In­dus­try giants Midea, Gree file com­plaints, seek mil­lions of yuan

China Daily (Hong Kong) - - IP SPECIAL - By WANG XIN wangxin@chi­nadaily.com.cn

With this hot sum­mer con­tin­u­ing to fuel a boom in air con­di­tioner sales, a le­gal wran­gle over air con­di­tioner patents be­tween home ap­pli­ance lead­ers Midea and Gree is also heat­ing up.

Gree Elec­tric Ap­pli­ances in Zhuhai, Guang­dong province, filed a patent com­plaint against its peer, Midea Group, with the Bei­jing In­tel­lec­tual Prop­erty Court in late June, claim­ing 50 mil­lion yuan ($7.4 mil­lion) in dam­ages from the lat­ter.

In re­sponse, Midea, head­quar tered in Foshan, Guang­dong, sued Gree for a com­bined 50 mil­lion yuan in dam­ages in an­other four fol­low­ing patent cases in Suzhou, Jiangsu province, and Guangzhou, cap­i­tal of Guang­dong, the lat­est filed with the Guangzhou In­tel­lec­tual Prop­erty Court on July 5.

Both com­pa­nies said in their re­spec­tive pub­lic state­ments that they be­lieve in the court sys­tem, de­clin­ing to make fur­ther com­ments to Chi­nese me­dia.

The cases are a re­flec­tion of the in­creas­ingly fierce compe tition be tween the ri­vals, Hong Shibin, an in­dus­try ob­server, told China Eco­nomic Weekly mag­a­zine.

There were roughly 400 air con­di­tioner man­u­fac­tur­ers across China about 17 years ago, yet most of them have been el­bowed out, leav­ing only about 10 brands sur­viv­ing.

Data from ZDC, an in­ter­net con­sumer re­search cen­ter based in Bei­jing, shows Gree has topped its peers with 44 per­cent of the do­mes­tic mar­ket, fol­lowed by Midea and Haier.

The air con­di­tion­ing busi­ness plays a ma­jor role at Gree, con­tribut­ing 88.1 bil­lion yuan in sales last year, or 81 per­cent of its to­tal rev­enue, ac­cord­ing to its fi­nan­cial re­port.

The com­pany claimed to have ranked No 1 by air con­di­tioner sales in China for 22 con­sec­u­tive years since 1995 and taken first po­si­tion world­wide since 2005.

In con­trast, Midea gen­er­ated 66.8 bil­lion yuan in air con­di­tioner sales last year, which ac­counted for 42 per­cent of the com­pany’s to­tal rev­enue.

The air con­di­tioner sec­tor has slowed its growth, as the en­tire in­dus­try scale is ap­proach­ing a ceil­ing, in­dus­trial in­sid­ers said.

For the two ty­coons, the re­main­ing mar­ket is lim­ited, China Eco­nomic Weekly said, cit­ing Zuo Yanque, gen­eral man­ager of China Mar­ket Mon­i­tor, a con­sumer prod­uct re­tail re­search com­pany based in Bei­jing.

“To en­sure growth, they have to snatch mar­ket share from each other, which has po­si­tioned them­selves in fierce ri­valry,” Zuo said. “They need to change their mind­set and seek new profit growth spots in other fields.”

Liang Zhen­peng, an in­dus­try an­a­lyst, said that his­tor­i­cally, play­ers in the in­dus­try used to fo­cus on ex­pand­ing dis­tri­bu­tion chan­nels, while they have started to shift their fo­cus to re­search and de­vel­op­ment.

Liu Buchen, an­other in­dus­try ob­server, added: “The le­gal pro­ce­dures help the al­ready well-es­tab­lished brands to fur­ther in­crease their rep­u­ta­tion and pro­vide them the op­por­tu­ni­ties to show­case their tech­no­log­i­cal mus­cles.

“From this per­spec­tive, they are both win­ners of the cases.”

claimed com­pen­sa­tion by Gree from Midea

SHA LANG / FOR CHINA DAILY

New air con­di­tion­ers are man­u­fac­tured at Gree, which holds 44 per­cent of China’s do­mes­tic mar­ket.

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