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Chinese mobile phone makers are in crisis in India

Chinese mobile phone maker Vivo is facing a policy trap in India. How to maintain stable growth in the global market with a sharp increase in uncertainty is what every Chinese multinational company must consider now.

For many smartphone makers in China, 2014 is a crucial point in time. Vivo, Xiaomi, OPPO, Realme and other mobile phone brands entered the Indian market that year.

Eight years later, domestic mobile phone brands in India have slipped from the original market share of 46% to less than 3% today. Five major mobile phone manufacturers including Xiaomi, Samsung, Vivo, Realme and OPPO have taken over the Indian smartphone market.

However, the rapid expansion of Chinese mobile phone vendors in India was accompanied by sanctions measures.

On April 30, 2022, India’s Anti-Money Laundering Agency confiscated US$725 million (4.89 billion yuan) from the bank accounts of its Indian subsidiary because Xiaomi had violated India’s domestic foreign exchange management law.

On July 7, 2022, India’s Enforcement Department alleged that Vivo had violated the Anti-Money Laundering Act in a statement. Subsequently, 119 of Vivo’s bank accounts in India were blocked, and nearly 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 hardly competitive. Four of the top five domestic mobile phone brands in India are from China. This has alarmed local mobile phone manufacturers in India and the Indian government. In recent years, India has focused on strategies such as “Made in India”, “Self-reliance” and a “Manufacturing Replacement Program”, hoping to boost domestic manufacturing and reduce dependence on China.

India’s sanctions against Vivo are still ongoing, and the end is not yet known. But Vivo is expected to do something with the deteriorating business environment in India. This incident also raises alarm bells for other Chinese companies in India.