Chinese cell phone maker Vivo encounters policy traps in India. How to maintain stable growth in a global market with a sharp increase in uncertainty is what every Chinese multinational company must consider now.
For many Chinese smartphone makers, 2014 is a crucial point in time. Vivo, Xiaomi, OPPO, Realme, and other mobile brands entered the Indian market that year.
Eight years later, India's local cell phone brands have fallen from an original market share of 46% to less than 3% today. And five major cell phone manufacturers, including Xiaomi, Samsung, Vivo, Realme, and OPPO, have captured the Indian smartphone market.
However, the rapid expansion of Chinese cell phone vendors in India has been accompanied by sanctions actions.
On April 30, 2022, India's Anti-Money Laundering Enforcement Agency seized USD 725 million (CNY 4.89 billion) from the bank accounts of its Indian subsidiary because Xiaomi allegedly violated the local Foreign Exchange Management Act in India.
On July 7, 2022, the Indian Enforcement Directorate alleged that Vivo had violated the Prevention of Money Laundering Act in a statement. Subsequently, 119 of Vivo's bank accounts in India were blocked, and approximately INR 4.65 billion ( CNY 390 million) in cash and other assets were frozen.
In addition, Huawei and ZTE have been banned from selling products for use in 5G networks in India.
In the Indian market, local cell phone companies are barely competitive. Four of India's top five domestic cell phone brands are from China. This has brought anxiety to India's local cell phone manufacturers and the Indian government. In recent years, India has been emphasizing strategies such as "Make in India," "self-reliance," and "manufacturing substitution program," hoping to foster local manufacturing and reduce the dependence on China.
India's sanctions against Vivo are still ongoing, and the end is not yet known. But it is foreseeable that Vivo will have to do something as the business environment in India deteriorates. This incident also raises the alarm for other Chinese companies in India.