“Vyapar Bhawan”
925/1, Naiwala, Karol Bagh, New Delhi-110005.
Phone: +91-11-45032664, Tele= +91-11-45032665
E-mail: teamcait@gmail.com Website: www.cait.in
Dated: 16th December, 2021
Ref. No.: 3316/1/50
Smt Nirmala Sitharaman ji
Hon’ble Minister of Finance & Corporate Affairs
Government of India
Sub: Entry of Chinese e-commerce company, Shopee into India
Dear Madam,
1. I bring to your notice the conduct of operations by an e-commerce entity, Shopee, in breach of the Press Note 3 (2020) series published by the Government of India on 17.04.2020 (“Press Note”). As you are undoubtedly aware, the Press Note amended the Foreign Direct Investment (FDI) Policy and the Foreign Exchange Management Rules, 2019 (“FEMA Rules”) mandating prior approval of the Government of India in case, any investment is made in India by an entity of a country sharing land border with India or where the beneficial owner of an investment in India is situated in a land bordering country.
2. Shopee is a Chinese e-commerce giant which has commenced its operations in India through an entity, SPPIN India Private Limited, held by two holding companies SPPIN 1 Private Limited & SPPIN II Private Limited, both registered in Singapore. These two entities are in turn held by another parent company SPPIN Limited, registered in the Cayman This complex structuring of entities is nothing but an attempt to hoodwink the Indian government and infuse Chinese funds into India.
3. More pertinently, it is well known that Shopee is a brand which is controlled operated by Tencent, and the Chinese-born, Forrest Xiaodong Li. It is with the motive to establish illegal control over the retail market in India that Shopee is launched into India by using the complex camouflage of a number of corporate veils and multiple foreign entity structures.
4. The entry of the mobile application, Shopee, by the above-mentioned mechanism is going unnoticed specifically since Shopee has been listed with a new company, with new companies having less information in the public domain. The Government of India has over the years taken stringent actions against Chinese application in view of such apps engaging in activities “prejudicial to the sovereignty, and security of India”. However, some apps often do not fall under the radar of the Government simply because they mask their origin.
5. Shopee is now in India by using a mix of holding companies outside Mainland China, and thereafter, rebranded them to maintain and/ or re-establish a presence. The smokescreen afforded by a global maze of equity holdings and complex corporate structures has been enough for some of these apps to not just sustain operations but also flourish in India. Infact, as per recent news articles, Shopee does more than 1 lakh order a day.
6. Shopee has been able to grow at this astronomical pace, in a matter of mere months, by adopting predatory pricing tactics. In fact, this is the standard modus operandi of Shopee in every new market it goes to across the world. Shopee’s standard SOP in every market is to demolish competition and distort the market and gain dominance by adopting unfair trade practices and predatory pricing tactics.
7. A bare perusal of the Shopee website and application will show that many products are sold on the platform at astonishingly low prices of Rs. 1/ Rs. 9/ Rs. 49 etc. Screenshots evidencing the same have been attached. This is nothing but a deliberate pricing strategy adopted by the e-commerce giant with the intention of reducing prices of products to nonsensical and loss-making levels in the short-term; so as to undercut and extinguish small sellers and retailers in the long term. This low ball pricing by Shopee is being done with a calculated view to kill the offline players and micro and small-scale businesses and retailers in the country and amounts to predatory pricing and unfair trade practice.
8. As such, I request you to examine, enquire and take necessary action as may be deemed appropriate in law against the mobile application, Shopee and the corresponding website, shopee.in and all similarly situated entities, including SPPIN India Private Limited.
9. We are hopeful that this issue will receive your due attention and that appropriate action will be taken to protect the interests of small traders and retailers in India.
Thank You. With kind regards
Truly yours
Praveen Khandelwal
National Secretary General
Confederation of All India Traders
