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preface
India has always been a very amazing country, and as our neighbor, we are no strangers to the third brother. In addition to the frequent confrontation between the two countries at the military level, the magical operation of Indian buddies in the Internet field also provides us with a lot of jokes.
In addition to picking up trains and riding motorcycles with many people, the Indian three brothers also made a lot of commotion in international events. For example, the last time it bought a large amount of Russian oil at a low price in Indian rupees and sold it to Europe to earn tens of billions, the rupee plummeted, and Russia only got a lot of rupees that could not be spent after paying a lot of oil.
But this time, the joke came to the mainland enterprises, Lei Jun's millet was fined tens of billions of US dollars in the United States, and in anger, it could only lay off employees to fight back.
What's going on here, let's take stock of the love-hate relationship between Xiaomi and India.
Local enterprises go abroad for development
After the reform and opening up, the mainland's economy has developed rapidly, and a large number of domestic enterprises have also exhausted the demographic dividend and entered a period of rapid growth, and a number of Fortune 500 companies have emerged.
But after decades of development, the domestic market has gradually become saturated, a while ago the Academy of Social Sciences think tank expert Cai Fang revealed a data in a speech, he said that China accounts for 17.9% of the world's population, only contributes 12.8% of household consumption, and more than 80% of the market share abroad.
What's going on, in fact, it's very simple, that is, everyone's economic strength has entered a comprehensive well-off, taking smart phones as an example, now even the elderly in rural areas have a smart phone, a smart phone can be used for at least two or three years, then everyone has, what to do with those new products produced every year.
After all, as a manufacturing country, the annual product manufacturing capacity of the mainland is very terrifying.
At this time, it is necessary to seek development from outside, and developed countries such as Europe and the United States are definitely not easy to obtain. On the one hand, they have a very strong brand in their home, and it is difficult for us to form effective competition when we first arrive, on the other hand, Huawei's bloody example is close at hand, and the United States may have come to this set, the risk is too high.
In contrast, India is a very good market. Close enough to us, the population base is large enough and there is enough market. Although Indians have a lower overall income, their consumption outlook is very free, because Indians do not have the habit of saving money and dare to spend as much as they earn.
So the market in India is actually very active. In 2021, India became the world's first annual shipment under the mainland, reaching 162 million units, an increase of 12% year-on-year. In the second quarter of 2022, while global smartphone shipments and Chinese mobile phone market shipments both declined, Indian smartphones still achieved a year-on-year growth of 12% in the two largest smartphone markets.
In addition, India's technology is still in its infancy, and there are not enough competing companies in India. The Indian government has also seen this situation clearly, and has been shouting the slogan "Make in India rises" in recent years, and Modi has plagiarized the slogan of the mainland and shouted "Made in India". Invitations to attract investment are issued to enterprises all over the world, and a large number of policies and loan incentives are given to attract enterprises to build factories and invest.
Therefore, major manufacturers are scrambling to be the first to build factories in India, because consumption is inertia, if you can gain a foothold in the Indian market, then if the latecomer wants to beat you, he needs to spend more costs, so the major mobile phone manufacturers are scrambling to stand in the Indian market first.
Xiaomi is not to be outdone, Lei Jun has always been a very courageous person, in the early years, he directly dared to shout out the price of the mobile phone, and then laid out the Xiaomi ecology. With such a big piece of cake in India, it is normal to want to get a piece of the pie as soon as possible.
Advance into India
In the mainland network meme, Lei Jun can be said to be an extremely fresh and vulgar one, obviously a business wizard, but also very grounded, and he contributed a lot of hilarious moments to us at the press conference he personally ended.
“are you ok”
This out-of-the-loop meme was said by Lei Jun at the Xiaomi press conference in India.
In 2015, Xiaomi became the first mobile phone manufacturer to enter the Indian market, relying on the attribute of cost performance to quickly harvest a large number of fans in India, and in 2017, India's President Modi personally received Lei Jun.
In 2018, Xiaomi accounted for 30.3% of the Indian mobile phone market, while Apple's market share in India was only 2% in the same period, and in 2021, Xiaomi sold more than 40 million mobile phones in India.
Such brilliant achievements benefit from Xiaomi's unique strategic cooperation ideas, and he has taken a completely different approach. Unlike Lenovo, which starts a business in India and is completely managed by Indians, it is also different from Huawei's model of setting up a business in India that is completely led by Chinese. Xiaomi adopts a joint lineup of management appointing Indians and using Chinese teams on products, fully exploiting strengths and avoiding weaknesses.
The appointment of Manu Kumar as CEO of Xiaomi India is a key step in Xiaomi's success in India. Before joining Xiaomi, Manu Kumar was already a star figure in the Indian Internet industry as the co-founder of Jabong, a star incubation program of German Rocket Internet in India.
In addition to business management, Manu Kumar, who has his own traffic and resources, is also sparing no effort to promote the localization of Xiaomi, and even maintains a long-term communication mechanism with Prime Minister Modi's office, and he can also accurately find India's demand pain points and maximize marketing strategies in publicity and marketing.
In addition to sales, Xiaomi's software manufacturing has also been localized. By the end of 2018, Xiaomi will have six foundries in India, capable of producing an average of two smartphones per second.
In addition to 500 service centers, Xiaomi's other deployments in India's after-sales service also have 3 dedicated repair factories, two large parts warehouses, in addition to the mobile phone body, other hardware facilities of the Xiaomi ecosystem are also locally manufactured.
Xiaomi also offers exclusive India customization features for Indian users. For example, the special function of visual dialing of public service numbers in India.
Xiaomi's system MIUI is also connected to India's local taxi software, news aggregation, listening software and so on through light applications. There are many small innovations that are not difficult, but they surpass other mobile phones in terms of ease of use and become the operating system closest to Indian life.
In November 2017, Xiaomi MIUI held the Xiaomi India Developers Conference in New Delhi, India, which also marked a new height and starting point for the development of Xiaomi's software ecology in India.
From 2014 to the present nearly 10 years, Xiaomi has opened 10 factories in India, creating more than 20,000 jobs for India, becoming a veritable "Indian brother" in the mobile phone industry, and even many Indians think that India is the brand of Xiaomi.
Just when we thought that Lei Jun was going to be happy because he had the largest population in the world (surpassing the mainland in 2022), India once again slapped Xiaomi hard through his bizarre creation.
Tragic pig killing plate
In fact, there has always been a joke on the Internet that "India earns money and spends India, don't want to take a penny home". Many foreign-funded companies have been confused by India's pit, and Xiaomi is also doomed.
In December 2021, Xiaomi was investigated by Indian authorities for suspected tax evasion. India's finance ministry claimed that Xiaomi India was suspected of serious tax evasion between 2017 and June 2020, issuing Xiaomi a sky-high fine of 6.53 billion rupees (about 558 million yuan).
You know, Xiaomi's highest annual profit in India is 350 million yuan. India's penalty, Xiaomi has been dry for two years in vain. But that's not enough.
On April 27, 2023, the Enforcement Authority of India issued an announcement that since 2015, Xiaomi (India) has remitted 55.5 billion rupees (about 4.8 billion yuan) in foreign exchange to three unrelated foreign entities on the grounds of "remitting patent fees". Accordingly, the Enforcement Directorate seized the equivalent amount of money in the bank account of Xiaomi India under the Indian Foreign Exchange Management Act, 1999.
The Indian court found that Xiaomi India illegally remitted 55.5 billion rupees to three overseas entities in the name of counterfeit payment of patent fees, violating the provisions of the Indian Foreign Exchange Control Act, so the funds were seized.
Xiaomi India clarified at the time that the research and development of Xiaomi mobile phones used Qualcomm chips and some patent licenses, and 80% of the seized funds were royalties remitted to Qualcomm, which was reasonable and legal.
But the official reply is: Indian millet and Chinese millet are okay. The implication is that Xiaomi mobile phones are developed in China, and India is only responsible for manufacturing and sales, so why pay patent fees.
It is personal understanding that even Xiaomi mobile phones produced in India use the same patented technology and have to pay patent fees. How can the Indian side not understand this truth, but "pretend to be confused", this is a proper pig killing plate.
Mainland netizens commented on this: He can obviously rob, but he has to give you a judgment. More importantly, if the existing law does not control you, India will tailor a law for you.
But this is not India specifically targeting the continent, in fact India is targeting the whole world.
In 2007, Vodafone was fined $2.1 billion for tax evasion, Li Ka-shing personally received a fine of $1.2 billion, Vodafone dragged on for 12 years, the fine doubled to $5.1 billion, Vodafone appealed to the international arbitration court, won, India changed its domestic laws overnight, retroactive tax came into being.
In 2008, India fined Microsoft 7 billion rupees for not paying enough taxes
In 2013, India's tax authorities stomped Nokia $256 million on the grounds that Nokia violated fair competition
In 2013, India fined IBM $860 million for monopolistic operations and unfair competition!
In 2013, India fined BMW $100 million for violating import laws
In 2014, India fined Samsung $200 million
In 2021, India fined Walmart $1.35 billion for violating foreign investment laws, and Walmart couldn't stand it and withdrew from the Indian market in 22 years
In 2022, India fined another $212 million for Samsung tax evasion
In 2022, India fined Amazon $172 million for violating relevant financial regulations.
In 2022, Google was fined $275 million twice in one week for violating Indian antitrust laws.
In May 2022, India froze 4.8 billion yuan of Xiaomi's deposits on the grounds that Xiaomi's patent fees were suspected of money laundering.
In July 2022, India fined OPPO US$550 million for tax evasion
In August 2022, India accused vivo of avoiding taxes of 1.89 billion yuan
Layoffs fight back
He was fined 4.8 billion in compensation, which basically made Xiaomi's 10 years in India work in vain, and he also lost a lot more.
This is a great blow to Xiaomi, which is mired in financial difficulties in the car manufacturing industry, and Lei Jun certainly cannot sit still, and since late June, Xiaomi India announced that it will start laying off employees. A Xiaomi India employee revealed in an interview with the media that the number of employees in the company has been reduced from 1,400 to 1,500 to about 1,000. The company laid off about 30 employees in the past week, with more likely to be laid off in the coming months.
This is just one of the companies, according to relevant sources, all of Xiaomi's companies in India have ushered in more or less layoffs.
However, Xiaomi undoubtedly underestimated the greed and determination of the Indian authorities. If the layoffs are effective, in the 7 years from 2014 to 2021, as many as 2,783 multinational companies chose to close Indian subsidiaries or offices, and many companies chose to exit India directly after being fined by India's sky-high prices and confiscating huge assets, but India has never returned the fine because these companies want to exit, let alone layoffs.
Bibliography:
India uses Chinese companies as cash machines! Xiaomi was fined more than 5 billion, and OPPO and VIVO also unfortunately won Tencent
Xiaomi phones were fined again in India, and India's business environment is worrying NetEase
Xiaomi's $676 million unfreeze request was rejected, and the Indian High Court upheld the original judgment Sina