Shanghai Kawaguchi Machinery Co. Ltd. and Chinese injection molding equipment maker Yizumi Precision Machinery Ltd. are in a legal battle in a Chinese court over the breakdown of a 2016 agreement for Yizumi to buy a majority stake in Shanghai Kawaguchi.
Yizumi had told Plastics News in April 2016 that it had acquired an 80.09 percent stake in Shanghai Kawaguchi for $277,100, but a lawyer for Shanghai Kawaguchi said the two sides only had a "letter of intent" dated April 7, 2016, that was never finalized.
The lawyer, Pascal Pan, told Plastics News that Shanghai Kawaguchi has sued Yizumi in court in Shunde, in the Chinese city of Foshan, "in order to claim … compensation" over the busted-up purchase agreement.
Yizumi did not comment on the details of the dispute, citing the pending lawsuit.
"As litigation will start very soon, it will not be appropriate that we make any public comments towards this matter," said Richard Yan, CEO of Shunde-based Yizumi.
Shanghai Kawaguchi is a subsidiary of Shizuoka, Japan-based Kawaguchi Ltd., one of the early pioneers of Japan's injection molding machinery industry.
Pan accused Yizumi of not following the intent of the 2016 agreement, and said that ownership of Shanghai Kawaguchi was never transferred from its Japanese owners to Yizumi.
"In fact, Yizumi did not obey the rule of letter of intent and broke down the agreement finally, but that made public believe that Kawaguchi's technology, brand, history and shares had already disappear from Japan," Pan said.
The Japanese parent set up the Shanghai Kawaguchi unit in 2004, and several years later began making injection presses at factories, first in Shanghai and then in Hebei province.