With More Chinese Companies Accused of Customs Fraud in India, OPPO Could Face Heavy Penalties

Following in the footsteps of Xiaomi and Vivo, another Chinese tech company has been accused of breaking laws in India. Chinese smartphone giant Guangdong Oppo Mobile Telecommunications Corp., Ltd. (OPPO) is accused of evading more than $571 million in import duties.

On July 13, the Directorate of Revenue Intelligence (DRI), India’s anti-smuggling agency, issued a press release (pdf) alleging that OPPO India evaded paying Rs. 4,389 crores (about 571 million dollars) in customs duties.

The DRI falls under the Central Board of Excise and Customs (CBIC), Department of Revenue, Ministry of Finance and Government of India.

“A sum of Rs 450 crore [about $60 million] was voluntarily filed by Oppo India, as partial differential customs duty paid by them,” the statement read.

The DRI has also issued a show cause notice to OPPO India demanding payment of unpaid customs fees. A show cause notice requires the recipient to justify or explain to the court why disciplinary action should not be taken against the party for an alleged violation.

OPPO is a major consumer electronics and smartphone company headquartered in Dongguan, China, with Asia as its primary market.

OPPO’s business in India covers the manufacturing, assembly, wholesale and distribution of mobile handsets and accessories. It deals with different brands of smartphones, including Oppo, OnePlus and Realme.

The company was accused of “willful misrepresentation in the description of certain imported articles” intended for use in the manufacture of cell phones, resulting in ineligible duty exemption claims of approximately $388 million, according to the Indian Ministry of Finance.

The ministry’s press release pointed to incriminating evidence at the offices of OPPO India and the residences of its key management employees during the searches conducted by the DRI.

In addition, some OPPO India senior managers and domestic suppliers have also accepted “submission of wrong description” through self-declarations.

A statement is voluntary when it is made by a person free from any outside influence and under his or her free will.

The company has been accused of making and accruing “royalty” and “licensing fee” payments to various multinational corporations, including those based in China, for the use of their proprietary technology, brand or trademark. their intellectual property right (IPR) license, The Times of India (TOI) reported. And this was not added to the transaction value of the imported goods, resulting in an alleged customs evasion of approximately $183 million.

A spokesperson for OPPO India told TOI that they have “a different view on the charges mentioned in the show cause notice”, adding that “OPPO India will take appropriate action as may be necessary in this regard. , including remedies provided by law.

The TOI report points out that in recent weeks, “Chinese telecommunications players, ranging from Huawei to Xiaomi, Vivo and OnePlus have faced multiple actions from the [Income Tax Department, Enforcement Directorate] and customs authorities.

“The investigations come after the government decided to closely monitor Chinese companies, including restricting their access to Indian markets, following tensions in Ladakh,” the article added.

More Chinese companies accused of breaking laws

According to 36Kr, a China-based publishing and data company, more than 100 Chinese companies visited India in 2014 to explore market opportunities, including Xiaomi.

Customers inspect smartphones made by Xiaomi at a Mi store in Gurgaon, India, on August 20, 2019. (Sajjad Hussain/AFP via Getty Images)

Being one of the largest smartphone manufacturers in the world, Xiaomi has dominated the overall smartphone market in India for the past five consecutive quarters. However, in the first quarter of 2022, Xiaomi saw its market share decline by 24% compared to the same period last year, local news reported.

Protracted COVID-19 outbreaks and a shortage of core components have long plagued Xiaomi’s logistics, production and offline stores, Wang Xiang, partner and president of Xiaomi Group, said on a conference call on the reports. company’s financials, Chinese media reported on May 21.

In April, Indian authorities seized $725 million from Xiaomi, accusing it of violating the country’s foreign exchange laws by making illegal money transfers overseas.

The Law Enforcement Directorate (ED), India’s financial investigation agency, said the smartphone maker had transferred $725 million to “three overseas-based entities” under cover of payouts. royalties, according to a statement quoted by the Press Trust of India.

On July 5, before OPPO was charged with customs fraud, ED raided 48 sites belonging to Vivo India and 23 associated companies, according to ED’s press release (pdf). Vivo India’s bank accounts have also been temporarily frozen under ED’s instructions, TOI reported. They were unfrozen on July 13 under conditions set by the Delhi High Court.

Epoch Times Photo
A smartphone screen displays the logo of telecommunications company Vivo on a background of the Vivo website in Rio de Janeiro, Brazil, on November 3, 2021. (Photo by Mauro Pimentel/AFP via Getty Images)

According to a Bloomberg report in May, Indian authorities have surveyed more than 500 Chinese companies in India, including Xiaomi, OPPO, Vivo, Alibaba and Huawei.

Additionally, many Chinese companies in India have recently found it more difficult to obtain work visas for their employees.

For example, Baosteel, a major Chinese steelmaker, now relies on remote management after several work visas for its Chinese employees were denied.

In an analysis, Chinese publisher 36Kr said geopolitical tension is just one aspect contributing to changes in India’s business environment. The main issues are that “Chinese companies should have complied with Indian regulations and hired good local resources and legal teams to make their case.”

While some Chinese companies are considering pulling out of India, others like Xiaomi, which has a large market share in India, felt that leaving was not an option given their long-term investments and their well-developed local supply chains.

“Xiaomi simply cannot afford to leave India,” 36Kr said in its post.

Kathleen Li

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Kathleen Li has contributed to The Epoch Times since 2009 and focuses on China-related topics. She is a professional engineer, registered in civil and structural engineering in Australia.

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