Vivo is in trouble again in the Indian market. According to multiple other media reports, the Indian Enforcement Directorate (ED) recently arrested a number of vivo India executives on the grounds of "anti-money laundering investigation", including vivo India interim CEO Hong Xuquan (English name Terry), chief financial officer Harinder Dahiya and consultant Hemant Munjal.
Previously, the Enforcement Directorate of India had submitted a charge sheet to vivo India under the Prevention of Money Laundering Act (PMLA). The indictment stated that vivo illegally transferred a total of 624.76 billion Indian rupees (approximately 63.7 billion yuan) of assets overseas through shell companies to evade paying taxes in India. This accounts for half of vivo’s total revenue in India of 1,251.85 billion rupees over the years.
A spokesperson for vivo expressed that it was "deeply shocked" and said that the Indian authorities' "recent arrests indicate that harassment is continuing and has brought uncertainty to the entire industry." The company will resolutely use all legal means to respond and challenge these accusations.
This is not the first time vivo has been targeted in the Indian market.: As early as October this year, news broke that India’s financial law enforcement agency arrested four industry executives on suspicion of money laundering, one of whom was an employee of the mobile phone company vivo.
In addition to using forged documents to open bank accounts, the Enforcement Directorate of India claimed that vivo employees were working in India without the necessary visas, violating local employment visa regulations.
According to public information, the main Chinese mobile phone brands operating in India are OPPO, vivo, Xiaomi, Transsion (operating three brands in India: Itel, Tecno and Infinix), Realme and Oneplus (OnePlus). In addition to vivo, OPPO and Xiaomi have both been specially "treated" by the Indian government.
At the beginning of 2022, India cited royalties as an excuse.A fine of 6.53 billion rupees (approximately 560 million yuan) was imposed on Xiaomi, the reason is that Xiaomi India paid royalties to Qualcomm of the United States and Xiaomi of China, but it was not included in the value of imported products, which constituted tax evasion.
Subsequently, amid accusations of illegal money transfers,India's Enforcement Directorate freezes 4.8 billion yuan in funds involved in Xiaomi's bank account. It was not until early October this year that the Indian government officially announced the cancellation of the fine against the Chinese company Xiaomi, unfrozen $4.8 billion of Xiaomi's funds in Indian banks, and lifted Xiaomi's restrictions in India, allowing Xiaomi to continue its business.
Affected by this, according to the 2023Q3 Indian market data released by market research organization Canalys, Xiaomi fell to second place from the top sales volume in the Indian market for 20 consecutive quarters, with its market share annual growth rate declining by 17%.
Another Chinese brand, OPPO, also experienced a 16% annual market share decline. It also received a tax backpay notice from the Indian Revenue Intelligence Bureau in mid-2022. The Indian Revenue Intelligence Bureau stated that OPPO has evaded customs duties of nearly 43.9 billion rupees and improperly obtained tax-free benefits totaling 29.81 billion rupees through improper declaration of goods.
In addition to "fines", India also imposes requirements on the nationality of Chinese mobile phone manufacturers' executives in India. According to foreign media reports, the Indian government has put forward a number of new requirements for Chinese smartphone manufacturers in India. The company's CEO, CFO, COO, and CTO must be Indian nationals.
Major General Ding, an industrial and economic observer and founder of Ding Technology, told a reporter from the New Consumer Daily: "On the whole, India's basic supporting facilities, business environment, and supply chain system still have certain obstacles to Chinese companies' deepening of the industrial chain and expanding investment."
According to public information, India’s mobile phone shipments have exceeded 2 billion units from 2014 to 2022, with a compound annual growth rate of approximately 23%, and smartphone penetration reaching approximately 80%.
A mobile phone industry practitioner told a reporter from New Consumption Daily: "The Indian market is also changing, especially after the smartphone penetration rate increases, it will inevitably upgrade to the mid-to-high-end direction. Therefore, domestic brands also need to adjust their strategies. However, considering India's current restrictions and targeting of Chinese brands, mobile phone manufacturers will also have concerns about investing in upgrading the industry chain."