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China says it is following India’s Vivo raid closely, warns of crippling impact on business confidence

The Chinese Embassy in India criticized Indian authorities in a statement for the “frequent investigations” of local units of Chinese companies and warned that such measures “hinder the improvement of [the] business environment” in India and “chills the confidence and willingness” of businesses in other foreign countries to invest and operate in the South Asian market following raids on Vivo’s offices earlier this week.

The Law Enforcement Directorate, India’s anti-money laundering agency, raided dozens of phone maker Vivo’s operations and production sites in several states earlier this week. . In a statement to TechCrunch, Vivo said it was cooperating with Indian authorities.

Wang Xiaojian, spokesperson for the Chinese embassy counselor in India, said China is following the issue closely.

The Law Enforcement Directorate said on Thursday afternoon that a company associated with Vivo used false documents when it was incorporated in India. The agency seized 119 bank accounts with $58.7 million linked to Vivo India, it added (PDF).


The incident follows a similar investigation into Xiaomi, another Chinese company. The ED seized $725 million from Xiaomi India, accusing the company of violating the country’s foreign exchange laws. Executives from Xiaomi, which refuted the charges and legally challenged the decision, were threatened with “physical violence” during their investigation, Reuters reported earlier.

Chinese smartphone makers dominate the Indian market, according to research firm Counterpoint. Xiaomi held the top spot in India in the quarter ending in March, while Vivo was the fourth-largest smartphone vendor by volume of handsets shipped, Counterpoint said.

India Cellular and Electronics Association, a lobby group that represents several tech giants including Apple and Amazon, in May urged New Delhi to intervene and alleged that ED did not understand how royalty payments worked in the industry. technological. (India’s Directorate of Law Enforcement said earlier that Xiaomi paid three overseas-based entities $725 million “under the guise of royalties.”)

Tension between the two neighboring nuclear-armed countries escalated in 2020 after a border skirmish. India has since introduced several restrictions on Chinese businesses (without ever naming China in its orders.)

Over the past two years, New Delhi has banned hundreds of Chinese apps, including TikTok, UC Browser and PUBG Mobile, citing national security concerns. India also changed its foreign direct investment policy in 2020 to require all neighboring countries with which it shares a border to seek New Delhi’s approval for their future deals in the country. Previously, only Pakistan and Bangladesh were subject to this obligation.

The investment rule has drastically reduced the ability of Chinese investors to support Indian companies and startups. Prior to the amendment, Tencent and Alibaba were among the most prolific backers of Indian startups.

Xiaojian said late Wednesday that the world’s largest population always asks Chinese companies to abide by overseas laws and regulations and “wishes” the Indian side to provide a “fair, just and non-discriminatory business environment” for Chinese companies. .

“The essence of China-India economic and trade cooperation is to achieve mutual benefits and win-win results. Bilateral trade volume between China and India will reach an all-time high of more than 100 billion U.S. dollars in 2021, reflecting the huge potential and vast prospects of economic and trade cooperation between our two countries. China wants the Indian side to investigate and enforce in accordance with laws and regulations, and effectively provide a fair, just and non-discriminatory business environment for Chinese companies to invest and operate in India,” he added.

The story has been updated with ED’s comment.

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