Xiaomi: Phone Component Firms Hesitant on India Expansion

Chinese companies operating in India are generally hesitant to openly discuss the scrutiny they face. However, Xiaomi, a prominent Chinese company, has taken a different approach by writing a letter to the Indian government.

This action suggests that they are encountering difficulties in India, particularly in the smartphone sector, where a significant portion of critical components is sourced from Chinese suppliers.

Xiaomi, a Chinese company, has communicated to New Delhi that smartphone component suppliers are hesitant to establish operations in India due to the intense scrutiny faced by Chinese companies from the government.

In a Reuters report, Xiaomi has additionally appealed to India to contemplate providing manufacturing incentives and reducing import tariffs for specific smartphone components. This reflects Xiaomi’s efforts to address the challenges encountered in India’s business environment and advocate for policies that could facilitate smoother operations for Chinese companies in the country.

The Chinese company, holding the largest share of India’s smartphone market at 18%, manufactures smartphones in India using primarily local components, with the remainder imported from China and other countries.

India intensified its scrutiny of Chinese businesses following a border clash in 2020, which resulted in the deaths of at least 20 Indian soldiers and four from China. This incident disrupted the investment plans of major Chinese companies and prompted repeated protests from Beijing.

While Chinese companies operating in India typically avoid discussing the scrutiny they face, Xiaomi’s decision to write a letter to the Centre indicates ongoing challenges in India, particularly in the smartphone sector where numerous critical components are sourced from Chinese suppliers.

In the letter, Xiaomi India President Muralikrishnan B. emphasized the importance of “confidence building” measures to encourage component suppliers to establish operations locally in India.

“Apprehensions among component suppliers in India, particularly those of Chinese origin, hinder local operations,” stated Muralikrishnan without specifying companies.

The mobile firm also highlighted concerns regarding compliance, visa issues, and other unspecified factors. It emphasized the government’s role in addressing these concerns and fostering confidence among foreign component suppliers, urging them to establish manufacturing facilities in India.

Indian authorities accused Chinese smartphone company Vivo Communication Technology of violating certain visa regulations and allegedly transferring $13 billion in funds from India.

Additionally, India froze over $600 million in Xiaomi assets due to allegations of illegal remittances to foreign entities, purportedly disguised as royalty payments.

Both Chinese companies deny any wrongdoing.

In addition to regulatory scrutiny targeting companies like Xiaomi and Vivo, India has taken further actions since 2020, including banning over 300 Chinese apps such as ByteDance’s TikTok and suspending planned projects involving Chinese automakers like BYD and Great Wall Motor.

Read more Tech News