BEIJING, December 27 (TMTPost)— China is taking action to protect domestic companies as they face growing scrutiny in India.

Credit：TMTPost

China is closely following what the development of the recent report about Vivo and ZTE’s India units, and the Chinese government “firmly supports Chinese businesses in safeguarding their lawful rights and interests”, said Mao Ning, the spokesperson of China’s Foreign Ministry, at a regular press conference on Monday. Mao urged India to fully recognize the mutually beneficial nature of the business cooperation between our two countries and provide a fair, just, transparent and non-discriminatory business environment. The Chinese embassy and consulates in India will continue to provide consular protection and assistance to the individuals concerned in accordance with the law, the spokesperson said.

 Mao Ning responded to a report last week that two employees working for Vivo’s India business were arrested. The report said India’s financial crimes agency, the Enforcement Directorate (ED), has arrested two senior employees in Vivo’s India unit. These employee were said to be sent to ED’s custody and set to appear in court on December 26. Vivo’s India unit later said it was deeply shocked by the arrest and vowed to resolutely address these accusations through all legal means. It said that recent arrests show that India’s harassment against Vivo still continues, which induces an environment of uncertainty amongst the wider industry landscape. It’s also said that Chinese staff of the ZTE’s India unit might soon be forced to leave India because they could not get visa or the visa extension permit

Two months ago, Chinese smartphone maker Vivo has been reportedly to have staff being arrested. ED was said to arrest four Vivo executives including one Chinese national working in India in a case of alleged money laundering.The allegation originated in July 2022, when the ED said it had raided 48 Vivo locations in India and blocked 119 bank accounts to freeze 4.65 billion rupees ($58.76 million) of assets under Vivo and its associates. A month after the ED’s actions, the Directorate General of Revenue Intelligence (DRI) announced accusation of evading Rs. 22.17 billion (about US$ 280 million) in tax payment. The apex anti-smuggling agency previously said a search of Vivo India's factory in August 2021 revealed incriminating evidence indicating Vivo India involvement in willful mis-declaration in the description of certain items imported, which were used in the manufacture of cell phones.

Vivo said in October that is keeping a close eye on recent investigations and gets ready to respond with “all available legal options”, adding that it firmly abides by local laws and regulations in India. Beijing hopes India will provide a fair, just, transparent and unbiased environment for Chinese companies, China’s Commerce Ministry said that month. The Chinese government always asked domestic companies to operate legally overseas while supporting companies in protecting their rights, according to the ministry.

Vivo is the second-biggest smartphone brand after Samsung in India. In the quarter ended June this year, Vivo held 17% of market share by shipments, just shy of Samsung's share of 18%, according to Counterpoint Research, a global market research firm in the TMT industry.

Indian authorities have also targeted other Chinese mobile phone makers these years. The Indian Revenue Service under India's Ministry of Finance conducted raids on two "foreign-owned" cell phone companies in various provinces across India on December 21, 2021, and found multiple tax issues in two companies, including royalty evasion and undisclosed related party transactions. Local media reported that the two companies referred to Xiaomi and OPPO. Huawei has been also investigated by the Indian tax authorities since February, 2021.

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