OFweek Smart Home Network News US time June 9, Sharp in New York District Court, California High Court launched a lawsuit against Chinese home appliance brand Hisense, said Hisense in the United States to "SHARP" brand sales of low quality and low price LCD TVs, damage Sharp The brand image requires Hisense to stop using the SHARP trademark and propose damages of at least US$100 million.
A website called “Blue Tech†issued a document saying that the website’s US correspondent had received information from relevant people in New York City. At about 10:00 am on June 16, Beijing time, Sharp Corporation withdrew its lawsuit against Qingdao Hisense Electric. The news was cited by several media.
However, Southern Weekend reporters can still find the lawsuit in the California Supreme Court. In an interview with Southern Weekend reporters, the related person of Hisense stated that it was determined that Sharp's lawsuit in the New York court had been revoked, but he was unaware of whether the lawsuit in the California High Court was revoked.
Those close to Sharpe revealed to the Southern Weekend reporter that the original lawsuits were conducted in both places and will now focus on litigation in California.
Sharp's allegations
The lawsuit began with the acquisition in 2015. On July 31st of that year, Hisense and Sharp jointly announced that Qingdao Hisense and its affiliated company, Hisense, jointly invested USD 22.88 million to acquire 100% shares of Sharp Mexico Co., Ltd., and at the same time, obtained Sharp TV brand use rights in the Americas (except Brazil). And all channel resources for a period of five years (January 6, 2016 - January 5, 2021).
The focus of the case is Hisense's use of the SHARP brand in the United States. According to the Southern Weekend reporter’s original inquiries on the California High Court website, Sharp believes that in order to highlight its product advantages, Hisense deliberately uses Sharp's distribution network to sell inferior products to harm Sharp's brand image. At the same time, Hisense also had false propaganda when using the Sharp brand.
Sharp wrote in the dossier that the seven SHARP TV models launched by Hisense did not match the actual size of the screen displayed on the packaging. For example, the size of the LC-75N8000 is 75 inches, but it is actually Only 74.55 inches; 11 of the TVs sold by retailers exceed the FCC (United States Federal Communications Commission) emission standards, proving that they have electromagnetic interference; at least one of the products displayed on Hisense's website is more compliant than the actual specification. 35% higher; listed 4K TVs only meet low-resolution standards, and so on.
Regarding Sharp's allegations, Hisense’s response to the Southern Weekend reporter was that Sharp’s so-called “product quality problem†on individual models was an excuse to touch porcelain. He also said that after the acceptance of Sharp's Americas business, Hisense's mainstream 32-inch, 50-inch, 65-inch TV and Sharp brand price index have increased substantially. During the 2016 CES, Hisense's latest Sharp N7000 series TV products were also reviewed by the United States. The com website was selected as the "Editor's Choice Award".
For this lawsuit, Mr. Zhu Xi, Deputy General Manager of Hisense International Marketing, publicly stated that Sharp “who was the first to sue the wicked person†and “Grace and Enemy†had interpreted a farce for a modern version of “farmer and snakeâ€. Hisense will actively respond to the lawsuit. And continue to produce and sell Sharp brand TV products in North America.
Win-win acquisition
According to Zhu Xi’s previous statement to the media, Hisense’s acquisition of Sharp’s Mexican plant and North American business in 2015 was to “treat†Sharp. Zhu Xi said that at that time, Sharp had a difficult business operation and suffered serious losses. He had visited Hisense three times and five times in the hope of finding the best “people†for the “North American Sharpâ€. In this context, Hisense took over the Sharp Mexican plant and hosted Sharp North America. Brand sales.
However, according to the announcement at that time, Hisense believed that this acquisition was a major progress in Hisense's internationalization process and would also be conducive to the realization of Hisense's internationalization strategy. In fact, this acquisition played an important role in the internationalization process of Hisense, especially in the North American market. The Sharp Mexico plant is also Hisense’s largest television production center overseas.
Since then, Liu Ruirui, chief executive of Hisense Americas, once told the media that in 2016, Hisense added an additional US$30 million to the plant to strengthen its automation capabilities and increase its production capacity. Liu Ruirui also said that due to the reduction of inventories of major US retailers, retailers' orders for manufacturers are more frequent, but if products from Chinese factories are transported in the past, it will take a long time, and transportation from Mexican factories can save money. A month's time.
For the takeover of Sharp American brand sales right, the most direct benefit is Hisense’s market share in North America. According to market research firm IHS, in 2015, Hisense’s market share in North America was only 2.8%, which was a significant difference from Samsung's 28.7% market share. However, after taking over, Hisense can translate Sharp's market share in North America. More importantly, Sharp can use its reputation in the North American market to sell its own products.
In addition to Hisense, domestic TV brands such as TCL, Haier and Skyworth have all started operations in the North American market, among which the domestic brand with the highest sales volume is TCL. According to IHS data, its market share in North America was only 5% in 2016. The fourth place on the list.
A North American market leader of a domestic brand, who did not wish to be named, told the Southern Weekend reporter that for a long time, the impression of domestic TV brands in the North American market was “low-end, low-cost†and it was difficult to break into the mainstream market in North America. According to its introduction, different from the domestic market, the six major North American stores, Target, Costco, Amazon, Wal-Mart, Sam's Club, and Bestbuy all have certain thresholds for the brand image and reputation of the products they have settled in, and only one or two of the domestic brands can enter the market. Family.
“The vast majority of television products you see in these stores are Samsung, LG and several local brands in the United States. Domestic brands are hard to find.†The above-mentioned person in charge said, “Most domestic brands are in less developed areas. , RVs and other niche sales channels, which is also the main reason for domestic brands do not make much. Hisense to take over Sharp's brand use rights and sales channels, for Hisense, no doubt very helpful.
North American market battle
In April 2016, Hon Hai Group announced that it had spent USD 3.5 billion to acquire 66% of Sharp's shares and acquired Sharp's global brand control. The battle for brand control in the North American market has also started since then.
In an interview with the Wall Street Journal at the beginning of last year, Hon Hai founder, Gou Ting-ming, made it clear that Sharp’s acquisition is intended to improve Hon Hai’s value chain and it does not hope that Hon Hai is merely a low-margin brand foundry company. Terry Gou said that Sharp is a very popular brand and clearly stated that he must retain Sharp's brand.
Since then, Sharp has redefined its brand strategy and hopes to unify the control of global brands. But in fact, in addition to North America, another important market - Europe, Sharp's brand control is not in Sharp's own hands. In 2014, Sharp had reached a licensing agreement with UMC (UMC) to sell Sharp's European brand sales rights to UMC.
However, early this year, Sharp regained Sharp's brand sales rights in Europe by acquiring UMC's holding company. According to the analysis report of IHS, New Sharp hopes to resume sales of 10 million LCD TVs per year. Sharp will not allow the existence of "two Sharp" brands in the global market. This also made it necessary to resolve the issue of North American brand control.
In a reply to the Southern Weekend reporter, Hisense stated that in October 2016, the president of New Sharp Dai Zhengwu had visited Hisense and hoped to “recover†brand control of Hisense in North America. However, it was rejected by Hisense. The reason given by Hisense is to perform the contract and honor the contract. The Southern Weekend reporter tried to contact Foxconn, New Sharp's actual control company. The reply was that Sharp was operating independently and needed to contact Sharp's company in Japan. As of press time, Sharp did not reply to Southern Weekend's request for an interview.
In response to this round of battles over brand sales rights, many analysts believe that Sharp “is bound to get.†Because for Sharp, Hisense is a competitor in the North American market, and the brand sales right is controlled by competitors. After five years, the brand image will still be full of uncertainties. This is also Sharp's most worried, and emphasized in the lawsuit: Hisense deliberately used Sharp's distribution network to sell inferior products to harm Sharp's brand image.
Sharp's withdrawal from the previous report was also considered as misrepresentation. People close to Sharpe told the Southern Weekend reporter that the original lawsuits were conducted in two places. Now they are withdrawing their lawsuits in the New York District Court, just to focus more on California High Court litigation.
If Sharp's allegations are supported by the court, there will undoubtedly be a great blow to Hisense's brand image in the North American market. Sharp may also recover its brand control in the Americas (except Brazil).
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