India is such a terrible country!

Tech 2023-06-19 15:41:48 Source: Network

Author: Deng XinhuaOn June 9th, the Indian law enforcement agency stated that Xiaomi was suspected of violating the country's Foreign Exchange Management Law by illegally transferring funds to foreign entities.Based on this accusation, the Indian authorities previously seized a total of 55

Author: Deng Xinhua

On June 9th, the Indian law enforcement agency stated that Xiaomi was suspected of violating the country's Foreign Exchange Management Law by illegally transferring funds to foreign entities.

Based on this accusation, the Indian authorities previously seized a total of 55.51 billion rupees of funds from Xiaomi(About 680 million US dollars, nearly 5 billion RMB)Or it will be officially confiscated.

Why did India take such a crazy move?

01 presents an international version of 'Close the Door and Beat the Dog', with no one in India

When Xiaomi entered India, he was welcomed by India. Xiaomi founder Lei Jun and Indian Prime Minister Modi Laoxian took a group photo as if they were brothers. List of Xiaomi products has also been very successful in India, dominating the Indian mobile phone market.

Group photo of Indian Prime Minister Modi and Lei Jun

However, in the first quarter of this year, the market share of List of Xiaomi products fell to the third place, with a share of 16%, down 44% year on year. Samsung from South Korea has maintained a leading position in the Indian smartphone market for two consecutive quarters with a 20% share.

Nowadays, Xiaomi is facing an international version of "closing the door and beating the dog", which is really adding to the snow storm.

You know,Xiaomi's adjusted net profit in 2022 was only 8.5 billion yuan, which resulted in the confiscation of nearly 5 billion yuan, equivalent to more than half of last year's profits being wasted.

With the great success of China's reform and opening up, Vietnam and India subsequently achieved economic reforms, and ASEAN also made efforts to shift the global economic center from the Atlantic region to the Indo Pacific region for the first time in hundreds of years. In today's era, the economic competition among countries in the Indo Pacific region is the most intense and exciting.

The way India treats Xiaomi, Xiaomi may suffer greatly, but India itself may suffer even more. Do you want to actively weaken your competitiveness when others play the role of "Qianjinshi Horse Bone" and you play the role of "shutting down the door and beating the dog" in India? Do you want to voluntarily give up the opportunity to Vietnam?

India should learn from Ireland, a small island country in Europe, in terms of "Thousand Golden City Horse Bone".

In the early years, Ireland, in order to develop its economy and attract investment from Apple, promised to give Apple a large amount of tax incentives, which was originally a win-win situation. But the EU is not doing it anymore.

In 2016, the European Commission ruled that Ireland needs to collect up to 13 billion euros in taxes from Apple in the United States.

13 billion euros, at the latest exchange rate, about 100.3 billion RMB! Compared to the nearly 5 billion yuan confiscated by India from Xiaomi, I don't know how much larger it is! Moreover, Demographics of the Republic of Ireland has a population of only 5 million, while Demographics of India has a population of 1.4 billion.

But the Irish government said, 'We absolutely don't want this money!'!Irish Finance Minister Nunan strongly opposes the European Commission's ruling. And the Irish government also appealed to the European Union, firmly opposing the collection of this tax.

At the end of 2017, the Irish government reached a consensus with Apple to receive $15.4 billion in tax payments from Apple through a custody account, until the European Union made a ruling.

The reason why Ireland places money in a custody account is to indicate:I won't touch a penny of this money.

Image source: Apple

In 2020, the Permanent Court of Justice of the European Union ruled that Apple did not need to pay 13 billion euros in taxes. But the European Commission won't do it. On May 23 of this year, the European Commission appealed to the European Supreme Court, demanding the overturning of the ruling of the European Permanent Court and requiring Apple to pay 13 billion euros in taxes. The lawsuit is still unresolved. On November 5th, the EU Supreme Court will make a ruling, but the ruling is not binding.

Look,Ireland has been suing the European Union for 7 years in order not to accept the money from Apple!

This money is undoubtedly a huge sum for Ireland, which has a population of 5 million. But this small island country understands that it is very, very uneconomical to have a bad reputation of "shutting down the door and beating the dog" in order to scare away foreign investment for this one-time income.

But India, with a population of 1.4 billion, is staring at Xiaomi's 5 billion yuan "small money", really nobody in the country!

Modi Laoxian, did you forget your original intention when you first proposed developing manufacturing, improving infrastructure, and vigorously attracting foreign investment when you took office?

Not long ago, Apple also said it plans to transfer 45% of its production capacity from China to India. Buffett said in an interview with CNBC:Apple's decision to relocate its supply chain to the Indian market was a very foolish one.

Buffett is right!

Populism has dragged down India's development

In today's world, the Indo Pacific region has been given many opportunities.

The development of India and Vietnam is particularly noteworthy. But it seems that whether Vietnam or India, they are still so short of breath.

Taking India as an example, both the international environment and population situation are very advantageous.

Not to mention the international environment, Modi Laoxian still has a set of tricks in this regard, and can be considered one of his peers who understands diplomacy quite well.

In terms of population situation, last year China had 9.62 million newborns, while India had 23 million! A country in an economic upward period, with such a good population situation, no wonder companies from all over the world are running to India, and Chinese companies are no exception. Huawei, Xiaomi, OPPO, vivo, and others have been in India for many years.

But populism is very prevalent in India. Taking the attitude towards China as an example, 74 year old retired Indian Lieutenant General Shahraj Singh Panag published an article in Indian media, with the main point being that there will be a war between China and India. This is not his own opinion. 69.3% of people in India believe that if China and India go to war, India will win. Do these statements sound strange?

Therefore, the experience of Tiktok, Xiaomi, OPPO and other enterprises in India has its environmental background.A few Indians have misunderstood that the Chinese love peace and seek development, and have no intention of curbing India's development.

If there are true reformers in India, efforts should be made to guide and dissolve the populist sentiment of the Indian people. How can populism hold back the development of the Indo Pacific region with such fierce competition? Populism was once popular, but falling behind in the Indo Pacific competition was a century long regret.

Modi Lao Xian has some reform measures that have contributed greatly to India's current economic achievements. However, he is still not considered a true reformer.

Since he took office as Prime Minister of India, Modi Laoxian has put forward a series of major strategies such as "Made in India", "Digital India", "Monsoon Plan", "Action to the East", and also put forward the slogan of "Let Indian Railways Railway Speed up".

During the COVID-19 in 2020, Modi Laoxian launched a package of economic stimulus plans totaling 20 trillion rupees. He advocates for "bold reform" and "self-reliance", transforming the 21st century into the "Indian century".

In 2022, Modi Lao Xian proposed at the celebration of India's 75th anniversary of independence that India aims to become a developed country in 25 years.

On August 15th, Indian Prime Minister Modi delivered a speech at the celebration of India's 75th anniversary of independence.

Modi wants to promote policies to develop the national power, defense, and digital technology industries. There is no problem with the direction, but the approach is very problematic. Using the so-called "suspected violation of the Foreign Exchange Management Law" to engage in Xiaomi is really shameful.

In addition, the Indian The Economic Times reported on June 13 that the Indian government has required Chinese mobile phone manufacturers to do the following in their business in India:

1. Introducing Indian equity partners in India's business, with Indian capital holding 51% of the joint venture company.
2. Indian executives must be appointed to key positions such as CEO, COO, CFO, and CTO.
3. The supply chain must use designated Indian partner manufacturers.
4. Through joint ventures with Indian companies, we aim to enhance local manufacturing capabilities and component levels, gradually achieving full export from India.
5. The distributor must be a local Indian enterprise.

According to the report, Chinese companies such as Xiaomi, Oppo, Realme, Vivo, and others participated in the meeting, but the specific execution deadline has not been announced yet.

An Indian official participating in the meeting stated that India must have control over the management and board of directors of Chinese mobile phone companies (in India).

This approach by India is tantamount to a disguised acquisition of Chinese companies, and can even be said to be an "open competition". On the surface, what appears to be damaged is Chinese companies such as Xiaomi, while in the long run, what is damaged is India's foreign investment attraction and international competitiveness.

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