Nokia's distributors have submitted a report to China's National Development and Reform Commission, State Administration of Taxation and State Administration for Industry and Commerce which alleges how Nokia has been involved in tax evasion and tax fraud in China.
Liu Youming, a representative from Nokia's distributors, told Chinese media that the distributors had sent a legal letter to Nokia but had not received a reply from the company. That was why they decided to report Nokia's allegedly illegal behavior. The distributors said that they hoped that the government would punish Nokia's unreasonable policies on selling beyond agreed areas.
Nokia had angered some distributors when the company previously began terminating distributors in China who had broken their agreements by selling products outside the scope of their prescribed zones. According to the distributors, Nokia often imposed heavy fines on selling beyond agreed areas but without issuing them an invoice, which they said was a way of tax evasion for the mobile phone company.
However, local media reports that Nokia China responded that these distributors were not their signing dealers and the company had consulted with the Chinese departments concerned after the distributors refused to sell their products.
In later May 2009, 112 dealers of Nokia gathered in Changsha, Hunan province, to discuss Nokia's heavy fines on selling beyond agreed areas. They decided to protest Nokia by refusing to sell the company's mobile phone products. On June 10, over a dozen dealers of Nokia in Jinan, Shandong province, jointly began to refuse to sell Nokia mobile phones and they were later joined by dealers from Shanghai, Hangzhou and Changsha. On July 24, the distributor representatives of Nokia gathered again in Zhengzhou, Henan, to protect Nokia's policies.