48 locations of Vivo and its 23 related entities last week, alleging that sale proceeds of the Chinese company’s India operations were transferred out of India to show losses and avoid paying taxes. The raids were conducted as part of an investigation into alleged money laundering.
According to media reports, the ED launched the probe after the Delhi Police filed an FIR against a Vivo-linked entity for misleading government authorities and banks. They also alleged that two Chinese directors of Grand Prospect International Communication – Vivo’s distributor in Jammu and Kashmir – submitted forged documents and fake Indian addresses.
The ED blocked 119 bank accounts linked to Vivo’s India business that were holding $58.76 million. While Vivo said it was cooperating with authorities and was committed to fully complying with Indian laws, the ED alleged that Vivo’s employees, including some Chinese nationals, did not cooperate during the search and “tried to abscond, remove and hide digital devices”.
Vivo is the third largest smartphone maker in India, accounting for a 15% market share, according to Counterpoint Research. China’s Xiaomi has the biggest 24% share, while South Korea’s Samsung Electronics has 18%.
Wang said that the Chinese government always asks Chinese enterprises to abide by laws and regulations overseas and firmly supports Chinese enterprises in safeguarding their legitimate rights and interests.
“China wishes the Indian side to investigate and enforce the law in compliance with laws and regulations, and effectively provide an fair, just and non-discriminatory business environment for Chinese enterprises to invest and operate in India,” he added.
Indian authorities have conducted similar search and investigation operations into operations of Xiaomi, Oppo, Huawei and ZTE.
Xiaomi is currently fighting a legal battle in India after the Enforcement Directorate seized $725 million in the company’s India bank accounts in April, alleging it had made illegal remittances abroad “in the guise of royalty” payments. An Indian court has temporarily lifted the block following a challenge by the company. The case is ongoing.