China claims to be blameless while India looks into the nation’s commercial and business practices.
According to China’s embassy in the South Asian country, several probes by Indian law enforcement agencies into Chinese enterprises are harming foreign companies’ trust in operating and investing there. After a border incident in 2020, several Chinese businesses have found it difficult to conduct business in India. Since then, India has banned more than 300 Chinese apps and tightened regulations on Chinese investment, citing security concerns.
The embassy’s remarks on Wednesday come after raids this week by the Enforcement Directorate, a financial crime-fighting organization, on Vivo, a smartphone manufacturer owned by China’s BBK Electronics, as part of a money-laundering probe. The embassy stated in a statement that such repeated probe hinders the improvement of the business environment in India and chills the confidence and desire of market entities from other countries, especially Chinese enterprises or firms, to invest and operate in India. Raids were conducted at 44 Vivo and affiliated entity production and operational facilities across India, and China was actively monitoring the situation, it continued. The offices of the Chinese phone manufacturer have been searched by the Enforcement Directorate (ED) in states including Uttar Pradesh, Bihar, Madhya Pradesh, and Maharashtra. The business has stated that it is working with law enforcement. China is concerned that the inquiry may already be biased against the corporation. Vivo stated last week that it was committed to strict adherence to Indian law and that it was working cooperatively with authorities. Requests for comment were not promptly answered by the Indian agency’s or the government’s spokespeople. In May, Reuters reported that Xiaomi Corp, one of India’s largest smartphone vendors and manufacturers, had testified in court that its executives had been subjected to intimidation and threats of violence while being questioned by the government about claims of making illegal transfers. Both Xiaomi and the agency at the time of the accusations denied any misconduct. China’s Great Wall Motor also decided to abandon its intentions to invest $1 billion and fire all of its workers in India this month as a result of the country’s more stringent regulatory oversight after New Delhi rejected its request to buy a factory.
Earlier, the tax authorities looked into possible financial irregularities at OnePlus and Oppo.
The Chinese embassy in India said in a statement that these inquiries hinder the development of the business environment in India and undermine the confidence and desire of market entities from other countries, particularly Chinese firms to invest and operate in India.
Since 2020, when the two countries engaged in the worst conflict in decades at the LAC, India has increased monitoring of companies with headquarters in China. More than 200 Chinese-made mobile apps, including shopping services from Alibaba Group Holding Ltd., the popular TikTok short video app from ByteDance Ltd., and apps used on Xiaomi phones, have been outlawed by Prime Minister Narendra Modi’s administration. Following a court judgment, the government’s anti-money-laundering agency temporarily suspended its plan to seize control of Xiaomi Technology India’s bank accounts for allegedly breaking foreign exchange laws. According to a source with knowledge of the situation, the ministry of corporate affairs has begun the process of checking the financial records of more than 500 Chinese enterprises. The move is being viewed as a component of the Union government’s efforts to strengthen controls over Chinese market entities and the ongoing crackdown on such businesses and their associated Indian operatives who are allegedly engaging in serious financial crimes like money laundering and tax evasion while operating in India. A military standoff between the two nations along the Line of Actual Control (LAC) in eastern Ladakh, which has been going on for more than two years, is the backdrop to the increased action against Chinese-backed businesses or entities operating in India.
