current position:Home>Millet's Indian crisis

Millet's Indian crisis

2022-05-07 16:17:2236kr

May Day eve , Xiaomi received two bad news in succession . 

4 month 29 Japan , Market research institute IDC Publish data showing ,2022 First quarter , China's smartphone market shipments are about 7420 Ten thousand units , Year-on-year decline in 14.1%. Among them Xiaomi 2022 Shipments in China's smartphone market in the first quarter of 1100 Ten thousand units , Year-on-year decline in 18.4%, market share 14.9%, Ranked fifth .

With the decline of domestic market share , There is also the news that Xiaomi India's relevant assets have been seized .

The law enforcement agencies under the Ministry of finance of India are in 4 month 30 Daily announcement display , Will be detained in the bank account of Xiaomi India Company 555.1 Million rupees ( About us 47.9 RMB 100 million ) The assets of the .

Announcement on the seizure of Xiaomi related assets issued by the Law Enforcement Bureau under the Ministry of finance of India , Source: Law Enforcement Bureau under the Ministry of finance of India  

“ Xiaomi Technology India Pte Ltd ( Hereinafter referred to as Xiaomi India ) It is a company established in India in accordance with the laws of India , The laws and regulations of India should be observed , Regulated by Indian tax authorities . If the Indian tax authorities investigate and deal with the company according to law , The investigation procedure is legal 、 There are facts and legal basis , The company must pay taxes .” Xia Jinyan, a lawyer from Zhejiang zeding law firm, told wired Insight Express .

however , Xiaomi quickly solved the matter . According to the latest report of Reuters , An Indian court has suspended federal law enforcement agencies from freezing China's Xiaomi bank accounts 555.1 Decision on assets of INR 100 million .

But here's the thing , Within half a year, the Indian government has investigated Xiaomi's tax issues three times in a row . At the beginning of this year, the Indian Ministry of Finance recovered from Xiaomi 65.3 Million rupees ( about 5.7 RMB 100 million ) Taxes , At the end of last year, the Indian government also investigated Xiaomi's income tax .

2020 year , India's Ministry of telecommunications and information technology has also released a production linked incentive scheme for electronic manufacturing , Samsung was shortlisted for the program 、 Companies such as apple , But there is no Chinese mobile phone company .

Xiaomi from 2014 After entering the Indian market in , Its presence 2017 At the end of the year, it surpassed Samsung to become the mobile phone brand with the largest shipment in the Indian market , Since then, Xiaomi has maintained this record for a long time . Lei Jun also said that India is very important to Xiaomi .

But now , The actions of the Indian government show that , The development of Xiaomi in India will not be as smooth as before , On the contrary, we will encounter all kinds of obstacles .

Although Xiaomi has temporarily solved the recent crisis , But there is no guarantee that the Indian government will not seize its relevant assets again .

“ Xiaomi India's assets are located in India , Indian tax authorities can recover the tax .” Lawyer Xia Jinyan mentioned .

Millet's Indian crisis , I'm afraid it's not over yet .

01 Half a year , India strictly investigates Xiaomi's tax  

Xiaomi is in the proud Indian market , Keep getting into trouble .

The Law Enforcement Bureau under the Ministry of finance of India is in 4 month 30 A public notice was issued on , Weighing basis 1999 In India 《 Foreign exchange control law 》 The provisions of the , In the bank account of Xiaomi India Company 555.1 Million rupees ( About us 47.9 RMB 100 million 、7.25 Billion dollars ) The assets of the .

See from the announcement , The law enforcement agency of India this year 2 In June, an investigation was launched into the illegal remittance of Xiaomi , And mentioned Xiaomi 2014 Started operating in India in ,2015 Remittances began in . The company has remitted the equivalent of... To three foreign entities 555.127 Hundred million rupees of foreign exchange , Including a Xiaomi group entity disguised as royalties .

The Indian law enforcement agency mentioned , Xiaomi India is an Indian mobile phone trader and distributor , Brand is MI( Xiaomi ). Xiaomi India purchases fully manufactured mobile phones and other products from Indian manufacturers , Xiaomi India has not received any services from three foreign entities , These payments have been transferred to these entities . Under the guise of creating various irrelevant documents between group entities , The company remitted the amount abroad in the name of royalties , This is against the law. FEMA《 Foreign exchange control law 》 Article 4. .

Announcement issued by the Indian law enforcement agency , Source: Law Enforcement Bureau under the Ministry of finance of India  

in other words , The law enforcement agency of India does not recognize patent licensing fees and royalties , Think Xiaomi India didn't get service from it , Therefore, Xiaomi India's remittance to foreign companies is illegal .

In view of this matter , Xiaomi India issued a statement saying , All operation activities of the company strictly comply with local laws and regulations . The royalties and bills paid by Xiaomi India to the bank are legal and true . These royalties paid by Xiaomi India are used for the licensed technology and intellectual property rights used in the Indian version of the products . For Xiaomi India , Paying such royalties is a legitimate business activity .

Xiaomi said it would maintain close cooperation with the government , To clarify any misunderstandings .

in fact , This is not the first time that the Indian government has conducted a tax investigation on Xiaomi .

This year, 1 month 5 Japan , India's Ministry of Finance said in a statement that , Xiaomi Technology India Pte Ltd (Xiaomi Technology India Pvt.) Give three cause notices , Recover from the company 65.3 Million rupees ( about 5.7 RMB 100 million ) Taxes .

The reason for tax recovery is also that Xiaomi India Company remits royalties and license fees to Qualcomm and Xiaomi mobile software company , These expenses are not included in the transaction value of its imported goods .

here , Xiaomi has said ,“ The tax problem this time , The root cause is that there are differences in the price determination of imported goods . On this issue , Xiaomi will also continue to communicate with relevant Indian departments .”

In terms of progress , Xiaomi did not have effective communication with the Indian government , This also led India to seize relevant assets of Xiaomi India for the second time for the same reason .

And in the 2021 year 12 month , The Indian income tax department also investigated the compliance of mobile phone manufacturing companies including Xiaomi India with relevant income tax regulations .

From the end of last year to this year 5 month , Xiaomi India has been investigated by relevant Indian tax authorities three times .

Except for tax , last year 6 month , The Ministry of electronics and information technology of India “ Sovereignty and national security are threatened ” citing , Start banning Chinese mobile apps , Xiaomi browser was therefore banned . Xiaomi mobile phone, as the first selling brand in the Indian market , Xiaomi browser is basically pre installed , The impact of this ban is huge .

Judging from the various actions of the Indian government , In the future, Xiaomi may be more and more strictly controlled in the Indian market , But nonetheless , Xiaomi is also unlikely to give up the Indian market , After all, this is one of Xiaomi's most successful overseas markets .

02 How important India is to Xiaomi ? 

“ In the past two years , We implemented... At headquarters ‘ India's first priority ’ strategic . In terms of R & D and Design , We have considered the needs of many Indian consumers .”2017 year 11 month , Lei Jun accepts Indian business media Livemint Mentioned in the interview .

At the time , Comes at a time IDC published 2017 Market share of Indian smartphones in the third quarter of 2013 , In this quarter , Xiaomi relies on its red rice Note 4、 Red rice 4 And other popular models , Won... In India 23.5% Market share , Successfully equal Samsung , Tied for first place .

2017 Market share of Indian smartphones in the third quarter of 2013 , Picture source IDC 

Since then , Xiaomi has long occupied the first place in the Indian smartphone market .

Comprehensive market research institutions IDC、Counterpoint and Canalys Published data over the years show that , from 2018 Year to 2021 In the year , Xiaomi's smartphone market share in India is 28.9%、28.6%、26%、24%, It has basically consolidated the position of India's largest mobile phone brand .

Indian smartphone market , Its importance to Xiaomi can be seen .

After Xiaomi entered the Indian smartphone market , We also attach great importance to local production and investment . Disclosure of information ,2014 After Xiaomi announced its entry into the Indian market in , The next year, the production line established by Xiaomi in cooperation with Foxconn has been completed and put into operation .2015 year 8 month , Red rice mobile phone released by Xiaomi in India 2 Enhanced version , It is manufactured by Foxconn India factory .

Public information display , By 2021 Beginning of the year , Millet and Foxconn in India 、 Flextronics (Flex) cooperation , Three manufacturing plants have been established in Tamil Nadu and Andhra Pradesh .

And because the 2021 In, the global epidemic led to the interruption of supply chain , Xiaomi then found three new partners —— BYD (BYD)、DBG and Radiant, Jointly build factories and produce millet equipment in India , Once again, Xiaomi “ Made in India ” Strategy to a new height .

2021 Beginning of the year , Manu, global vice president of Xiaomi · Kumar · Jain accepted foreign media BusinessInsider In an interview ,“ With DBG Plant put into operation , We expect capacity to increase by about... This quarter 20% . The factory went into production two months ago . BYD's plant will be put into operation in the first half of this year , We expect that the production capacity will be further improved . Xiaomi and its partner companies , The number of people working specifically for Xiaomi products has increased from last year's 5 Ten thousand people increased to the present 6 ten thousand people .”

After years of layout, Xiaomi , Xiaomi mobile phone is about 75% All parts can be made locally in India , TV is 100% Can be made in India . This further consolidated Xiaomi's supply chain in India .

In addition to the upstream and downstream layout of the mobile phone industry chain , Xiaomi has also jointly invested in many Indian companies for capital , Such as online microfinance platform KrazyBee、 Online music and video providers Hungama Digital Media Entertainment、 2. Mobile phone recycling and maintenance company Cashify etc. .

These local Indian enterprises have strengthened the localization progress and business cooperation of Xiaomi in India , Such as Hungama Yes, the content can be directly connected to Xiaomi music ;Krazybee Be able to provide installment sales services for Xiaomi mobile phones ;Cashify Recyclable Xiaomi mobile phone .

2017 Lei Jun accepted Indian business media Livemint In an interview , Xiaomi will go to India in the next five years 100 A startup invests in 10 Billion dollars , I hope to create a brand around Xiaomi App The ecological system .

From mobile phones 、 Supply to sales , Then to mobile application services 、 All industrial chains such as mobile phone back-end maintenance . Xiaomi has laid a deep foundation in India , It's equivalent to re hatching a “ millet ”.

India's importance to Xiaomi is self-evident , Xiaomi is bound to try to keep the Indian market .

03 How will Xiaomi overcome the difficulties ?

“ Although India has been cracking down on restrictions on Chinese mobile phone companies such as Xiaomi , But it won't let it out completely , After all, the Indian people still need cost-effective products .” The first a move Sun Yanbiao, President of the Machinery Research Institute, went to the Internet Insight Express .

The fact is as expected . After Indian law enforcement agencies frozen relevant assets of Xiaomi India , Xiaomi India later challenged the decision of India's financial crime crackdown agency in the high court of Karnataka state in southern India .

According to the latest report of Reuters , Two sources said , After listening to Xiaomi's lawyer , The judge suspended the decision of the Law Enforcement Bureau . One of the sources said , The condition for giving relief is , Xiaomi will inform the Indian authorities of the transfer of funds , Such as royalty payment, etc .

But nothing has been finalized , The court's written order has not been made public . According to the Indian court website , This case will take place in 5 month 12 The next hearing will be held on the th .

The difference between the Indian government and Xiaomi mainly lies in royalties including patent license fees , The government of India believes that its entities ( Xiaomi India ) Did not enjoy the patent right mentioned by Xiaomi , And royalty is the cost of the enterprise , If the cost is too high , Then the enterprise profit decreases , Accordingly, the enterprise income tax paid locally may be reduced accordingly .

Xiaomi has previously said in its response that : Whether royalties, including patent licensing fees, should be included in the price of imported goods , This is a complex technical problem in all countries .

“ Modern enterprises will conduct tax avoidance under the premise of legality in a variety of ways . The key to this thing , It's the royalty paid by Xiaomi India to foreign enterprises 、 Whether the license fee is based on the real relationship between Xiaomi India and relevant foreign enterprises 、 Necessary transactions , If the transaction is false , Then it must violate the laws and regulations of India .” Xia Jinyan said to the connection Insight Express .

Judging from the latest progress , Xiaomi seems safe , Temporarily lifted the decision of the Indian government to seize relevant assets . But a source reported by Reuters said , The premise of lifting the seizure of assets is that Xiaomi will inform the Indian authorities of the transfer of funds , Such as royalty payment, etc .

It means , At any time, the Indian government can not recognize Xiaomi India's payment of royalties to foreign companies , And then prevent Xiaomi India from paying relevant funds to foreign companies .

“ Because of geopolitics 、 Factors such as India's support for local manufacturing , India may still restrict the development of Chinese enterprises in the region .” Sun Yanbiao said .

2020 year 4 month , Drafted by the national Ministry of telecommunications and information technology of India 《 Production linked incentive scheme for India's large electronics manufacturing industry (PLI plan )》 Official release . The plan shows , India will in the future 5 During the year , Total expenditure exceeds 4000 Billion rupees to stimulate the development of electronic manufacturing industry, including smart phones .

thereafter ,Lava、Dixon、Micromax Wait for Indian companies ; samsung 、 Apple and other foreign mobile phone manufacturers ; foxconn 、 Heshuo and other mobile phone foundry, etc 22 Companies appear on the incentive list . The domestic mobile phone manufacturers that occupy more than half of India's mobile phone share and set up factories in India , Like millet 、OPPO、vivo None of them appeared on the list .

The move is clearly the Indian government's crackdown on Chinese mobile phone manufacturers .“ Now the local mobile phone brand in India is not strong , So India uses apples 、 Samsung to attack Xiaomi OV, In order to win some space for local mobile phone brands .” Sun Yanbiao said .

The Indian government's measures have had some effect . Sun Yanbiao said that recently, Indian local mobile phone brands are slowly rising , There are also some new brands . In the field of smart wear , Local brands in India are growing faster .

In front of Indian smart watches 5 Market share of big brands , Picture source Counterpoint Research Official WeChat official account  

According to the Counterpoint Of IoT Service The latest research shows ,2021 In, the shipment volume of Indian smart watch market increased by more than 274%, Record high . Indian local brands Noise With 27% Share in 2021 Leading the whole market in , Indian domestic brands account for... Of the total market shipments 75%.

Judging from the actions of the Indian government in recent years , Xiaomi's life in India may not be easy in the future . But Xiaomi cannot give up the hard won Indian market , So we can only play it by ear , Seek living space .

This article is from WeChat official account. “ attachment Insight”(ID:lxinsight), author : Li Xin ,36 Krypton authorized release .

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