India Detains Chinese Smartphone Executive Amid Fraud Investigation

New Delhi

An executive at Vivo, a Chinese smartphone maker, has been arrested in India in connection with a money laundering probe. Guangwen Kuang, the head of administration at Vivo India, was taken into custody by India’s Enforcement Directorate (ED), the country’s main financial crimes investigation agency.

The ED is investigating money laundering and foreign exchange law violations, with Kuang, a Chinese national, along with three others arrested and held in custody for three days.

Vivo has confirmed the arrest and vowed to exercise all available legal options. Allegations of money laundering against Vivo were first made in July 2022 when the ED seized $60 million from the company’s bank accounts. The agency accused Vivo of tax fraud and said the firm had remitted 624.8 billion rupees ($7.9 billion), mostly to China, to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India. The company has confirmed its commitment to the investigation.

India has seized over $700 million from Chinese smartphone maker Xiaomi, accused of illegally moving money out of the country. Xiaomi denied wrongdoing and said its operations were compliant with local laws and regulations. Despite the crackdown, Vivo remains India’s second-largest smartphone brand, commanding 17% of the market in the second quarter. Xiaomi’s market share has dropped from 19% to 15%. Relations between China and India soured after a deadly clash at their border in 2020.

India’s authorities subsequently banned Chinese apps and increased scrutiny over deals with Chinese firms. Vivo’s troubles have prompted a swift reaction in Chinese media, with state-run tabloid Global Times accusing India of “rising protectionism.” China’s embassy in India has warned that probes of Chinese firms in India risked damaging its reputation among foreign investors and disrupting normal business activities.

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