Oppo Hits a Wall in India
On 7/12/22 we noted that the Indian Law Enforcement Agency froze 119 accounts totaling $57.4m, along with fixed deposits, 2Kg of gold, and cash of the Chinese smartphone firm Vivo (pvt), under the accusation that the company had been funneling sales revenue back to its parent BBK Electronics (pvt) in China to avoid paying taxes in India. Vivo is a sister brand of BBK along with Oppo (pvt), OnePlus (pvt), RealMe (pvt), and iQOO (pvt), and to understand how important Chinese brands are to the Indian smartphone market, in 1Q of this year, Chinese brands represented 84.8% of the Indian smartphone market, with only Samsung (005930.KS) and ‘other’ making it into the top 6 group.
It seems that the India\n government has struck again, with the Directorate of Revenue Intelligence, part of the country’s finance ministry, indicating that it had found evidence that Oppo “willfully and wrongly declared description of certain items it imported which allowed it to improperly avail duty exemption benefits of $374.3 million,” with management accepting the wrongful submissions before the Customs Authority at the time of import. The ministry searched the offices of the company and the residences of the management team as part of the investigation which led to the recovery of incriminating evidence. The Ministry also added that Oppo had made $176m in license and royalty payments to other companies, both in and out of China that it did not disclose in the value of goods it imported into India, which violates Indian customs law. Oppo has voluntarily deposited $56.5m as partial customs duty since the investigation.
Oppo’s view however is a bit different than that of the Indian government in that it believes such issues are ‘industry-wide’ and is reviewing a recent warning that the ministry issued after the earlier Vivo incident and an even earlier investigation that led to the seizure of $725m of assets owned by China based Xiaomi (), which erupted into threats of physical violence and harsh statements from the Chinese government during the investigation. The enmity between the two countries stems from border wars that began in the 1960’s but reignited in May of 2020 when Chinese and Indian troops battled along disputed border areas, eventually erupting into gunfire in September 2020 after 45 years of relative peace.
Those battles resulted in the Indian government banning Chinese software applications and some cancellations of contracts between Chinese companies in strategic Indian markets and considerable anti-China protests. While the effect on Chinese smartphone brands was felt for a shot period, they regained popularity with Indian consumers because Chinese smartphone brands designed products designed for the Indian population that had some very specific needs, while more global brands did not, leading to a very loyal following on the sub-continent, aside from the political wrangling..
It seems that the India\n government has struck again, with the Directorate of Revenue Intelligence, part of the country’s finance ministry, indicating that it had found evidence that Oppo “willfully and wrongly declared description of certain items it imported which allowed it to improperly avail duty exemption benefits of $374.3 million,” with management accepting the wrongful submissions before the Customs Authority at the time of import. The ministry searched the offices of the company and the residences of the management team as part of the investigation which led to the recovery of incriminating evidence. The Ministry also added that Oppo had made $176m in license and royalty payments to other companies, both in and out of China that it did not disclose in the value of goods it imported into India, which violates Indian customs law. Oppo has voluntarily deposited $56.5m as partial customs duty since the investigation.
Oppo’s view however is a bit different than that of the Indian government in that it believes such issues are ‘industry-wide’ and is reviewing a recent warning that the ministry issued after the earlier Vivo incident and an even earlier investigation that led to the seizure of $725m of assets owned by China based Xiaomi (), which erupted into threats of physical violence and harsh statements from the Chinese government during the investigation. The enmity between the two countries stems from border wars that began in the 1960’s but reignited in May of 2020 when Chinese and Indian troops battled along disputed border areas, eventually erupting into gunfire in September 2020 after 45 years of relative peace.
Those battles resulted in the Indian government banning Chinese software applications and some cancellations of contracts between Chinese companies in strategic Indian markets and considerable anti-China protests. While the effect on Chinese smartphone brands was felt for a shot period, they regained popularity with Indian consumers because Chinese smartphone brands designed products designed for the Indian population that had some very specific needs, while more global brands did not, leading to a very loyal following on the sub-continent, aside from the political wrangling..
RSS Feed