Vantage | Why Chinese firms are wrong about their scrutiny by India

Globally, investors are pulling back from China’s market. These investors are apprehensive. Chinese stocks are rapidly losing their value, and this sentiment applies to Chinese investments in India as well. They are increasingly being viewed with suspicion. The broad sentiment is negative, and it is getting worse by the day. Two leading names are in trouble: Xiaomi and Paytm. Both are market leaders. Xiaomi is among the leading smartphone sellers in India, while Paytm is synonymous with digital payments, but both companies are under the spotlight because of their Chinese connections. Xiaomi officials have written a letter to the Government of India about smartphone component suppliers. Xiaomi claims: “The suppliers are wary of setting up shop in India.” “There are apprehensions among component suppliers regarding establishing operations in India, stemming from the challenges faced by companies in India, particularly those of Chinese origin,” said the letter signed by Xiaomi India’s president.

However, what are the apprehensions? The company did not spell them out. But towards the end, the statement gives it away. It says, “Challenges faced by companies in India, particularly of Chinese origin.” That’s what Xiaomi is worried about: India’s scrutiny of Chinese companies. Its rise in India was rapid, but in recent years, Xiamoi has had some run-ins with the law. In 2022, Indian officials froze its assets worth over 600 million dollars. It is because Xiaomi is said to have violated Indian laws by remitting some money illegally, so company assets were frozen. Last year, Xiaomi filed a lawsuit against the decision. But a judge rejected the appeal. Then you have Vivo, another Chinese smartphone maker that has faced scrutiny. Just like Xiaomi, Vivo too is accused of remitting money illegally.  It was also pulled up for visa violations for visiting the “sensitive” Himalayan region of Jammu and Kashmir. Reports say as many as 30 Chinese executives of Vivo came to India. They were given business visas. But when they applied, these executives hid the fact that they worked for Vivo. Plus, some of these employees ended up travelling to Jammu and Kashmir. This was a breach of their business visa provisions. India bars foreigners from entering or staying in the areas of Ladakh and parts of Jammu and Kashmir it has designated as “protected” unless they have a permit from the authorities—a document that is separate from a visa. Jammu and Kashmir is a sensitive region. Foreigners cannot just travel there. They need permission for it. In addition to a visa, they need a special permit to visit regions like Jammu and Kashmir. Vivo employees violated these rules. So India had valid reasons to investigate. But China doesn’t see it this way. Beijing says Chinese companies are facing discrimination. “China hopes that India can fully understand the mutually beneficial nature of bilateral economic and trade cooperation and provide a fair, just, transparent, and non-discriminatory business environment for Chinese enterprises’ investment and operation there,” said Mao Ning, Chinese foreign ministry spokesperson. If that were indeed the case, India wouldn’t have cleared 80 Chinese FDI projects in 2022. India doesn’t have a problem with Chinese investment. It has an issue with shady and murky transactions. That’s the reason why Paytm, too, is facing scrutiny. The Indian fintech giant is facing regulatory trouble. Paytm has been put on notice by India’s central bank. It has run afoul of compliance, but for many years, Paytm has ignored warnings from authorities. Now, it faces a potential ban from the payments space. Multiple payment services on the app could shut down in March. Paytm is facing scrutiny for its Chinese links. The company has a Chinese investor. Ant Financial reduced its stake in OCL to less than 10 percent in July 2023. Jack Ma-led Ant Group invested in Paytm. But last year, Ant reduced its stake. Now it owns less than 10 percent of the shares. Reports say the Government of India has set up a panel that will look into Chinese investments in Paytm, among other things. The moral of the story is that the rule of law may be an alien concept for China, but for India, it is non-negotiable. If Chinese companies or investors want to do business in India, they all have to follow the rulebook. Views expressed in the above piece are personal and solely those of the writer. They do not necessarily reflect Firstpost’s views. Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook ,  Twitter  and  Instagram .