India Freezes Xiaomi Assets
Xiaomi’s (1810.HK) Redmi 9 Power was the top selling smartphone in India in 2021 and the brand was the best-selling smartphone brand in India based on unit volume (Apple has the highest revenue in 4Q) and was for most of 2020. That said, there has been considerable friction between the Indian government and Chinese smartphone brands, a result of border disputes between the two countries that have created an adversarial relationship. India’s anti-money laundering agency recently took over bank accounts held by Xiaomi Technology India, under the Foreign Exchange Management Act and has initiated an investigation of what Xiaomi called royalty payments that were transferred from India to the company’s Chinese parent in February. The Indian government stated that “such huge amounts in the name of royalties to three foreign based entities when Xiaomi India had not availed any services from the three foreign entities…” which they believe violates the country’s foreign exchange statutes.
According the India’s release Xiaomi has been making such payments to these foreign entities since 2015, totaling $726m, which is the amount the Indian government has seized and is also considering that Xiaomi gave misleading information to the banks involved in the transfers and has called a number of former and current Ziomi employees to testify to the committee. Xiaomi stated that it abides by all Indian laws and was fully compliant with all regulations, and is cooperating with authorities.
According the India’s release Xiaomi has been making such payments to these foreign entities since 2015, totaling $726m, which is the amount the Indian government has seized and is also considering that Xiaomi gave misleading information to the banks involved in the transfers and has called a number of former and current Ziomi employees to testify to the committee. Xiaomi stated that it abides by all Indian laws and was fully compliant with all regulations, and is cooperating with authorities.
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