Chinese Smartphone Maker Honor Pulling Out India Team, Cites ‘Obvious Reasons’

Several media reports in China are stating that the Chinese smartphone maker Honor, previously a sub-brand of Huawei, will be pulling its team in India. 

A report in the South China Morning Post cited another report in a state-run publication citing Honor’s CEO confirming the move. At a launch event in Shenzhen on Thursday, CEO Zhao Ming was cited as saying that the company is leaving India for ‘obvious reasons’.

Ming stated while Honor’s India business will be managed by local partners, the company will take a ‘very safe approach’.

Honor, a former sub-brand of Huawei, was sold by its parent company after crippling US sanctions effectively ended Huawei’s smartphone business. Among other things, the US sanctions cut off Huawei’s access to Google’s Android OS and related Google services. 

Eventually, Honor was sold off for $12 Bn to a consortium made up of the Government of Shenzhen, Digital China and others.

The move comes as the Indian government’s noose tightens around Chinese companies over financial irregularities and the rising geopolitical tensions between Beijing and New Delhi.

Since the deadly Ghalwan border clash between the two countries’ armed forces, India has banned more than 250 Chinese apps citing national security concerns, including big names such as TikTok and PUBG Mobile. 

Multiple Chinese companies are under the government’s radar under suspicions of tax evasion, money laundering and other financial irregularities. Currently, the government is investigating four smartphone makers and OEMs – former Honor parent Huawei, Vivo and its sister company OPPO and Xiaomi.

Huawei has been under suspicion across the world for its alleged links with China’s ruling party – something that the Chinese telecom giant has vehemently denied. This has resulted in India increasingly limiting Huawei’s participation in its telecom network.

Most recently, India’s Department of Telecommunications (DoT) amended its licencing rules to include expansion projects under the ambit of ‘trusted’ devices and sources as well. This move means that Huawei and fellow Chinese telecom OEM ZTE now can’t get expansion projects from India’s telcos as well till it gets its equipment in the ‘trusted’ category.

India’s Income Tax department raided Huawei’s offices in February 2022 on suspicion of tax evasion. Subsequent investigations have revealed that Huawei has been withholding crucial data which has prevented the I-T department from calculating its taxable income.

While the numbers on Huawei are still not clear, compatriot Vivo has found itself in scalding hot water.

India’s Enforcement Directorate (ED) has alleged that the Chinese smartphone maker remitted almost half of its income of INR 1.24 Lakh Cr outside the country, reducing its taxable income in India. At the same time, Vivo’s sister company OPPO is being investigated on charges of tax evasion as well.