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Xiaomi has begun to fight back! In May 2022, India publicly announced that it would freeze about 4.8 billion yuan of assets belonging to the Indian subsidiary of mainland Xiaomi, saying that this was a "punishment" that Xiaomi must accept after violating their country's relevant regulations on foreign exchange.
Since Xiaomi entered India, it has gained a firm foothold in the Indian market with its own unique advantages, and the Indian people's love for our Xiaomi mobile phones has increased year by year.
According to a survey released by Canalys, a research agency, in October 2022, Xiaomi ranked first in the Indian market with 9.2 million mobile phone shipments in the third quarter of that year.
But just when everyone thought that Xiaomi would become bigger and bigger in India, India suddenly announced this year that it would freeze Xiaomi's assets. What's going on behind this? And in the face of this sanctions from India, how will Xiaomi fight back?
India freezes Xiaomi's 4.8 billion assets
Before we talk about whether India is really "small and big", let's take a look at the two things that happened between him and Xiaomi this year.
On May 1 this year, India announced a measure through the media, saying that after an investigation by the relevant departments of their country, it was found that the mainland's national enterprise Xiaomi remitted 55.51 billion rupees, or 4.8 billion yuan, to foreign entities on the pretext of paying royalties.
Many people do not understand this "royalty" said by the Indian side, in fact, to put it bluntly, the technology used by Xiaomi India is not also from Beijing Xiaomi Headquarters, but you want to build a factory in this country to produce, and when using the technology, you have to pay a royalty to Beijing Xiaomi every year.
Logically, this is a necessary part of cooperation between companies, but people in India do not understand this.
It is not said that Xiaomi India uses this name as an excuse to remit all its assets to the country to achieve "foreign exchange transfer", to put it bluntly, it is to take all the money of Xiaomi India and turn the company into an "empty shell".
India's idea is not "airborne", as early as January this year, they had already placed this "crime" on Xiaomi.
But at that time, it was said that Xiaomi used this reason to remit money to our domestic Xiaomi in order not to pay taxes in India, and they also issued a fine of about 560 million yuan to Xiaomi India at that time, saying that this was a necessary punishment.
At the beginning, Xiaomi paid this fine, because since he has opened this list, if it is not handed over, it will not be beneficial to Xiaomi's future development in India, so Xiaomi chose to eat this "dumb loss" in order to be able to expand the scale of development in India.
But guess what, the matter of this ticket has just been processed, and people in India have begun to "want to recruit" again.
It is said that Xiaomi's behavior since 2015 has violated the relevant provisions of a "Foreign Exchange Management Law" enacted by their country in 1999, which is illegal remittance!
In India's view, since you have broken the law, then we have to "teach" you beyond the simple issue of a ticket. Didn't they say that Xiaomi transferred 4.8 billion yuan of assets to China, so people are going to freeze all 4.8 billion yuan.
And explained that the reason for this is to let Xiaomi have a long memory, and the other is to protect the development of India's local industry, so as not to let Xiaomi mess with the environment in which their company lives.
There is also to give his domestic enterprises a "vigilance", which probably means that you see Xiaomi doing so big, I will still punish him if he makes a mistake, so you should run the enterprise well, don't move some thoughts that should not be moved.
On the surface, India has done "reasonable and well-founded", showing that its measures are "legally reliable" and at the same time being a "good big brother" of domestic enterprises.
But you can't let you take advantage of any good things, not to mention that millet can only earn about 1 billion yuan in India all year round, and it is fined 560 million, the key is that this time you use such a big crime as "illegal remittance" to slander millet, how can this matter be so unauthentic, so people millet can not let India come so nonsense.
When it was first "charged" by India, Xiaomi went to the local court to sue, but after all, people are functional departments of India, and they will definitely not "beat their own people", so regardless of Xiaomi's appeal, the Indian court will lose the case.
Xiaomi saw that this Indian court is also unreliable, so if we want to prove our innocence, we must rely on ourselves, so about a month after India said that it would freeze Xiaomi's assets, Xiaomi began to fight back.
Xiaomi began to step up its countermeasures
Xiaomi's initial countermeasure was layoffs, Xiaomi India was not originally about 1500 employees, since the beginning of the counterattack, Xiaomi has laid off hundreds of people on the grounds of "business adjustment", reducing the size of employees to about 1000 people.
From this measure alone, we can see where Xiaomi is "smart", isn't there one reason for India to freeze Xiaomi's assets is to protect the development of domestic industries, since you don't say that you are sanctioning us, then of course we can't show that this move is "countermeasures".
Moreover, reducing the size of employees is originally a business adjustment that will be carried out in the development of enterprises, and it is reasonable to carry out it at this time.
However, the impact of the layoffs is not limited to the increase in unemployment in India, and the chain reaction is that Xiaomi's development scale and market share in India will shrink.
Since we started to counteract, Xiaomi India's share of the market has fallen to the third place. Many people will have a question when they see this, saying that after Xiaomi's market share in India has shrunk, isn't it beneficial to the development of Xiaomi?
This is true, the scale shrinkage will indeed lead to a decrease in Xiaomi's market revenue, but let's look at it overall, since India has now suppressed Xiaomi in this way, there will be more bad tricks in the future.
Even if you don't fight back, do you think about it, will Xiaomi have a better time in India after that? Not only will the crime of "illegal remittances" be substantiated, but the losses will be even greater than they are now.
In addition to layoffs, Xiaomi India can no longer use our domestic high-end equipment and technology. This countermeasure is not so much against India, but more of a necessary countermeasure after countries like India have "unjustifiably pressured" us.
At the end of December last year, the mainland's Ministry of Commerce and the Ministry of Science and Technology jointly issued a regulation restricting the export of a variety of high-end technologies, including drone technology, integrated circuits and even sensor manufacturing technology.
In fact, when this control measure was introduced, India was a little anxious, why? Let's take a straightforward example, some high-end technologies are actually commodities in the export field.
For example, we have mastered this technology in the United States, but before the regulation our price was 200 yuan, the United States sold 400 yuan, and if you buy something in the United States, he will have a series of additional conditions, who do you say you buy?
But now it's different, we have introduced a system, either do not sell or increase the price, with the previous 200 yuan you can not buy. If you want to buy it, then spend 300, if you don't want to buy it but you still have to use it, of course, the American 400 yuan thing beckons to you.
So India's financial losses in buying technology are actually much greater than before. But under this system, as far as India is concerned, whether you want to pay this "royalty" or not, even if you increase the price, you may not be able to buy it again. Do you say India can still sit still?
Of course, India's measures against Xiaomi and his "can do anything for money" behind him, many enterprises in our country have long seen clearly.
It turned out that India ordered a batch of buses for BYD, saying that it would pay a 10% deposit first, and then pay the balance after delivery. Of course, BYD is unwilling, as far as your style of acting, I will produce and deliver all the cars, and you will be able to do the things that will not be paid when the time comes.
Not only that, but even the most disobedient Foxconn was angered. Didn't they originally say that they wanted to reduce the size of Foxconn's factory on the mainland and invest 140 billion yuan to build a large factory in India, but this has changed this year: Foxconn quit.
At that time, Foxconn wanted to transfer the production line to India, but there was a lot of noise, so big to do things to say that if you don't do it, the reason behind this is simple, that is, India has changed the incentives originally decided to develop this industry, and does not want to pay this money.
Therefore, India's series of practices actually revealed all the small calculations in his heart, but as a large country with a very high population, if it has been cooperating in this careful way, how can it drive the country's industry?
Then again, why does India bother so much on things between millet, is it really like he said that millet violated Indian laws, and India wants to protect itself?
Why is India doing this?
If we believe India's unilateral rhetoric, we are falling into his trap. Judging from Xiaomi's dare to appeal many times, Xiaomi has not done anything "illegal transfer of assets" at all, which is purely a simple slander from the Indian side.
The reason why India will hit this fist on Xiaomi is because Xiaomi is the best development enterprise in India at the current stage, and India chose Xiaomi to declare its "position" through this method.
The relationship between the mainland and India has been a little tense since a few years ago, and with the development of these years, the relationship between the two sides has reached a new "freezing point" in history.
Since what happened on the border three years ago, India has intensified its crackdown on the mainland, first banning Indians from using more than 300 mainland-related electronic applications, and then imposing financial restrictions on Chinese companies in India.
In addition, BYD and Foxconn have not successfully cooperated with India, although the root cause lies in India itself, but people are not aware of this problem, not to say that our enterprises are "unreliable", and think that mainland enterprises used to purely earn Indian money.
In addition, India now prefers the United States, on the one hand, he wants to increase the export of its own things to the United States, and the other more important reason is to let the United States provide some military support to India.
And now that the United States itself has made its relationship with us like that, Modi can certainly see the clues.
Therefore, in order to let the United States see its "sincerity" faster, India chose to suppress the mainland's development in India, and this time it set its sights on Xiaomi.
But let's take 10,000 steps back, the Indian government is indeed quite naïve, not to mention whether the United States will eventually provide you with military equipment because of these behaviors, according to the weapons that the United States has provided to Ukraine before, they are all old "garbage" that is worn out and not used in the country, even if they are willing to give you, what good can those military equipment that come to India have?
But India does not understand this truth, and we can see from the Xiaomi incident that India is likely to use similar means to suppress mainland companies in India in the future.
But the Indian government did not expect that Xiaomi would take such a tough countermeasure this time, and such measures brought more than a little loss to India.
What losses will India face under Xiaomi's countermeasures?
The most direct result of Xiaomi's layoffs must be the increase in the number of unemployed people in India, although his employees are only more than 1,000 people, but do not forget that India is a country with a large population, and the pressure brought by more than a thousand people without work to his domestic development is really not small.
In addition, from a few years ago, everyone realized a rule of investing in India, although you have a lot of people, but basically have no culture, so the kind of production line that relies on quantity to win is actually the most suitable in India.
But before the factory is built, there must be an investment, but this investment money, Party A will not take it out by itself.
I build a factory in your country, and it makes sense to borrow money from your bank, so many people will choose to borrow money from Indian banks and then proceed to the next step of practice.
If the development is good and the income is high, then I will pay you back, but if the expected goal is not achieved or something happens to the Indian government in the process, then we will do the same as India: not pay it back.
And after the Xiaomi incident, more and more people will tend to this approach, since you play a trick, then my small actions are nothing in comparison.
Therefore, in the long run, the Indian government may completely spoil the domestic capital chain and enterprise development environment for its own reasons, so even if the Indian government wants to really protect its own industry, it may not be able to do anything.
In short, as far as India's freezing of millet assets is concerned, the result may be that India can't think of breaking its head.
Now, if Xiaomi continues to increase its countermeasures, the more than 20,000 jobs provided by Xiaomi in India may not be able to be completely saved, and the losses they will face at that time may not be more than the 4.8 billion in their eyes.
Therefore, if India wants to develop healthily in the long term and maximize the benefits of cooperation, "win-win" is king. It's a pity that India doesn't understand, and if you don't hurry up to reflect and reflect, the road may be more difficult to follow.