One after another Chinese smartphone manufacturers find themselves in the soup and the latest of the lot is Vivo. The Enforcement Directorate (ED) has raided no less than 44 locations of the firm and entities that are linked to it.
Why? The action was part of a money laundering probe that was launched after the Delhi Police registered an FIR based on a complaint that accused a Vivo-linked entity of "misleading government authorities 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 stay under the radar of officials. The searches were carried out under sections of the Prevention of Money Laundering Act (PMLA).
China's take on the matter
While Vivo India has said it is cooperating with authorities, China has butted in and its Foreign Ministry Spokesman Zhao Lijian said this when asked about the issue: "We hope the Indian authorities will abide by laws as they carry out the 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, without an iota of doubt, dominate the Indian smartphone market and Vivo is right in the mix, only behind Xiaomi and Realme. But their regular run-ins with the government should linger in the minds of people here as the scenario has played out again an again.
Is India targeting Chinese firms?
India has upped the scrutiny of Chinese firms since the Galwan Valley border clashes in 2020, and the fact is that money-laundering cases against a Chinese smartphone company are not few and far between since then with assets worth crores of rupees having been 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 worth of deposits Xiaomi India for alleged contravention of the Foreign Exchange Management Act (FEMA). The company did appeal against the seizure order and the Karnataka High Court had responded by ordering a stay on the same. But, the matter is far from settled.
In February, the Income Tax (I-T) department raided Huawei, a Chinese telecom company, over alleged manipulation of its account books for reducing taxable income in India. At the fag end of 2021, the I-T department had raided the premises of a number of Chinese smartphone companies over alleged unaccounted income worth over Rs. 6500 crore.
Why you should be worried
The bilateral trade volume between India and China crossed a $100 billion in 2021 and the Indo-china economic and trade cooperation remains beneficial for both nations. But, such activities by Chinese firms should worry the common man, as transparency, while found lacking in one front is frequently applied to others as well.
In the first quarter of 2022, Vivo shipped 5.5 million devices in India and held a 15 percent market share and became the top 5G brand in the Rs. 10,000-20,000 price bracket in the country.
