Weichai Power Upholds Patent Litigation Banner
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Weichai Power recently announced on November 2 that its technical center had released a market research report revealing serious patent violations, particularly concerning the company's legally protected diesel oil and gas separators. The company stated it would send legal letters to the infringing companies, demanding they cease the infringement, compensate for damages, and face potential civil litigation if necessary.
In this strongly worded statement, three companies were named as infringers, with China National Heavy Truck Group Co., Ltd. and its affiliates being among them. Notably, just one day before Weichai Power’s announcement, China National Heavy Duty Auto Group successfully passed the Hong Kong Stock Exchange’s hearing for its red chip listing, which is expected to go public by mid-November.
It is not uncommon for competitors to file lawsuits around the time of an IPO in overseas markets. For example, in 2004, SMIC initiated its dual listing in Hong Kong and the U.S., while TSMC sued SMIC in California for patent infringement and trade secret theft. More recently, in October, Foxconn filed a lawsuit against BYD in the Hong Kong High Court just before BYD spun off its mobile phone manufacturing business.
While the outcome of such lawsuits may vary, they often impact investor confidence and could influence the fundraising success of the competing company. It is likely that the primary goal of these patent disputes is to create uncertainty and gain a competitive edge.
The long-standing rivalry between China National Heavy Duty Truck and Weichai dates back years. The two companies once shared a parent-child relationship, but Weichai eventually broke away and established itself independently.
Currently, China National Heavy Duty Truck leads the industry in heavy truck production and sales. However, Shaanxi Automobile Group, now under Weichai Holdings, has grown rapidly over the past two years, closely following the top players like Sinotruk, FAW, and Dongfeng, firmly securing the fourth position in the industry.
Moreover, Weichai's engines, gears, and transmissions dominate a significant share of the domestic market. By raising the prices of its products, Weichai can increase costs for competitors and strengthen its own financial performance.
Because of this, SINOCHEM decided to build its own engine production line and supporting industries, aiming to reduce its reliance on Weichai. As a result, SINOBIRC will need to raise substantial capital through its Hong Kong listing, and it may not be a coincidence that Weichai Power chose this moment to initiate legal action.
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