/Edited by Chen Jiying
/Wan Tiannan
After nearly half a month of mediation, Hytera Communications Co., Ltd. ("Hytera"), the king of Chinese walkie-talkies, has ushered in a turning point.
In early April 2024, the U.S. Federal District Court of Illinois (referred to as the District Court) issued a global injunction to Hytera, requiring Hytera to stop selling products containing two-way radio communication technology worldwide and report to the court on a daily basis. Pay a fine of US$1 million. The order is effective from April 2, 2024 and will last until the company fully complies with the anti-suit order.
Under high pressure, Hytera removed all walkie-talkie-related products from the shelves and posted a notice on its official website. At the same time, Hytera also appealed to the U.S. Seventh Circuit Court of Appeals (referred to as the Court of Appeals), requesting to revoke the aforementioned Product banning orders and fines from the District Court.
’s strategizing was effective. Hytera waited for the Court of Appeal’s order on April 17. The aforementioned ban on sales and fines were suspended, and Hytera began normal business operations.
First, tiktok suffered "forced demolition and forced sale", and later Hytera was forced to ban sales globally. The industry leader in China, which is brave and aggressive in the market, seems to have to "give in" in the face of the strong and overbearing American judicial system.
In fact, Hytera and other Chinese companies have suffered from unfair suppression for a long time.
In 2017, the Trump administration released the National Security Strategy Report, which characterized China as “the most important strategic competitor challenging the United States’ international status and national interests in many fields such as international security and economy.” A series of sanctions were imposed on Chinese companies. , control plans have been released one after another, and five Chinese companies including Hytera and Huawei have been included in the "blacklist".
The latest global ban is a continuation of the above-mentioned suppression.
As one of the benchmarks for Chinese companies going global, Hytera's overseas sales in the first half of 2023 reached 1.041 billion yuan, accounting for 46.10% of total revenue. In the same period of 2022, its overseas revenue accounted for 53.18%. At the same time, it also contributed more than half of the company's profits.
Next, Hytera’s solution is also a path-finding journey for Chinese enterprises to go global, seeking a better solution for the latter’s overseas journey.
American Motorola, why is it chasing Hytera?
Among the severe penalties imposed on Hytera by the U.S. court, the American company Motorola Solutions (hereinafter referred to as "Motorola"), which has been fighting with Hytera for seven or eight years, can be regarded as the one who handed the penalty.
The direct trigger of this global ban was a lawsuit initiated by Hytera in the Shenzhen Court in 2022. In June of that year, Hytera filed a lawsuit with the Shenzhen Intermediate People's Court, requesting the court to determine that its new generation h-series products did not infringe Motorola's trade secrets and copyrights.
The Shenzhen Intermediate Court subsequently filed the case and required Motorola to provide relevant evidence before April 1, 2024.
Before this critical node arrived, Motorola Kadian filed an injunction motion with the U.S. court, requesting Hytera to withdraw the Shenzhen lawsuit, in order to regain the leadership of the U.S. court in the trial.
On March 25, 2024, the U.S. court approved the aforementioned injunction motion in a timely manner, forcing Hytera to withdraw the lawsuit in the Chinese court, and at the same time forcing Hytera to implement additional global bans and sanctions.
Why has Motorola been clinging to Hytera for seven or eight years?
First, Motorola is worried that Hytera will leverage its monopoly in the global private network communications field.
In the field of global dedicated wireless communications, currently only Motorola and Hytera have multi-standard and industry-wide products and solutions.
In the past, Motorola was the dominant player in this field, relying on its monopoly position and dominant pricing power to enjoy excess profits.
However, Hytera has gradually emerged with its product strength, price strength, and innovation, leveraging Motorola's dominance.
As early as 2003, Hytera began to expand overseas and gradually opened up markets around the world. In 2017, Hytera completed the acquisition of tetra solution provider Sepura, which has a strong presence in the European market. Ranking second, Hytera has used this to pry open Europe, Motorola's most important core market.
By 2018, although Motorola’s revenue was approximately 7.4 times that of Hytera, and its global private network communications market share reached 47%, its three-year average growth rate was only about 10%, far behind Hytera’s. Up to 30%+. The share gap between
and
is also continuing to narrow. Today, Hytera’s global market share in the field of private network communications ranks second in the world.
Sensing danger, Motorola took action.
In 2017, Motorola filed a lawsuit in the Illinois State Court of the United States, claiming that Hytera had stolen its digital two-way wireless intercom technology and was suspected of trade secret infringement. Subsequently, the United States introduced sanctions and included five Chinese companies including Hytera and Huawei. Sanctions blacklist.
This is the beginning of this hunt and containment coordinated by the government and enterprises. Unwilling to give in, Hytera subsequently launched a counterattack against Motorola in many countries. In the eight-year struggle, both sides had their own victories and defeats.
The ultimate goal of Motorola's pursuit of Hytera is to drive Hytera out of the global market and ultimately monopolize the dividends of the private network market.
Although the overall scale of the dedicated wireless communications market that Hytera focuses on is small, its growth rate is extremely impressive. According to marketsandmarkets™, the wireless broadband market size in the public safety field is expected to increase from US$40.2 billion in 2024 to US$126.9 billion in 2029, with a compound annual growth rate (CAGR) expected to reach 25.9%. In this market, the key communications field will occupy the largest market size from 2024 to 2029, and the Asia-Pacific region is expected to maintain a higher growth rate.
As the market leader, Motorola is unwilling to give up the dividends of private network communications. At the same time, its price/performance ratio is much inferior to that of Hytera. Since is difficult to gain an advantage in the market, it is possible to overturn the table through litigation. It is a required option.
This is also Motorola's usual method - before, Motorola and Huawei also launched a judicial battle, which ended in a settlement between the two parties and Huawei won compensation.
Why does Hytera have to endure the humiliation?
After Hytera voluntarily withdrew its lawsuit from the Shenzhen Intermediate Court and removed related products from the shelves, many netizens raised questions - why should a Chinese company bow to the orders of the U.S. District Court?
But in fact, Hytera has not really "accepted its fate". After years of litigation, Hytera has clearly prioritized its priorities. The so-called "acceptance" is just a stop-gap measure.
In fact, the severe injunction issued by the U.S. court in early April was only a temporary rather than a permanent judgment. It was based on the so-called "contempt of court" and was mainly intended to force Hytera to withdraw the lawsuit from the Shenzhen Intermediate Court.
Therefore, Hytera endured the humiliation and cooperated with the US court injunction in order to lift the injunction as soon as possible and resume normal operations. This was the best option after weighing the pros and cons. It did not seek temporary happiness and demonstrated its responsibility and responsibility for its global layout. After active communication and negotiation between Hytera and the U.S. Court of Appeals, the latter suspended the district court’s injunction and fines.
Looking back on the past eight years of litigation, both sides have their own victories and defeats, and Hytera has even won a number of key lawsuits.
In response to the lawsuit filed by Motorola in 2017, Hytera filed a series of antitrust lawsuits against Motorola in the U.S. District Court.
On December 18, 2020, the District Court for the Northern Eastern District of Illinois rejected Motorola’s application for a global injunction against Hytera for the DMR products involved.
Two months later, on January 11, 2021, the British court revoked the freezing order previously issued by the Commercial Property High Court of England and Wales against Hytera and its British subsidiary in response to Motorola's application. At the same time, the Court of Appeal also rejected Motorola's application to appeal to the British Supreme Court and required Motorola to bear part of Hytera's legal fees arising from the British freezing order.
On August 24, 2022, the U.S. District Court for the Northern District of Illinois issued a "Memorandum Opinion and Ruling" stating that Hytera provided sufficient facts for eight of the nine charges provided by Motorola and rejected Motorola's request to withdraw its counterattack. Motions in monopoly litigation.
On December 23, 2022, the Australian Federal Court ruled that half of Motorola’s copyright and patent infringement claims against Hytera were dismissed.
On April 20, 2023, the Dusseldorf Regional Intermediate Court in Germany ruled that Hytera won the lawsuit and Hytera did not constitute patent infringement; and required Motorola to pay the court litigation costs of Hytera and its German subsidiary hmf in the first and second instances. .
From the general trend, the world is holding high the anti-monopoly banner. Some time ago, the European Union and the United States successively cracked down on Apple's monopoly behavior. Motorola wants to be the only one company in the future. Through patent wars, it will squeeze its competitors out of the market and establish a monopoly. This is against the trend of the world.
In fact, even countries such as the United Kingdom and the United Kingdom, which have good relations with the United States, cannot tolerate Motorola's monopoly excess profits.
In February 2016, Motorola completed the acquisition of British operator airwave. Every year, the British government pays airwave more than 400 million pounds. By 2022, the British Competition and Markets Authority ruled that Motorola enjoyed "extraordinary profits" of approximately 160 million pounds per year through airwave, and was required to withdraw from the British ESN network construction that was supposed to replace the airwave system in 2026 due to suspicion of "price monopoly" .
Hytera has actively responded to lawsuits and counterclaims in many countries, which is also based on its business confidence.
At present, the patent dispute between Motorola and Hytera mainly focuses on DMR walkie-talkie products, but in the DMR track, Hytera is actually also a veteran player.
As early as 2005, when the DMR (Digital Mobile Radio) organization was established, Hytera joined the organization and started the research and development of DMR products and networks. It played an important role in the popularization and promotion of DMR related technologies around the world. effect.
Therefore, whether Motorola’s accusation is true remains to be seen. This is also evident from the different rulings of the Court of Appeal and the District Court.
Moreover, in the patent dispute between the two parties, the disputed code is less than 1% of the code involved in the DMR walkie-talkie, and the DMR walkie-talkie involved in the dispute is only one of Hytera's many product lines.
In summary, for the far-sighted Hytera, the current predicament is not a dead end. “If the sales ban can be lifted quickly, it will have little impact on the company’s production and operations,” an industry insider revealed.
Now, the Court of Appeal has suspended the sales ban. Motorola’s attempt to make trouble has failed, and Hytera is expected to face a bigger disruption.
Innovation breakout competition, Hytera is very capable
For companies competing in the global market, litigation and fighting are only superficial stages, while innovation capabilities are the core final game.
The reason Hytera, a rising star, makes Motorola so fearful is precisely because of the latter's catching-up potential based on R&D innovation.
's financial report shows that Hytera invests more than 15% of its annual revenue in research and development, increasing its investment in key technologies such as narrowband, 4g/5g, public and private integration, intelligent guidance, low-orbit satellites, AI, chips and other key technologies. It is also one of the few companies in the world. Some companies have R&D and production capabilities for PDT, DMR and TETRA terminals and systems.
Whether at home or abroad, Hytera has achieved many key innovations - producing my country's first domestic brand walkie-talkie; developing my country's first high-end digital walkie-talkie based on the Tetra standard; participating in the formulation of my country's first independent Intellectual property's dedicated digital trunking standard (pdt). Today, more than half of China's police, fire fighters, and emergency personnel use Hytera system networks and terminal products; the world's first 5G professional security terminal will be released in 2022, etc.
Innovative research and development promotes product iteration, which also enables Hytera to avoid litigation risks and escape from homogeneous competition.
Since 2017, Hytera has invested massive funds and manpower to create a new R&D platform. The newly launched h series products are 100% independently developed by Hytera and have been used in world-class events such as the Qatar World Cup and the G20 Summit. It has been maturely commercialized and has formed large-scale orders. It maintains a leading position in technology and is fully replacing the previous generation of walkie-talkie products.
According to a staff member of Hytera Securities Department, "Daily Economic News" said: "After the h series was produced, it was witnessed by lawyers from both sides. This product does not involve the scope of old cases."
is also based on years of intensive research and development. Innovation, Hytera is at home in global layout, exporting products, standards and operations across the board.
For example, the pdt standard that Hytera participated in formulating has gone abroad and been accepted by many countries. By taking the lead in setting standards, we can effectively avoid malicious lawsuits from companies such as Motorola.
Hytera's track has equally promising prospects, maintaining an annual growth rate of over 25%. As a leader, Hytera relies on a complete industrial chain layout to form a "2+3+1" business strategy. It is relying on greater cost performance, higher innovation and R&D speed, and faster business growth to seize more and more markets. increasing global share.
As a leading enterprise in the field of dedicated communications in China and a technology leader in the field of global dedicated communications, Hytera fully masters the three major domestic and foreign mainstream professional wireless communication digital technology standards of PDT, TETRA and DMR, and has everything from underlying protocols, system networks to unified The entire industry chain layout from platform, application software, intelligent terminals to one-stop delivery can provide end-to-end products and solutions in different scenarios for users in various industries around the world.
Based on the above-mentioned perfect layout, many securities companies are optimistic about Hytera's prospects and maintain "buy" and "overweight" ratings. For example, Tianfeng Securities predicts that Hytera's net profit attributable to the parent company in 2024 and 2025 is expected to increase to 600 million or 800 million yuan.
It is precisely because of remaining optimistic about the company’s prospects that on April 8, the company’s controlling shareholder and actual controller Mr. Chen Qingzhou publicly promised: Within 6 months from now (that is, April 8, 2024 to October 7, 2024 ) do not reduce their holdings of company shares through centralized bidding or block trading.
Hytera, known as the "Little Huawei" of its private network, might as well learn from Huawei's experience at the moment - Huawei had been fighting with Cisco for many years. Today, Huawei has fully caught up with Cisco. Cisco's net revenue in 2023 will be US$57 billion, less than 60% of Huawei's in the same period.
is just like Huawei many years ago. Now that the ban has been suspended, Hytera relies on continuous innovation and iteration to break the situation. Hytera, which has experienced the storm, has a bright future.
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