The Indian mobile phone market is booming, and the Indian government's attitude towards Chinese companies is particularly interesting. Recently, there have been rumors that vivo's branch in India is considering selling its equity holdings, a move that carries significant implications. On the surface, both the Indian media and government have expressed their "expectations" that companies with cooperation between China and India should maintain at least 51% local ownership and that the management and sales operations of such enterprises should be fully localized.

These "expectations" may sound ideal, but for Chinese investors, they undoubtedly represent a heavy challenge. It is clear that this is an attempt to compress the interests of Chinese companies to the greatest extent, akin to open plunder. Under such circumstances, is vivo really acting voluntarily, or is it being forced into this situation? Everyone is well aware of the truth.

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Is vivo selling out in India?

This time, vivo is facing tough times in India, under immense pressure. It is said that vivo's Indian subsidiary is in talks with the Tata Group about an acquisition.

This is not a joke. The Tata Group is a major player in India with significant ambitions. They have previously assembled Apple products and are now planning to build semiconductor factories, extending their reach further and further.

The issue is that the price offered by Tata is not satisfactory to vivo, which considers it too low. However, the Indian government is siding with Tata, insisting that vivo must sell at least 51% of its shares to a local company.

Now, it's not just Tata that wants to buy; the Indian government also wants local control, with the management and sales network being local as well. This move is clearly aimed at minimizing the influence of foreign enterprises.

This "hope" is, in reality, a disguised mandatory requirement. For vivo, this is simply being forced into a corner. Although they have been thriving in the Indian market, facing such pressure from the government, their options are limited.Tata Group's initial offer may not have been accepted in the first round of talks, but who knows what new tactics they might employ next? After all, they are not known for being easy to deal with.

It is clear that the strategy adopted by the Indian government is aimed at firmly grasping the rapid development trend of the mobile phone market, especially when domestic companies are expected to reap substantial profits.

In essence, they have used the mandatory requirement for foreign investors to reduce their shareholdings as a means to pave a broader development path for local enterprises.

Although this strategy does indeed help to increase the market share of local companies in the short term, it may potentially have a negative impact on market diversification and the healthy development of competition in the long run.

Vivo is also in a difficult position; their business in India was originally developing very well. If they are really forced to sell a majority of their shares, they would not only lose control of the company but could also affect their long-term strategic deployment.

Vivo has been on Tata's radar for a long time.

Chinese manufacturers have already captured 60% of the Indian mobile phone market. Among them, Vivo's market share has reached an alarming 17%, with a growth rate that is frighteningly fast, and it seems poised to become the market leader in India.

How could Tata Group ignore this situation?

Tata, a well-established company in India, was previously mainly involved in heavy industry and had strong market and government relationships. Now, seeing the lucrative prospect of Vivo, how could they not be tempted?Incorporating their recent enthusiasm for expanding into the electronics industry, acquiring vivo would undoubtedly be a great opportunity to add points to their strategic scorecard.

Not only that, but Tata could also use this opportunity to ride the wave of nationalism and shape the image of a national hero. After all, who doesn't like to hear stories about local companies defeating foreign competitors?

In this way, Tata would not only score points in the business world but also win favor politically.

But speaking of which, can this deal really be negotiated?

Although vivo might be forced to sell shares, the matters involved are complex: valuation, equity structure adjustments, management appointments, protection of trade secrets, supply chain integration, and reform of the distribution network... Each of these items is enough to give one a headache.

Considering Tata's assertiveness and vivo's reluctance, the atmosphere at this negotiation table will definitely not be very harmonious.

In fact, forget about vivo, even if Apple enters India, it has to find Tata for contract manufacturing. Even if E. coli exceeds the standard, it has to be endured. Fear not the thief but the one who covets, this matter is essentially a dead end.

The risks of the Indian market should not be overlooked.

Over the past few years, the Indian market's attitude towards Chinese companies has been capricious.Since the beginning of 2020, India seems to have shut its doors to Chinese software; it then proceeded to impose stricter measures on well-known domestic mobile phone manufacturers such as Xiaomi, Oppo, and Vivo in 2021.

During 2022, the Indian government continuously took a series of strong measures, starting with a comprehensive ban on 23 local subsidiaries of Vivo, resulting in the freezing of assets worth 4.65 billion rupees.

In addition, the company was accused of tax evasion, with an astonishing amount of 62.476 billion rupees.

At the same time, a large number of senior managers were improperly punished and detained according to the law. These actions will inevitably have a profound and significant impact on the daily operations and market reputation of a large number of Chinese companies in India.

This suppression not only hits the economic situation of the company but also causes serious damage to the company's reputation.

These actions are obviously part of the Indian government's attempt to reduce dependence on foreign companies and promote the "Make in India" strategy under the policy framework of supporting local enterprises.

Although this strategy can increase the market share of local companies in the short term, it is a huge challenge and risk for foreign companies.

For Vivo, this storm is undoubtedly a severe test. The experience of Chinese companies in India tells us that transnational operations should not only focus on the market and consumer needs but also pay attention to the changes in the political environment.

Only by understanding and adapting to these political and legal environments can companies move forward steadily in the international market and protect their interests from damage.

The Indian market does have huge potential and attractiveness, but the political risks and market uncertainties are also high. Companies entering such markets need courage and wisdom, as well as sufficient preparation and flexible response strategies.Hope that vivo can properly handle the current predicament, adjust strategies, continue to hold a place in the global market, and write its own brilliant chapter.

In summary, although the Indian market is good, challenges and risks coexist, and one should be cautious when advancing or retreating.