HONOR

Brand forced out of Indian market by tax fraud

Chinese company Honor, which previously gained independence from Huawei Technologies and is successfully advancing in international markets, has announced its departure from India. This is because local authorities are increasing pressure on Chinese electronics makers.

This was stated by Honor Chief Zhao Ming. The company formed a team in India a few years ago but is forced to leave "for obvious reasons", according to the company's boss. According to the South China Morning Post, the company does not intend to stop operations in India, local partners will handle the business, but the brand will take a "very cautious approach" to the business.

The news comes after several Chinese smartphone makers were investigated by Indian authorities. Previously, local law enforcement officers dealing with financial crimes raided Vivo's offices and froze the company's local bank accounts on suspicion of money laundering. A few days later, India's Ministry of Finance raided the offices of Oppo, Vivo's sister company, suspected of tax evasion worth US$550 million, US$87.8 million in debt for late customs fees. In February, the local tax authority raided Huawei's offices.

A fairly high level of tension has been observed between China and India since 2020, when a serious military conflict nearly broke out over border disputes in the Himalayas. Since then, India, for example, has blocked more than 250 Chinese apps “for security reasons”. The latest "attacks" on smartphone makers have drawn sharp criticism from the Beijing official, who says frequent investigations of Chinese companies have disrupted normal business activity and "will impede the improvement of the business environment in India".

At the same time, India is an important market for smartphone makers – the country has at least 800 million internet users and is likely to overtake China in terms of population next year. In the second quarter, Xiaomi remained the most sought-after smartphone brand in India with 7 million units sold during the period, with Vivo, Oppo and Realme in the top five. In total, according to Canalys, Chinese smartphones account for 76% of the entire Indian market.

After 2018, Honor, which occupied 3% of the Indian market, dropped out of the top five, and in 2020, Huawei turned its brand into a separate company owned by a consortium led by the Shenzhen authorities. This allowed the brand to re-access Google services and re-enter the Indian market.

Image source: Honor