Preface
On April 17, Hytera announced that the U.S. court had revoked the ban on sales, and now, Hytera has resumed its global sales.
Many people were surprised by this anti-transfer, after all, at that time, the U.S. court issued another sales ban and imposed a sky-high fine on Hytera, but why did it stop 15 days later?
So, what did Haineng do to turn the tide at the end, and what kind of situation will it face in the future?
Hytera, a leading walkie-talkie company
On April 7, 2024, Hytera removed all products on sale on its official website and replaced them with an announcement.
According to the announcement:
"According to the order of the U.S. court, Hytera shall not sell any product containing walkie-talkie technology anywhere in the world until further notice".
As we all know, Hytera's main business is the production and sales of walkie-talkies, and they are leaders in this industry.
According to the statistics of QYResearch, it can be seen that Hytera has sold a total of 1.499 million walkie-talkies by 2022.
Its market share is the third in the world, and there is only one difference between him and Motorola, which shows that Hytera still has a lot of say in this industry.
However, a sudden ban on sales by a U.S. court surprised everyone and caught Hytera off guard.
In addition to this, the U.S. court also ordered Hytera to pay a fine of $1 million per day.
Each of these two is a fatal blow to Hytera, and if a company is unable to carry out sales work, it will face the danger of "falling".
And the main reason for all this is because of a complaint from Motorola, as early as 2017, Motorola sued Hytera in the Illinois court in the United States.
Motorola's reason was that Hytera had infringed on their trade secrets, and the following year, Motorola filed a lawsuit, saying that Hytera had infringed their patented technology.
Prior to this, Hytera had recruited several employees, who had just left Motorola.
Not only that, according to Motorola, they were also the company's core technology research and development figures, and they took away a lot of trade secrets and core technologies after leaving the company, and joined Hytera's technology research and development in the later stage.
In 2020, the U.S. court had already ruled Motorola to win and demanded that Hytera compensate Motorola $764 million.
Hytera was not idle in the face of the lawsuit, appealing in the United States while fighting back in various domestic courts.
As a result, the U.S. court felt that Hytera had "flouted the U.S. courts", so it imposed a huge fine and a global ban on sales, and Hytera was also in a difficult situation.
Plummeting stocks, sluggish cash flows, and U.S. courts collecting huge fines every day have all made it difficult for Hytera to move forward.
Just when Hytera was about to come to the brink of life and death, the United States suddenly suspended the implementation of the ban on Hytera, so why is this?
Peak loop turn
On April 17, Hytera issued an announcement stating that the appeal against the product ban had come out, and the U.S. court decided to suspend the implementation of the ban and other fines imposed on the company by the court of first instance.
As a result, on the 17th, Hytera put all the products that had been removed from the shelves on the shelves and resumed the sales channels of major websites.
In addition, Hytera also rushed to contact its partners at the same time, and they wanted to start the originally suspended work line so that the company's operations could resume normal.
For such a large listed company, a one-day shutdown will lose a huge amount of production, not to mention that Hytera Danone has suspended sales for as long as 15 days.
Because Hytera has regained its freedom, the stocks that have plummeted before have also risen to the limit, and a red color represents that Hytera's turmoil has temporarily subsided, and the big difficulties have been overcome.
However, the ban on sales and the huge fine have also brought a heavy blow to Hytera, especially in terms of finance, this year, Hytera's operating income should decline a lot compared with previous years.
From the 2022 audit report disclosed by Hytera, it can be seen that their revenue in the field of wireless communication equipment accounts for 83.31%.
In other words, Hytera's main operation is the walkie-talkie track.
Hytera, known as the "king of walkie-talkies", can achieve the first position in China and the third in the world, which proves that its strength is still very strong.
However, according to the performance forecast announced by Hytera at the end of January 2024, the net profit attributable to the parent company in 2023 will be between 60 million and 90 million yuan.
This amount is far from being met, and the US court is demanding a fine of $ 1 million per day.
The ban lasted 15 days, which is 15 million US dollars, which is about 108 million yuan at the recent exchange rate.
So far, Hytera does not have enough ability to pay fines, which can easily "hollow out" his family funds, thus affecting the later development.
Although Hytera said that the case is still in the above-mentioned period, and they will do their best to revoke the relevant order, how to pay the huge fine and how much to pay in the end are all follow-ups.
So, why did Hytera commit the "crime of contempt of court" in the United States?
U.S. "contempt of court"
The "silent gunsmoke" between Hytera and Motorola has also lasted for a long time, and the two companies are in different countries and have quarreled so much.
In the end, the U.S. Department of Justice even joined in, which has to make people think one more step further: "The United States is ironclad to squeeze out Chinese companies."
In fact, in terms of the overall process of things, Hytera is not without problems.
The reason why Motorola sued Hytera was because of the employees who jumped ship, and we didn't know whether Hytera knew about it beforehand, but the other party seized on this point to sue, and we couldn't do it.
Commercial intellectual property rights and patents are actually difficult to decide.
Hytera was sentenced to lose by a U.S. court in 2020 because of its handling of losses, resulting in a sky-high fine of $765 million, which almost cost Hytera's "half life".
As a result, Hytera appealed all over China, and finally filed a lawsuit against the H series products in the Shenzhen Intermediate People's Court, as if to prove that it had not infringed.
But it is precisely because of this that it really angers the United States.
In fact, in 2020, although the U.S. court ruled that Hytera lost, it did not fully agree to Motorola's request.
For example, the judge rejected Motorola's request for a global ban on Hytera's sales, and in the end, the U.S. court only ordered Hytera to pay fines and patent licensing fees.
However, Hytera's appeal in China has made the United States feel disrespectful.
They think that you can appeal in the United States, but in China you don't respect judges and don't trust American courts.
This is equivalent to listening to whoever is in the territory.
You should follow my rules on my territory, and I should follow your procedures on your territory, which is a meaning.
As a result, the United States used a "contempt of court" to issue a relevant ban on Hytera.
This case is originally very complex and lasts for a long time, and it is a typical cross-border "business war", which is the most difficult to define and the longest time to start a lawsuit.
Hytera was mired in the situation but did not respond well to the follow-up work and lacked communication with the U.S. courts, resulting in an escalating situation.
So, what about Hytera's future development?
Hytera's future development
The suspension of the ban is good news for Hytera.
As long as the enterprise can return to normal operation, how to solve the follow-up matters will be more free to discuss.
Hytera's market will be affected, and this year's market share decline is inevitable, so stabilizing market development is Hytera's primary goal.
The matter between him and Motorola is unlikely to be completely resolute in the near future.
Due to the fact that there are too many external factors that have been added in the future, this case is no longer just a matter of two companies, so it will take a long time for Hytera to solve it.
Although Hytera was relatively aggrieved during the whole process of this matter, this was the most suitable solution he could come up with.
Some Chinese people may think that Hytera is too "incompetent", and the hands of the United States can actually control the life and death power of a Chinese company.
In fact, there are quite a lot of deviations in this matter.
First of all, Hytera has never denied the fact that he "poached people", and we can see from all of Hytera's claims that he did not intend to whitewash himself from beginning to end, but reduced compensation as much as possible.
Chinese companies originally had a certain "weakness" in lawsuits in the United States, not to mention that Hytera has no advantage now, so this is why Hytera is so aggrieved.
Secondly, even if Hytera really has to go head-to-head with the United States, in the end, it is still himself who suffers a lot of vitality.
Nearly two-thirds of Hytera's market share comes from the sales brought by the overseas market, so he can't give up the huge cake of the overseas market, so he has to swallow everything this time.
In the later stage, while maintaining the company's stable state, Hytera should actively communicate with the U.S. court to try its best not to suffer serious losses to its interests.
As for the future, I believe that Hytera will be able to learn this lesson, although they have been making concessions, but fortunately, the current situation is quite stable.
At the same time, the United States' trust and doubts about China's judiciary have also been clearly seen in this incident.
Subsequently, Chinese enterprises must pay attention to the standards of international law when opening overseas markets, because a mistake will not only cause their own passivity, but also bring unnecessary impact to the two countries.
epilogue
There are also endless cases of Chinese companies being attacked by the United States, and TikTok and Huawei have been or are facing the eyes of the United States.
However, they have been very careful in dealing with this aspect, and I hope that Hytera can learn more from other Chinese companies in this regard.
Although the situation has now been stably controlled, Hytera cannot relax its vigilance, and speeding up follow-up communication is an issue that should be paid attention to.
Resources:
Tencent.com: You Chuanman: Hytera's "Crime and Punishment": Judicial Mutual Trust and Great Power Game|Global Rule of Law Observation
Oriental Fortune Network: Suddenly banned from sale in the United States, Hytera, the head company of walkie-talkies, responded: It has applied to revoke the order
Sina Technology: After fighting with Motorola for many years, Chinese walkie-talkie giant Hytera has been banned from sale worldwide