Beijing urges India to treat Chinese companies fairly after Xiaomi threat claim

China on Monday called on India to ensure that Chinese companies operating in India are not discriminated against, after Xiaomi Corp. said its executives there were threatened with violence during questioning over alleged illegal money transfers.

Reuters reported on Saturday that Xiaomi, India’s largest smartphone vendor, had detailed in a court filing the alleged threat made by officials from the Enforcement Directorate, which tackles financial crime.

The Enforcement Service called the accusations untrue.

In late April, $725 million (approximately Rs 5,600 crore) was seized from Xiaomi’s Indian bank accounts. The company was alleged to have made illegal transfers abroad ‘in the guise of’ royalty payments.

Xiaomi denies wrongdoing and says all royalty payments are legitimate.

When asked about Xiaomi’s legal proceedings, a spokesperson for China’s Foreign Ministry said Beijing resolutely defends the rights and interests of Chinese companies.

“China hopes that India will provide a fair, just and non-discriminatory business environment for Chinese companies with investments and operations in India, conduct investigations in accordance with the law, and enhance the confidence of international investors,” spokesman Zhao Lijian said at a news conference in Beijing.

Neither the Enforcement Directorate nor government spokespeople or Xiaomi, which has a 24 percent share of China’s smartphone market and employs about 1,500 people there, immediately responded to Reuters’ requests for comment.

Many Chinese companies have struggled to do business in India since a clash between soldiers on the country’s border in 2020. The government has cited security concerns in banning more than 300 Chinese apps since then, including TikTok, and tightening standards for Chinese companies investing in the country.

A court last week suspended the directorate’s action against Xiaomi’s accounts pending a hearing on May 12.