There is a passage on the Internet, I don't know if you have heard it, calling for the four major deaths in life: tax evasion in the United States, drug trafficking in China, hostage in Russia, and president in South Korea.
I would like to add one more thing, which is to do business in India.
For most developing countries, the international giants are grandfathers, the strong point of control of the national economic lifeline, a little bit of the point is also a lot of money, but to India, this magical country, these grandfathers have become a little wife to raise, earn some hard money not to say, but also hammered every day, this video, I will pass a few unlucky egg examples, talk to you about how difficult it is to do business in India, what strange operations will be encountered, and why India likes Hoho foreign companies.
Below there are the first unlucky eggs, the global retail giant Walmart.
In 2006, Walmart set its sights on India's retail market and planned to open convenience stores like 711. Wal-Mart thought so, India had a population of 1.1 billion, hundreds of billions of dollars in the retail market, but also expanding, but at that time India's retail industry was mostly mom-and-pop stores, that is, commissaries, relatively low, this is the opportunity, so Wal-Mart brains are hot, set up a joint venture company in India, ready to squat first, once the world changes, it will immediately go down, fiercely send it a crooked fortune.
In 2012, the Indian government finally introduced a law to allow foreign companies to enter the retail market, so Walmart, which was squatting on its legs, immediately announced that we would open 22 convenience stores in one go, and then spend a lot of money to rent outlets for decoration. But when it came to the 8th, there was an accident, the Indian government made three consecutive old punches, spitting out Wal-Mart hammer blood, left hook fist said that Wal-Mart was suspected of spending 25 million US dollars, bribing Indian officials to lobby, which tore open the legal opening, so began to investigate Wal-Mart executives in India, right hook fist said that Wal-Mart 30% of the goods must be purchased locally, and Wal-Mart sells high-standard goods, looking at those things produced in India, the hand began to shiver, and then a hook fist said, Wal-Mart to partners, The $100 million loan from the Indian Barty Group violated India's foreign investment law and wanted to do it.
India is afraid that Walmart will turn the tide, followed by a slap in the face, 2014 is india's election year, 2013, the Bharatiya Janata Party, is now one of the elders of the ruling party, the former finance minister Sinha said, when we come to power, we will immediately change the law, do not allow foreign companies to engage in retail business, those who opened, if it is decent, if it is not decent, we will help them decent.
So Walmart instigated it, dissolved the joint venture overnight, and withdrew from the Indian retail market, leaving only the wholesale business.
So doing business in India is like opening a box of chocolates, full of uncertainty, and you never know if the next piece is mustard or curry, depending on the mood of the Indian government.
Wal-Mart this is not bad, although it was violently beaten, at best it is a skin trauma, but some companies in India, directly by sucking blood and cutting flesh, and the means are brutal, the most famous victim, is the global telecommunications giant, the United Kingdom's Vodafone, the whole process is very bloody.
The thing is, Li Ka-shing since the end of the last century, and India joint venture, engaged in telecommunications business, made quite large, in order to be simple and easy to remember, the company name is called "India Hutchison" (Hutchison Whampoa Asha Communication Company).
In 2007, Vodafone also looked at the Indian market, so it spent $11.12 billion to indirectly acquire 67% of the equity of "India Hutchison" from Li Ka-shing, why is it an indirect acquisition, because the parent company of "India Hutchison" is Li Ka-shing's CPG Investment Company in Cayman, this time Vodafone acquired this CPG, so it indirectly acquired 67% of the equity of "India Hutchison", that is, this acquisition, the first is not in India, the second transfer is not an Indian company, It's a Cayman company, and although it involves local Indian companies, Vodafone believes that you can't control India.
However, the Indian tax department does not think so, since it involves Indian companies, it is under our control. According to our Indian Income Tax Law, you Vodafone bought an Indian enterprise, you have to pay equity transfer income tax, the Cayman company is a shell, this little means of tax evasion still want me, know who invented the Arabic numerals?
So the Indian government demanded $2 billion in taxes from Vodafone, saying that if you don't pay it, I will deduct your deposit.
Vodafone of course did not do it, so it launched a lawsuit with the Mumbai High Court, the Bombay High Court felt that it was bold and careful, there was nothing wrong with it, so it rejected Vodafone's appeal, Vodafone was not dead hearted, and then went to the Supreme Court of India to appeal, after back and forth, and finally the Indian Supreme Court believed that the Income Tax Law, which began to be implemented in 1961, there was no support from relevant legal provisions, so in 2012, Vodafone won the lawsuit without paying money.
Isn't there no legal basis for the Indian tax authorities to look at it? That's simple, isn't it over?
So the Indian tax authorities in 2012 to the Parliament, revised the relevant content of the Income Tax Law, stipulating that no matter where the registration is, as long as it involves our Indian company, whether you are direct or indirect, you must pay taxes!
Originally it was a dead sheep, nothing, but the funny came, the Indian Parliament said that the revised law, but the interpretation of the original provisions of the 1961 Income Tax Law, so the revision has been effective since 1961, this year is 2012, that is, it can be traced back to 50 years.
The Indian tax department then rushed to the Indian Supreme Law, re-appealed, the Indian Supreme Law looked at it, there was a basis for this, so it was decided that Vodafone lost the lawsuit, and had to play money, this time it was not 2 billion US dollars, even taxes, late fees with fines totaled more than 5 billion yuan, and Vodafone only spent a total of 11.1 billion US dollars on the acquisition that year.
Vodafone is crazy, did not expect that there is still such an operation on the earth, how to explain this to the shareholders? Under the sadness and indignation, I thought of the last resort, that is, to go to the International Arbitration Court to file a complaint. Finally, the International Court of Arbitration declared Vodafone successful in 2020, the 13-year lawsuit ended, some people analyzed that behind Vodafone's victory, there is a strong intervention of several Western countries such as the United Kingdom, because after the passage of this bill in India, all foreign companies will be affected, many of them have similar equity transactions, if Vodafone becomes an example, then one by one have to make up money.
In fact, many people support India's tax on Vodafone, and the International Court of Arbitration is not necessarily a good bird, and they survived the Philippines in the past few years. I think India is reasonable, but not legal, the law has been exploited by people, you have to recognize, you should pay tuition, but India not only modified the law, but also arbitrarily extended the retrospective period, this matter is scary, the content of the law and the effective time you can change at will, what is the difference with no law? It's all a kid.50.
In addition, the Indian government not only fines money to do things, but also has a long hand, and all along, the major foreign companies are like prisoners, subject to strict supervision by the Indian government, one person and one mouth ball and a dog rope, and if they are not careful, they will be whipped.
For example, in the past 10 years, India's e-commerce industry has been booming, Amazon, Wal-Mart have done the top two, but the Indian government stipulates that foreign e-commerce platforms can not directly sell goods to consumers, that is, can not have their own business, not to mention the strict selection of online pigs, even Beijing West Beijing and Taobei Xinxuan can not do, can only be used as a third-party platform, to put it bluntly to earn a service fee. The Indian government's purpose in doing so is to prevent foreign companies from stealing the business of small Indian sellers.
Several big e-commerce companies have thought of a way to save the country, support some of India's big sellers, let them do their own warehouses to sell goods for themselves, but the Indian government has tried everything to block this loophole and remove tens of thousands of their goods.
In addition, the Indian government also stipulates that foreign e-commerce platforms cannot engage in discounts, promotions, subsidies and other activities, saying that this is price manipulation, because the Indian government is afraid that the price war will drag down local physical sellers. India has also conducted round after round of investigations into commercial bribery and mergers and acquisitions against companies such as Amazon, and the penalty is several billion rupees.
Therefore, multinational companies in India are subject to the Indian government's difficulties, not as active as in other places, the development space is severely limited, and the profit growth is limited, such as Amazon, which opened in India in 2014, and is still losing money.
Doing business in India, not only to fight with the Indian government, you have to pass this pass for the Indian people, otherwise it will be another violent beating, in this matter, the most powerful voice is McDonald's.
In 1996, McDonald's officially entered India, targeting India's 100 million middle class, but just a few years after opening the store, something went wrong. In 2001, 3 Indian businessmen living in Seattle sued McDonald's, saying that its family secretly used beef juice when frying French fries, which was a serious problem, because in Hinduism, cattle are holy relics, and there is no money to eat watermelon in the wet market, even cow urine and cow dung are health products, which must be counted in GDP, and now you McDonald's hide the facts from our Indians, if we eat it, and have a face to see Shiva, isn't this forcing us to go to hell?
McDonald's immediately responded, saying I'm not, I'm not, we're using 100% pure vegetable oil. Later, I really couldn't stand it, and finally admitted that when I was frying fries, I used such a loss of beef juice, apologized and lost money, and it was difficult to put things to rest.
But when the news reached India, the camp was immediately bombed, and a large number of Hindus ran to the streets of Mumbai to protest McDonald's blasphemy against the holy relics, and when the team reached a McDonald's restaurant, they came to a zero-dollar purchase. Then the gang went to another McDonald's restaurant, where cow dung was smeared everywhere, and Hindu organizations such as the Shiva Army Party demanded that the government immediately close McDonald's 27 restaurants in India.
This frightened McDonald's, and quickly clarified that McDonald's in India did not have any pork beef, nor did it have any spices, and if you did not believe it, you could go to the test.
For more than 20 years, McDonald's has been working as a shop in India with its tail between its legs. Only selling lamb and chicken, not to mention, and think that more than 400 million people in India are vegetarian, afraid of making trouble again, so they quickly launched a variety of vegan foods, and even launched a special vegetarian restaurant.
Almost all large-scale violent conflicts in India are triggered by religion, such as the Great Uprising in India in 1857, the religious vendetta caused by the partition of India and Pakistan in 1947, the Gujarat Massacre in 2002, etc. Gandhi died because of this, Nehruta's daughter, Prime Minister Indira Gandhi was even more miserable, and he was killed by his personal bodyguard for ten years, which is also a religious issue. If beef had been used, all the managers and cooks at McDonald's in India would probably have been treated the same as the widows in India.
But this matter is not over, when McDonald's opened a shop near several religious sites such as the Golden Temple, it was a stall again, although McDonald's opened a vegan restaurant near the temple, and it did not dare to make a taboo in India, but it was committed abroad. In the United States alone, McDonald's consumes 800 million pounds of beef a year, so it is regarded as a big problem by some Hindus, and various religious groups often protest to McDonald's to withdraw from India.
According to the Financial Times, as of March 2022, McDonald's has a total of 316 stores in India, while China has more than 4300 stores, which is a fraction of ours, which shows how big McDonald's psychological shadow in India is in 26 years, and how many pairs of pants have been changed.
In fact, Wal-Mart has also experienced this in India, and in 2012, it was protested by the public because they were worried that Wal-Mart would steal its own business, and this public opinion also affected the top level of the government, which led to India's counterattack on the issue of opening up the retail industry. Amazon in India that was all resistant to numbness, and the reserved program was to burn the head of Bezos.
Therefore, there are no major multinational companies in India that are not hammered. It is estimated that when executives meet each other, they must first greet each other, hey, how much has been fined this quarter?
So how to understand this matter, the essence of the various encounters of foreign companies in India is the repeated jump between the Use of Foreign Capital and self-reliance by the Indian government.
After independence, India, although backward, has always had a dream of being a big country, and to be a big country is to develop industry, but India lacks capital and technology. So from the beginning of the Nehru era, India has limited the opening of the market, the introduction of some technical multinational companies, but at that time said that the introduction of foreign capital is to share the money to get technology, accelerate self-reliance, and because the British Hoho small for 200 years, it is not easy to be home, very sensitive to independence and autonomy, afraid of being controlled by outsiders The economic lifeline, so the control of foreign capital is very strict, such as india at that time, foreign companies want India, then India must account for the majority of equity, Foreign companies must transfer technology and so on.
In the 1970s, India felt that it was doing it again and wanted to be self-reliant, so it introduced laws stipulating that those industries that did not need foreign technology and intellectual property rights should be cleared out, only domestic enterprises should be developed, and foreign enterprises were not allowed to expand the scale of production, and the shareholding ratio of foreign enterprises was further restricted. More than 50 large companies, such as Coca-Cola and IBM, have all withdrawn from India.
In the 1980s and 1990s, India's economy was Wang Xiao'er's New Year - a year is not as good as a year, and in the early 1990s, he could only borrow a large amount of money from Western countries to continue his life, and finally understood that he could not play on his own, so he shook his handkerchief to foreign investors, threw a flattering eye, and gradually opened up the automobile, computer, communications, infrastructure, finance and other industries, and seduced a large number of multinational companies to invest in India.
However, the ultimate goal of the Indian government is to develop its own economy through foreign capital, and even require foreign direct investment in infrastructure, save enough money, and then get the technology, kick foreign capital, play their own, so the dead nature does not change, no matter how many investment policies have been introduced, has been strictly guarded against foreign enterprises, every three forks and five to clean up, how to do it mainly depends on the mood.
In fact, not only India, the countries that have introduced foreign investment are thinking like this, the reason is very simple, the family lacks money, but a large amount of money is afraid of not being able to fall into the debt crisis, and eventually dies worse than Argentina, so I want to use other people's money to develop the economy and eventually achieve self-reliance, which is not wrong.
But the problem is that when you use other people's money, you have to give them benefits, just like borrowing money to pay interest, this is the rule. But the matter of rules is a big problem in India.
When sharing experience, Indian foreign executives often say such a thing, that is, since Indians speak English and vote, a large number of Indian immigrants live in Western countries, and they are mixed very well, so at the beginning they thought that the brain circuits of Indians are the same as them, they will do business according to Western rules, and as a result, when they go to that look, they find that they have lived in vain, which is not the case at all, and the rules of Indians are no rules.
There is a consensus among these Western executives that Indians hate rules, and what they advocate is "taking shortcuts", that is, breaking the rules to make things develop in their favor, such as the Vodafone tax case, setting a retrospective period of 50 years, which is a typical example, which is unimaginable to Westerners who believe in the law. For example, the Indian government likes to launch bribery or merger and acquisition investigations, fines are just a means, the real purpose is to blackmail you, let you obediently give up profits.
In fact, this is not surprising, dealing with Indians, is a process of fighting wits and courage, the third brother will use various means, take advantage of each other, bargaining that is the lightest, can squeeze a point is a point, do not squeeze you to the limit, that life is not complete.
In a word: if you take advantage of the small, you will suffer a big loss.
And bad rules for Indians, not only is not shameful, but is a manifestation of intelligence and ability, that is, those foreign executives said, Indians to break the rules of this matter, as an innovation to treat, is to praise, not only officials, the people are the same, who if you are honestly queuing, that is called a fool, those Chinese sellers who do e-commerce in India, you go to ask, which is not tossed to death by Indian buyers.
Then why do Indians hate the rules, it is very simple, because all kinds of resources in India are highly tense, and because of the caste system, the distribution of resources is very unreasonable, if a person completely abides by the rules of society, it is not even a bowl, so the position must be flexible, the face must be thick, so that it can be eaten thin.
So India up and down is not crooked brains are a minority, superficially criticized, but many people are privately quite proud of this matter.
Strong nationalist tendencies, coupled with the disregard for rules and the psychology of taking advantage, lead to the Bottom Line of the Indian Government "can go down to the five oceans to catch turtles", those things that are done, ah, it is not easy to guess, but one is certain, that is, foreign companies in India, can only make small profits, you want to play big, sorry, I can only innovate for you. Therefore, India's positioning of foreign companies is simple and clear, that is:
Slag.
Because of this, India's business environment is very poor, the World Bank will release the "Global Business Environment Report" every year, to illustrate the difficulty of doing business in various countries, a total of 190 countries and regions, India in addition to a very few years can squeeze into the top 70, the rest of the years are hovering between 80 and 130.
In addition, in addition to the Indian government, India's various industry associations and civil society groups are also often demonized, many of the investigations and lawsuits launched against enterprises are from the people, coupled with the large number of ethnic groups, complex national conditions, and involving religious issues, so they go to the streets to protest at every turn.
But why is it so tossed that a large number of multinational companies still run to India to find a draw? Because the Indian market is too large, the demand of 1.3 billion people is an irresistible temptation for the vast majority of multinational companies, which is also where the Indian government dares to play a trick, love to come, not to roll.
The huge domestic demand market is the prerequisite for a world power, because the production capacity of industry is unlimited, but the market is limited, and whoever controls the market has the initiative. Export-oriented countries, in addition to selling oil and minerals, even if your GDP is high, but the root of life is still in the hands of others, such as South Korea. Once the interests of a big country are threatened, a small meeting can make you kneel and call Daddy, and in the eighties and nineties, the United States cleaned up Japan, South Korea, Germany and other countries one by one, that is, to pinch the export, and this is how it has been dealt with to us in recent years.
The huge domestic market is also the ballast stone for China's rise, with a population of 1.4 billion, basically as much as the total population of Western developed countries. Even if exports are suppressed, the domestic market, which relies on 1.4 billion people, will not be beaten up like Japan did in the 1980s.
Such a large market, must not be given to others, so we have repeatedly emphasized industrial upgrading, in recent years China's automobile, communications and other industries have taken off, in addition to our aerospace, chips, biomedicine and other industries little by little breakthroughs, only to get these high value-added industries, in order to put the amount of well-treated jobs, huge social wealth are left in the country, in order to break through the middle-income trap. You can imagine what situation will be if the new domestic automobile forces have won the Japanese, American and German three series and most of the market share in China.
Huge demand is there, there is demand for production, some policies in recent years, such as the fundamental purpose of the domestic cycle, is to enhance purchasing power, expand the domestic demand market, walk on two legs inside and outside, than South Korea such a leg single jump, much stronger, but the cultivation of internal skills is more difficult, it takes some time.
But we can't just think about making money, but also spend money, that is, open the market to other countries, buy their things, let them earn China's money, such as tropical fruits and grain, agricultural products and industrial manufactured goods, because the cooperation between countries, in the final analysis, or economic interests, win-win can win the hearts of the people, the reason why ASEAN and China are close, is this reason, so want to build an international system with China as the core, buy all over the world is a must, so the huge domestic market, this role comes.
(Original is not easy, welcome to see the officials like, collect, forward, your affirmation to my greatest encouragement)