Text/Wang Xinxi
Recently, a series of tumultuous operations in India have aroused widespread attention and heated discussions in the industry. After seizing 55.51 billion rupees (about 4.8 billion yuan) of Xiaomi's funds, key positions such as chief executive officer, chief operating officer, chief financial officer and chief technology officer of all Chinese mobile phone manufacturers of Xiaomi OV should be filled by Indian nationals.
This off-the-top requirement makes the phrase "India makes money Indian flowers, one wants to take home" is no longer enough to summarize India's behavior, all executives change, business all-inclusive, sales all replacement, equal to the enterprise was taken over by India at once, this practice is almost breaking the bottom line, is a beggar robbery devoured alive.
At present, this matter has also aroused discussion and attention in Taiwan, China, and Xie Hanbing, a well-known current affairs commentator in Taiwan, pointed out that this matter is actually India's bullying of Chinese companies, and India's doing so is actually ignoring international law and basic business principles, and sooner or later something big will happen in the future.
What is particularly important is that the Indian system only targets Chinese mobile phone manufacturers, and does not include Samsung, which is actually a discriminatory system setting.
Today, it is already widely recognized that India has become a graveyard for foreign companies, and in July 2022, India fined OPPO $550 million for tax evasion; In August 2022, India accused vivo of avoiding taxes of 1.89 billion yuan. In addition to Xiaomi OV, multinational giants including Vodafone, Walmart, Nokia, Samsung, IBM, Amazon, Google, and Microsoft have all suffered huge fines from India, and Walmart was fined $1.35 billion by India in 2021 for violating foreign investment laws. Without saying a word, Wal-Mart withdrew directly.
According to the Indian government, in the past seven or eight years, more than 2,000 multinational companies have suspended their operations in India, and there are only 5,068 registered multinational companies in India. India targets almost all foreign companies, but in recent years it has been more targeted at Chinese companies. Wave after wave, Samsung's development in India is much more stable, and there is currently no requirement that executives such as Samsung CEOs must be Indians!
From the perspective of Xiaomi and other manufacturers, it is very painful, Xiaomi has 7 factories in India, contributing more than 20,000 jobs to India, and now India's new conditions are about equivalent to empty gloves white wolf, if Chinese mobile phone manufacturers do not agree, what will they face next? So these companies are having a headache now, because India is going to get out of your business, it's easy for them to interpret the law, and the law can change every few years in different states.
In the past, many people thought that Made in India would become the biggest threat to Made in China, but now it seems that according to India's current practice, it is almost digging its own grave.
India has become a graveyard for foreign companies, which is conducive to attracting foreign investment by China
If India can create a good business environment, at the current time when many multinational companies pursue lower factory construction costs, especially in China, there will also be a large number of enterprises based on the demand for cost savings and seizing India's demographic dividend, running to India to build factories, and in another 3~5 years, the supply chain system in various fields of Indian manufacturing will be slowly built.
But now, it is difficult to say whether domestic enterprises can withdraw or not, because the layout of heavy assets has been formed in India, and the sunk cost is too high, but at least, there will be no heavy bets. India's model of deceiving foreign capital into fattening and killing is also widely known overseas.
And those foreign capital that has been withdrawn, may be unlikely to return to the Indian market in a short period of time, and even if it returns to the Indian market one day in the future, there may be a strategic layout, will not be asset-heavy layout, so India wants to introduce a large number of foreign capital in its home country to help it build a manufacturing industry chain system, forming a manufacturing country to balance China, may become more and more difficult.
In the mobile phone industry, the pressure has come to Apple, which has increased its investment in Made in India in recent years, and Apple may produce nearly 20% of iPhones in India in fiscal 2025. Then in the next few years, Apple's production of iPhones in India, including product quality control problems and business environment problems, may also make Apple reflect on the feasibility of asset-heavy layout in the Indian market.
Will India go after Apple? Maybe it will, maybe not, behind Apple is a large number of supply chain manufacturers, including foundry giants such as Foxconn, the importance of building India's manufacturing competitiveness is self-evident, and India may also be able to carry the weight.
To some extent, India's current international reputation and business environment are causing great damage to Indian manufacturing, which is good for China in the long run, because in a stock market, the Indian market environment is like a gamble for international manufacturers, and when India has made overseas capital desperate, then China may be one of the few promised lands.
India's exhaustive fishing behavior is also breaking some people's illusions, in fact, from another point of view, India is also illuminating China, and there is no need to worry about India stepping on China's shoulders to strengthen India's manufacturing industry, which is not necessarily a bad thing!
Especially from Musk to Bill Gates and other trips to China, the free, open and legal soil of the Chinese market is more attractive to the Indian market.
The business model of Chinese companies in India is about to change, and shield machine exports may be suspended
But from another direction, India's special suppression of Chinese companies, China's business model for India is about to change. A large number of foreign capital has withdrawn from India, and at present, it has not given enough warning to Chinese companies. For Chinese companies, it may be difficult to completely abandon the Indian market, but heavy industry, heavy asset layout, especially key technologies, research and development focus in India is even more undesirable.
From Xiaomi's perspective, it has built three manufacturing plants in India, also set up a research and development center in India, and hired local employees and management. This investment is huge, and there is no reservation about the core technology, which has helped India improve the mobile phone industry chain and solve many employment problems. But even so, it is still under constant pressure from India, and the cost of sinking is too high, so it can only be harvested.
Of course, in addition to the mobile phone industry, many domestic companies have supported India's infrastructure and other related industries in the past, including India's lack of electricity, as early as 2008, Shanghai Electric went to India and built six 660MW power stations for India, worth $1.31 billion.
As a result, the money has not been received so far, but the other party sued the Indian High Court for compensation of 2.14 billion yuan. The plant's boss is now the world's third-richest man, Ambani worth $130 billion.
Secondly, the export of key technology products involving the country's great instruments, including shield boring machines and photovoltaic products, has also been exported to India and projects have landed.
From the perspective of photovoltaic products, in 2022, China's ENFI "successfully signed the Indian Mundra solar polysilicon project contract with more than 200 patented technologies and strong strength accumulated in the field of silicon-based materials". With the help of domestic companies, India, which originally relied on the import of Chinese photovoltaic modules, has now become an exporter, and the data has skyrocketed.
India exported $479 million worth of photovoltaic cells and PV modules in the first quarter of 2023, up 6,293% from the same period last year and 29% quarter-on-quarter, according to Mercom citing Commerce Department data. Successfully filled the gap after the United States and Europe restricted Chinese photovoltaic products, and achieved seamless connection.
The second is the shield machine, the shield machine is a major equipment for infrastructure construction, known as the "king of the world's construction machinery", undertaking the heavy responsibility of crossing mountains and rivers and seas, except for a few developed countries, only the mainland has mastered this technology.
Up to now, China's shield machine occupies 2/3 of the global market, and the world's largest rectangular shield, the world's first inclined well dual-mode TBM, the world's first permanent magnet motor drive shield machine and other technologies are all from the mainland. India bought back 8 EPBs from China, in order to disassemble and steal the core technology, when the mainland engineers went to the after-sales assembly, but the Indian side refused, the Indian engineers picked up the manual and "read" for two months without understanding the principle of operation. Although India can't build it, India is now using it to dig tunnels in southern Tibet!
In the past, on the Bangalore Metro construction project in India, four shield machines from CRIC - "underground dragons" - were also collectively dispatched, and this year the CRIC shield machine participated in the second phase of the Bangalore Metro Project in India. Then combined with India's various operations, India has always hoped to achieve an independent breakthrough in the shield machine industry, and the domestic shield machine industry may have reservations about the relevant core industry technology from the encounter of domestic mobile phones being bullied by India.
From the current point of view, in the face of India's unreasonable suppression and unfair competition and asset grabbing, there are almost no domestic means to respond. If India realizes that the cost of default against China is low, more Chinese companies will be unable to protect their legitimate rights and interests in the Indian market in the future.
So in fact, in many industries, as the country's heavy equipment products including shield machines, photovoltaic products involving some of the domestic key core technology products, or should be cautious or suspend exports to India, which is both a strategic deterrent, but also for domestic countermeasures and in the competition of the manufacturing core technology environment, retain their own core weight, although the domestic strategy has always adhered to foreign trade opening, but considering the particularity of the Indian market, perhaps the business model is about to change.
Author: Wang Xinxi TMT Senior Reviewer This article is not reprinted without permission