India: Directorate Takes Aim at Xiaomi – Kalra, Reuters
The Indian government has taken aim at Chinese electronics giant, Xiaomi, which is expanding into the Indian market. The Indian Directorate General of Anti-Dumping (DGAD) has carried out investigations into the company’s pricing structure and business model, and has determined that Xiaomi is engaged in “dumping,” or selling products in India below cost price.
The initial investigation was initiated after Chinese digital products maker Gionee filed a complaint with the Indian government. The complaint alleged that Xiaomi was engaging in predatory pricing and undercutting competitors in the Indian market, leading to an unfairly competitive environment.
The investigation also found that Xiaomi’s pricing structure was so low that it was able to gain market share in India with very little effort or advertising. The DGAD investigation focused on the period of January 2018 to June 2018, claiming that “the domestic industry has suffered material injury from the dumping of Xiaomi’s products.”
Xiaomi responded to the complaint denying all charges and citing data from Indian telecoms regulator TRAI to prove its case. According to the data, Xiaomi’s share of the Indian smartphone market had dropped from 49% in the first quarter of 2018 to 40% in the second quarter of 2018.
Xiaomi also argued that it had increased its prices in India in order to better compete against other phone makers and supplied evidence of this. Despite these efforts, the DGAD investigation has gone ahead and recommended anti-dumping duty on Xiaomi’s products in India.
This could be a significant blow to Xiaomi, as it is one of the fastest growing Chinese electronics companies in India. The outcome of the DGAD investigation is also likely to have a significant impact on the Indian smartphone industry, as well as India’s overall investment climate.
It remains to be seen how the Indian government will respond to the findings of the DGAD investigation. It is clear however, that this investigation is a significant step in India’s effort to protect its domestic industry and competitors from unfair practices.
