Global Times fears for the future of its company Xiaomi in India. Ever since the ED launched a probe against the Chinese company last year, the CCP establishment has been sweating profusely. After ED summoned its former MD in India to its offices, the same publication, which is usually highly aggressive in its defence of Chinese interests appears to have gone timid and soft. The propaganda portal is now pleading with the Indian agencies to go lenient on its Xiaomi company.
Manu Kumar Jain, former India head and current global vice-president of Chinese mobile manufacturing company Xiaomi has found himself ensnared in the Enforcement Directorate (ED) net. On Wednesday, Manu appeared before the central financial-crime fighting agency after being summoned in connection with an alleged contravention of the foreign exchange law.
Reportedly, Manu flew in from Dubai, where he is currently based and attended to the call of ED. While ED continues its investigation on whether the company’s business practices conformed with Indian foreign exchange laws — China appears to be rattled.
Treat us fairly and equally: A timid Global Times defends Xiaomi
CCP’s mouthpiece Global Times on Wednesday released a feature-length article titled “India’s probe of Xiaomi ‘merits attention’ amid expectations for easing tensions: insiders” and called upon New Delhi to go easy on the Chinese company.
One of the paragraphs in the op-ed read, “The latest move involving Xiaomi does not benefit any side, given the fact that Xiaomi is a major representative of Chinese investment in India, which contributed to local employment.”
Quoting an industry expert, Global Times remarked, “We do hope that the Indian side will treat foreign investors equally, and create an open, fair and non-discriminatory business environment for all enterprises in India.”
The tabloid publication is usually hyper-sensitive whenever a Chinese company or establishment is targeted. However, given the toned-down approach of the publication, it appears that Xiaomi is in deep waters and playing rough in the situation could further hurt the company.
Using the Indianess of the company to shield the Chinese interests: The Global Times and Manu Kumar playbook
Global Times and its passionate defence of Manu Kumar Jain follows a similar playbook that the latter used when he was the head of the Indian arm of the business. As reported by TFI, in 2020, when Xiaomi phones in India did not show weather results for Arunachal Pradesh, Manu Kumar Jain had gone on to fragrantly claim that the company was “more Indian” than any other smartphone firm in the country.
He diligently attempted to explain how Xiaomi’s products were ‘Made in India’ and how the Xiaomi employed over 50,000 people in India. That the entire leadership team of the company is Indian and that the company pays its taxes in India were among the other reasons given by Jain to distance and insulate the Chinese company from growing anti-china sentiments in India.
Global Times has been using a similar line to shield the company from the actions of ED. Xiaomi may be employing workers in India but that doesn’t insulate it from facing the music.
What has ED found in its investigation?
ED sources in its report filed have revealed that Xiaomi had not complied with the regulatory mandate for disclosure of transactions with associated enterprises. Such lapse makes them liable for action. Reportedly, Xiaomi has made remittances, which aggregate to more than a thousand crore rupees, in the nature of royalty, to and on behalf of its group companies located abroad.
According to an India Today, ED in its report stated, “…foreign funds have been introduced in the books of the Indian company but it transpires that the source from which such funds have been received are of doubtful nature, purportedly with no creditworthiness of the lender. The quantum of such borrowings is in crores of rupees on which interest expenses have also been claimed”.
Reportedly, before recording his statements at ED’s Bengaluru zonal office, Jain was asked to submit documents related to Xiaomi’s shareholding, source of funds, vendor contracts, and payments made to Indian management and sent abroad. And according to sources, he complied and submitted the same.
A spokesperson of Xiaomi released a statement saying, “We give paramount importance to the laws of the land. We are fully compliant with all the regulations and are confident of the same. We are cooperating with authorities with their ongoing investigation to ensure they have all the requisite information.”
Xiaomi remains India’s top smartphone seller in 2021, with a 24 per cent market share, according to Counterpoint Research. South Korea’s Samsung Electronics was the no. 2 brand with a 19 per cent share. However, with allegations piling up against Xiaomi, including sharing of Indian user data with the CCP – the company finds itself in a tough spot. And if the trend continues, it may very well see its top spot slip away.