Anti-China sentiment isn’t a barrier for electronics companies

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Since the 2020 border confrontations between the two nations, three of the top Chinese electronics companies in India – Xiaomi, Lenovo, and Vivo Mobiles – have mostly avoided widespread anti-China rhetoric and government actions against Chinese businesses.

According to the most recent regulatory disclosures they made to the Registrar of Companies (RoC), accessed through business intelligence platform Tofler, computer maker Lenovo increased its sales in India year over year in 2020-21, while smartphone makers Xiaomi and Vivo reported marginal drops in sales.

In reality, as stated in its RoC filings, Lenovo developed its company despite not having approval from the Department for Promotion of Industry and Internal Trade (DPIIT) to directly engage in government bids.

While Xiaomi and Vivo did not mention a reason for the drop in sales in their RoC filings, industry insiders blamed it on the first harsher Covid-19 lockdown in 2020, as well as component shortages affecting product supply.

Emails addressed to Xiaomi, Vivo, and Lenovo were unanswered until the time of publication on Wednesday.

“All efforts shall continue to be made to improve revenue and retained earnings in the following years,” Xiaomi wrote in the filings.

In its papers, Vivo also stated that it will “maximize capacity utilization at the lowest cost to create higher revenue and improve profitability.”

Lenovo India’s total revenue increased by 14% to $10,389 crore in FY21.

However, the company stated that it is unable to engage directly in public procurement tenders since it has not yet received approval from the DPIIT.

Bidders from China and other countries sharing a land border with India requires additional clearance in the form of pre-registration with the DPIIT to participate in government tenders, which was revised in July 2020, shortly after a deadly clash between Indian and Chinese forces in the Galwan Valley.

In its RoC filings, Lenovo stated that it had submitted an application for registration in September 2020 and had satisfactorily answered all queries received throughout the assessment process by the relevant government ministries. It stated that it “awaits clearance promptly.”

In addition, the firm stated that it has increased manufacturing capacity in India by 100% in FY21, with a new line producing the company’s whole product line in the nation.

Vivo reported a net profit of 552 crores in FY21, compared to a net loss of 348 crores in FY20. In FY21, however, Xiaomi’s net profit fell by 31% to Rs 275 crore, while Lenovo India’s net profit fell by 17% to Rs 59 crore.

Border conflicts and following tougher controls for Chinese enterprises, including a ban on many mobile apps by the Centre, damaged India-China relations in 2020, even as social media was saturated with anti-China sentiments.

According to market research firm IDC India, four Chinese companies – Xiaomi, Vivo, Realme, and Oppo – are among India’s top five smartphone brands, with Samsung being the fifth.

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