Vivo’s ED Raids: Know What Is The Issue; How China Responded

The Enforcement Directorate (ED) on Tuesday and Wednesday raided more than 40 places across India in a money-laundering investigation against Chinese smartphone manufacturer Vivo and related firms. ED on Thursday also said the company’s Indian arm “remitted” almost 50 per cent of its turnover, which is Rs 62,476 crore to China to avoid taxes here. China has also responded saying they hope for a fair probe. Here’s is the whole issue:
What Is The Issue?

The ED conducted the searches at the places related to Vivo and associated companies, including Xiaomi and Oppo, in a money laundering case. It took cognisance of a recent Delhi Police (economic offences wing) FIR against a distributor of the agency based in Jammu and Kashmir where it was alleged that a few Chinese shareholders in that company forged their identity documents.

The ED suspects this alleged forgery was done to launder illegally generated funds using shell or paper companies and some of these “proceeds of crime” were diverted to stay under the radar of Indian tax and enforcement agencies.

The ED on Thursday said the Indian arm of Chinese smartphone maker Vivo “remitted” almost 50 per cent of its turnover, which is Rs 62,476 crore, mainly to China in order to avoid paying taxes here. The federal probe agency also said it has seized funds worth Rs 465 crore kept in 119 bank accounts by various entities, Rs 73 lakh cash and 2 kg gold bars after its pan-India raids that were launched early this week on July 5 against Vivo Mobile India Pvt. Ltd. and its 23 associated companies.
Is It The First Time These Chinese Firms Are Under Scanner?

Premises of a number of these Chinese smartphone companies including Xiaomi, Oppo and Vivo, their distributors and linked associates were raided across the country by the I-T department in December last year and it later claimed to have detected alleged unaccounted income worth over Rs 6,500 crore due to violation of the Indian tax law and regulations.

The action is being seen as part of the Union government’s steps to tighten checks on Chinese entities and the continued crackdown on such firms and their linked Indian operatives that are allegedly indulging in serious financial crimes like money laundering and tax evasion while operating here.

The stepped-up action against the Chinese-backed companies or entities operating in India also comes against the backdrop of the military stand-off between the two countries along the Line of Actual Control (LAC) in eastern Ladakh has been ongoing for more than two years now.
How Has China Responded?

Chinese Foreign Ministry spokesman Zhao Lijian has told a media briefing, “As I have stressed many times, the Chinese government has always asked Chinese companies to abide by laws and regulations when doing business overseas… In the meantime, we firmly support Chinese companies in safeguarding their lawful rights and interests.”

“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,” the spokesman said.

In the first quarter of 2022, Vivo had a 15 per cent market share in the Indian smartphone segment with the shipment of 5.5 million devices, according to market research and analysis firm IDC. According to a Counterpoint research report, Vivo became the top 5G brand in the Rs 10,000-20,000 price bracket segment in the country during March 2022 quarter.

Read all the Latest News, Breaking Newswatch Top Videos and Live TV here.