New Delhi: India’s Enforcement Directorate raided Xiaomi’s offices—the number one smartphone manufacturer in the country—and seized over $725 million in its bank accounts in April 2022.
This move was surprising as Xiaomi made a name for itself in India with its products and various CSR (Corporate Social Responsibility) programs. Worse, reports suggested that ED agents threatened violence against Xiaomi executives and their families. Now, the law enforcement agency has turned its attention to Vivo in an alleged money laundering case.
The Enforcement Directorate has conducted raids at 44 locations across the country under the Prevention of Money Laundering Act (PMLA), where Vivo and its linked companies have their offices and factories.
An Economic Times report claims the Central Bureau of Investigation initially scrutinized Vivo for alleged money laundering. The case was then passed on to the ED for further investigation. Currently, both Vivo and the ED have not issued any official statements on the raid.
Chinese companies and their sub-brands dominate the Indian smartphone market. Samsung is the only non-Chinese smartphone maker with a considerable market share in the country. It is also the only company that has not yet come under the ED’s radar in recent years.
A Bloomberg report from late May claims the Ministry of Corporate Affairs in India received information from unnamed sources of potential fraud by Vivo and ZTE. For Vivo, it ordered an inquiry to determine if there were any “significant irregularities in ownership and financial reporting.” Authorities were also ordered to analyze ZTE’s financial books “on urgent basis” to determine any irregularities. Reportedly, the Indian government is looking to go through the accounts of more than 500 Chinese companies, including Xiaomi, Oppo, Huawei, Alibaba, and others. It has already sent out letters to many of these firms seeking more details on their shareholders, directors, and owners.
This is not the first time Chinese companies have come under the government’s scanner. In 2020, India banned TikTok, CamScanner, and 56 more popular Chinese apps. A couple of months later, the country banned another 108 apps from Xiaomi, Baidu, and other developers. The move came following border skirmishes between Indian and Chinese soldiers along the Galwan Valley.