(Yicai) Dec. 26 -- Vivo Communication Technology will use all legal means to deal with and challenge the arrest of executives at its Indian unit, a spokesperson for the Chinese handset maker said, adding that their detention casts uncertainty over the entire smartphone industry.

India’s anti-money laundering watchdog has arrested a number of executives of Vivo India, including the chief executive and chief financial officer, following an investigation. The Enforcement Directorate also earlier detained the Chinese general manager of Indian consumer electronics maker Lava International and two certified accountants deemed related to the case.

“The Chinese government firmly supports Chinese businesses in safeguarding their lawful rights and interests,” foreign ministry spokesperson Mao Ning said at a regular press conference yesterday. “The Chinese embassy and consulates in India will continue to provide consular protection and assistance to the individuals concerned in accordance with the law.”

“We hope that India will fully recognize the mutually beneficial nature of the business cooperation between our two countries and provide a fair, just, transparent and non-discriminatory business environment,” Mao said.

Vivo entered the Indian market in 2014 and set up a plant in the north of the country the following year. The Dongguan-based company’s production capacity in India reached 60 million phones in 2021. As of the end of last year, it had 10,000 Indian workers at its facilities.

Vivo had 70,000 retail outlets, more than 650 exclusive stores, and 650 wholly-owned service centers in India as of last Dec. 31, while over 100 million Indians owned Vivo smartphones.

The company has no plans to expand its production capacity in India, and its main strategy is to stabilize its market share, a manager at its local unit told Yicai.

China’s Vivo, Oppo Mobile Telecommunications, Xiaomi, and Realme saw their combined share of India’s smartphone market fall to 55 percent in the second quarter of this year from 61 percent in the first quarter and nearly 70 percent in the third quarter of 2021, according to data from market research firm Canalys.

Since early 2021, Chinese smartphone makers, including Huawei and Xiaomi, have been probed by Indian authorities. Some had their money in Indian accounts frozen or seized for various reasons.

At least 500 Chinese-funded firms, including phone makers, device suppliers, infrastructure investors, and mobile app providers, have found themselves at the center of taxation and compliance investigations in India in recent years, a person familiar with the matter told Yicai.

Companies that intend to invest in India are required to have a stronger ability to make profits and hidden costs, such as inspections and fines, equaling about 3 percent of their total sales, according to a senior industry insider. To expand in India, foreign investors should either engage in trade or set up joint ventures with strong local partners, the person added.

Editors: Zhang Yushuo, Futura Costaglione