Oppo, OnePlus, Realme to Operate as Separate Entities in India to De-Risk BBK's India Business: Report

BBK Electronics-owned Chinese smartphone companies are reportedly preparing to work as independent entities with sales accounted for in their books. As per a report by Economic Times, the Duan Yongping-founded brand has restructured its India operations and made its three brands — Oppo, OnePlus, and Realme, independent entities. The move could help the manufacturer to de-risk business from the current and future government action against Chinese firms. Different central agencies in the country had accused the brands of income tax evasion, customs violations, fraud and money laundering.

As per the ET report citing people familiar with the matter, BBK Electronics has restructured its India operations by making Oppo, OnePlus, and Realme independent entities with sales accounted for in their own books.

The manufacturer has reportedly transferred sales and distribution of OnePlus and Realme to legal entities OnePlus Technology India and Realme Mobile Telecommunications India, respectively. Earlier, it was overseen by Oppo Mobiles India. Going forward, Oppo Mobiles India will handle the sales and distribution of Oppo. However, Oppo Mobiles will continue to manufacture smartphones for all three brands.

The latest move is considered as a way to "de-risk the business from the current and future government action against Chinese firms". The report quotes one of the executives as saying “BBK is cautious that the way the government is taking action against Chinese companies, any severe and further action against Oppo Mobiles India will impact the business of three large brands. Hence, it wants to separate the three businesses".

Further, the report adds that OnePlus and Realme are already looking for Indian contract manufacturers. OnePlus Technology India has reportedly started signing billing, sales and distribution agreements with large retail chains and their distributors in India, whereas Realme Mobile Telecommunications has already begun the process.

Oppo, Xiaomi, and another BBK electronics-owned company Vivo are under investigation for duty evasion and remitting sales proceeds to companies outside India. Vivo and its sub-brand iQoo operate under a separate entity in the country, Vivo Mobile India.

Last year, the Indian government issued notices to Oppo, Vivo India, and Xiaomi. The Department of Revenue Intelligence (DRI) issued notice to Oppo for a total customs duty of Rs. 4,389 crore on the grounds of the misdeclaration of certain goods, leading to a short payment in duties. Duty evasion is about Rs. 2,981 crores. Besides this, Enforcement Directorate (ED) had reportedly blocked nearly 119 bank accounts linked to Vivo India in July last year.

As per Counterpoint data, India's fast-growing smartphone market is dominated by Chinese players, with Vivo, Oppo and Realme accounting for almost half of all sales along with Xiaomi. South Korea's Samsung has a 20 percent share.