Indian government is probing the local units of ZTE Corp. and Vivo Mobile Communications Co. for alleged financial improprieties, according to the sources.
Further, the center is extending an investigation into other China-based firms after fining Xiaomi Corp.
How Did This Happen?
Basically, the Ministry of Corporate Affairs has received information from unnamed sources that indicates potential violation including fraud.
So, the Ministry of Corporate Affairs will scrutinize auditor reports, as per the documents.
At the same time, an inquiry was sought in April in the case of Vivo.
This is to detect if there were “significant irregularities in ownership and financial reporting” while authorities were asked to study the books of ZTE and submit findings “on urgent basis,” as per the documents.
So far, there is no statement released form the representatives for ZTE and Vivo in this matter.
India Tightened Scrutiny Of China-based Firms
Since 2020, India has tightened scrutiny of China-based firms.
During that time, the two nations saw the deadliest fighting in decades at their disputed Himalayan border.
So far, Prime Minister Narendra Modi’s government has banned more than 200 mobile applications from Chinese providers.
This list includes shopping services from Alibaba Group Holding Ltd., the TikTok short video hit from ByteDance Ltd. and apps used on Xiaomi’s phones.
Beside this, this month the country’s anti-money-laundering agency took control of the bank accounts of Xiaomi Technology India.
This happened for allegedly breaching foreign-exchange laws, although the decision was put on hold following a court order.
Sources say that the Ministry of Corporate Affairs has started the process of inspecting books of accounts of more than 500 Chinese companies.
The list includes Xiaomi, Oppo, Huawei Technologies, several Indian units of Alibaba Group such as Alibaba.com India E-commerce Pvt. Ltd., and Alibaba Cloud (India) LLP besides ZTE and Vivo, sources said.
In some cases, the ministry has sent letters to the firms seeking details on directors, shareholders of the companies, ultimate beneficiaries and owners., while it is in the process of seeking similar details from the rest of the companies, sources said.
Regarding the same, a report is expected in July, according to the sources.
Further adding that once the inspection reports are ready, the ministry would decide on whether further investigation by the serious fraud office is needed.
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