Xiaomi India's intensive layoffs? Official response to market share | Xiaomi | India
On June 30th, it was reported that Xiaomi India is undergoing large-scale layoffs. A Xiaomi Indian employee revealed in an interview with the media that the number of employees in the company has decreased from 1400 to 1500 to about 1000. The company has laid off about 30 employees in the past week, and there may be more layoffs in the coming months.
Xiaomi India responded to First Financial, saying, "Like any company, we will plan the number of employees based on market conditions and business forecasts. In addition to optimizing as needed, we will continue to recruit positions at the necessary time and location. With the goal of building a sustainable team, we ensure that our biannual performance management process rewards the best performing employees and also ensures that the worst performing employees have opportunities for improvement within a reasonable time frame. We also do not rule out reasonable optimization for employees who cannot meet the requirements."
As for the specific layoff data, as of the time of publication, Xiaomi has not yet responded.
Recently, Xiaomi's life in India has not been easy. In early June, there was a latest update regarding the detention of 55.512.7 billion Indian rupees by the Indian law enforcement agency in 2022 due to differences in the determination of imported commodity prices: the Indian law enforcement agency issued a notice that this portion of the funds will be officially confiscated. Xiaomi responded, "Xiaomi adheres to legal and compliant operations worldwide and complies with relevant laws and regulations in its business location."
On May 1, 2022, the Indian law enforcement agency stated that an investigation found that Chinese smartphone manufacturer Xiaomi Group illegally remitted INR 55.512.7 billion to foreign entities through counterfeit payment of copyright fees. According to the relevant provisions of the 1999 Foreign Exchange Management Act, authorities have seized INR 55.512.7 billion from Xiaomi Group's local bank account in India. Xiaomi India is a wholly-owned subsidiary of China's Xiaomi Group. According to reports, funds seized by the Indian law enforcement agency are located in the company's bank account.
At the beginning of 2022, the Indian law enforcement agency launched an investigation into illegal remittances and questioned Manu Kumar Jain, the Global Vice President of Xiaomi. In a statement, the Indian law enforcement agency stated that "the company began operating in India in 2014 and has been remitting money since 2015. The company has remitted foreign currency equivalent to INR 55.5127 billion to three foreign entities, including a Xiaomi Group entity disguised under royalties. The huge amount paid in the name of royalties was remitted according to the instructions of its Chinese parent entity... Xiaomi India purchases fully manufactured mobile phone sets and other products from Indian manufacturers. Xiaomi India has not received any services from the three foreign entities whose amounts have been transferred. Under the cover of various unrelated documents manufactured between group entities, the company is using royalties as a cover." The company remitted this amount overseas in the name of [name], which violates Article 4 of FEMA. The company also provided misleading information to the bank and transferred the funds overseas
That is to say, the Indian side believes that Xiaomi India Company's remittance of patent license fees and franchise usage fees to Qualcomm and Beijing Xiaomi Mobile Software Company in China, which are not included in the transaction value of its imported goods, constitutes tax evasion and needs to be re taxed.
Xiaomi Group told First Financial reporters, "All operations of Xiaomi India strictly comply with local laws and regulations. We have carefully studied the orders of the authorities. We believe that the royalties and bills we pay to banks are legal and genuine. The royalties paid by Xiaomi India are used for the licensed technology and intellectual property used in our Indian version of products. For Xiaomi India, paying such royalties is a legal business practice. Of course, we will maintain close cooperation with the government to clarify any misunderstandings."
According to IDC data, in the fourth quarter of 2022, Xiaomi's market share in India was 24.8%, ranking second only to Samsung. In 2022, Xiaomi's 21% market share in India, although still ranked first, ahead of Samsung's 18.1% and Vivo's 15.9%, has decreased by 25% year-on-year.