An Apple store in Chengdu, Southwest China's Sichuan Province. Photo: IC

 
Luxshare, one of Apple's largest Chinese component and finished product makers, is shifting its new investment of $330 million to Vietnam from India, where it failed to expand its business, according to media reports.

Chinese experts said that the shift indicates the rising protectionism of the Indian market against foreign investors, particularly those from China, which will affect the supply chain integrity of Apple in India and shatter the confidence of other investors in the South Asian market.

After several failed attempts to expand its operations in India for nearly three years, Luxshare decided to shift a new investment of $330 million to Bac Giang in Vietnam, Indian media outlet Business Standard reported on Thursday.

The license for the investment was cleared last week by the Vietnamese government. This raises its total investment in Vietnam to $504 million, the report said.

The Chinese technology company will make diverse products ranging from cables for smartphones and communications equipment to touch phones and smart watches in the country, according to the report.

Luxshare couldn't be reached for comment as of press time.

Luxshare Precision's withdrawal reflects a determined decision after facing numerous challenges during its years of operation in India, Chinese experts said. 

"This decision may affect manufacturing enterprises in Apple's supply chain and the overall supply chain for Apple phones in India," Liu Zongyi, secretary-general of the Research Center for China-South Asia Cooperation at the Shanghai Institutes for International Studies, told the Global Times on Sunday.

Similar cases have taken place in other sectors. Chinese vehicle maker BYD reportedly told its India joint-venture partner that it would shelve plans for a new $1 billion investment to build electric cars after its investment proposal faced scrutiny from New Delhi, Reuters reported on July 28, citing people with knowledge of the discussions.

BYD planned to expand into electric vehicle manufacturing and assembly in Vietnam, media reports said.

Indian government moves targeting companies from China have been relentless. For example, Indian police have accused Chinese smartphone makers Xiaomi and Vivo of helping transfer funds illegally to a news portal under investigation on charges of "spreading Chinese propaganda," an allegation that the Chinese companies strongly denied.

India's intensified scrutiny of Chinese enterprises has gone so far as interference in the appointment of senior executives in Chinese companies and restricting visas for Chinese personnel, among other actions.

The withdrawal also indicates a lack of understanding among some international investors about the Indian market, Liu said.

"India continues to present obstacles for foreign investors, particularly affecting the confidence of Chinese companies," Liu said.

The deteriorating business environment for Chinese companies in India has been marked by ongoing inspections, investigations, restrictions on personnel and visa denials - as seen in Chinese automaker BYD's Indian electric vehicle assembly plant with no personnel from China.

This situation is severely affecting the normal operations and confidence of Chinese businesses in the country, an India-based senior industry insider told the Global Times on Sunday on condition of anonymity.

Some companies in India are exploring alternatives, investing in markets like Vietnam, Mexico, Europe and other regions.

"India is not the sole option for Chinese companies to expand globally, and choosing other markets appears to be a prudent decision given the circumstances," the insider said.

The implementation of "Make in India" relies significantly on foreign investment and external technological support. The Indian government's amplification of nationalist sentiment goes against normal business practices, as Chinese experts noted.

"The Indian government's protectionism poses numerous risks and challenges to the country's ambitious plans of becoming a major manufacturing hub," Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, told the Global Times on Sunday.

"In the long run, it is likely to lead to regret as it deviates from standard commercial principles," Qian said.