China International Marine Containers (CIMC), the world largest box maker, has launched lawsuits against several of China Cosco Shipping’s container units in a rare spat between Chinese state-owned conglomerates.
The patent suits have come after Cosco Shipping agreed to take over Singamas’s dry box manufacturing business units—the world’s second largest—for CNY 3.8bn ($565m) earlier this week.
According to some Chinese media outlets, CIMC has filed a petition to Qingdao Intermediate People’s Court accusing two Singamas units being sold to Cosco Shipping of manufacturing and selling containers in violation of its patent, while asking for compensations totalling CMY 1bn.
A second petition accuses Cosco Shipping Lines—which is Cosco Shipping’s container shipping unit—of using containers in violation of the CIMC patent while requesting compensations of CNY 3m.
Emails seeking comments from CIMC, Singamas and Cosco have yet to receive a response.
CIMC and Teo Siong Seng-led Singamas—which together makes over half of the world’s containers—have often been mired in lawsuits in recent years, and the rivalry does not appear abating despite the Cosco deal.
While buying the Singmas units via wholly owned subsidiary Cosco Shipping Financial Holding, Cosco Shipping will entrust those businesses to Cosco Shipping Development (CSD), its Shanghai- and Hong Kong-listed financing arm.
The three-year entrustment will “facilitate increased economies of scale and the unified management of the container business” between Cosco Shipping and the Singamas units, according to CSD, which will receive entrustment fees totalling CNY 26.5m.
According to an exchange filing, CSD--which itself is the second largest shareholder of CIMC—will formally acquire those Singamas units from its parent group within three years.
CIMC’s largest shareholder is China Merchants Group (CMG), which controls a 24.6% stake.
The Cosco deal has drawn some discomfort in the low-margin container manufacturing industry, with some CIMC officials reportedly voicing opposition to the merger.
According to National Business Daily, CIMC officials have called on Chinese regulators to look over competition issues, with Cosco holding the same number of seats in the CIMC board as CMG.
