One hundred years ago, Ford succeeded in automobile manufacturing by adhering to an "industrial spirit". One hundred years later, Gree has likewise created a vast air-conditioning patent empire by upholding this same "industrial spirit".
Over the years, Gree Electric Appliances has consistently focused on patent technology research and development, driving growth through innovation, and striving to enhance its bargaining power in both domestic and international markets. With more than thirty years of dedicated effort, the Gree brand has become a household name, successfully capturing a 30% share of China's domestic residential air-conditioning market and establishing itself as one of the few Chinese manufacturing companies to achieve revenues of over RMB 100 billion, profits exceeding RMB 10 billion, and a market capitalization above RMB 100 billion.
Turning the Tide in a Desperate Situation and Preventing Imminent Collapse
Since the second decade of China’s reform and opening-up, the national economy has progressively integrated with the global market. Concurrently, as developed countries underwent "deindustrialization" and industrial transfer, a substantial influx of foreign capital entered the Chinese market, giving rise to a host of internationally competitive manufacturing enterprises.
In 1985, Guanxiong Plastic Factory was established by the Zhuhai Special Economic Zone Industrial Development Corporation, Gree’s predecessor. Zhu Jianghong, who came from a technical background, assumed the role of General Manager of Guanxiong Plastic Factory in 1988. Leveraging opportunities in the electric fan business, he secured the company’s first profits, facilitating the transformation of this traditional plastic manufacturing enterprise and turning its losses into gains. Subsequently, in 1991, Guanxiong Plastic Factory merged with the poorly managed Haili Air Conditioner Factory to establish Gree Air Conditioner Factory. Concurrently, Dong Mingzhu joined the company, marking an important starting point for Gree's development.
In August 1996, under Dong Mingzhu’s leadership, Gree achieved a 17% increase in sales, surpassing its competitor Chunlan, then known as the "Air Conditioner King," for the first time. Thereafter, Gree held the nation’s leading position in air conditioner production volume, sales revenue, and market share for eleven consecutive years, ushering in an era of prosperity for the company.
In 2012, Gree Electric Appliances surpassed the sales mark of RMB 100-billion, becoming the first single-category home appliance listed company in China to exceed one hundred billion yuan in operating revenue.
Behind these impressive achievements lies Gree’s continuous optimization and adjustment of its product structure, sales channels, and management mechanisms. This success is equally inseparable from the crucial support of technological innovation and patent strategy. Gree’s transformation from a struggling traditional small manufacturing factory into a highly sought-after listed enterprise demonstrates its consistent prioritization of establishing an intellectual property system, whether during economic booms or financial crises. The company has consistently directed significant financial resources toward air-conditioning technology research and development, engaging Sunshine IP as a key intellectual property advisor to assist in building a comprehensive intellectual property framework.
A Building’s Height Depends on the Strength of Its Foundation
Gree recognized early on that the build-up of patent quantity and improvement of patent quality determine an enterprise’s innovation capability. Top companies in the industry increasingly tend to develop into asset-light businesses built upon technological reserves. Building up patents not only enables a company to avoid attacks in competitive environments but also allows it to take a more proactive stance. Once a sufficient technological reserve is established, patent licensing and assignment can be leveraged to generate profit for the enterprise. Accordingly, Gree engaged Sunshine IP early on to leverage its professional service capabilities in building a comprehensive intellectual property system. This collaboration primarily focused on the following three areas:
1. Establishing Systematic Connections Across the Various Stages of Patent Work, Including Technology Pre-Research, Results Protection, and Results Commercialization. Starting from the principle that intellectual property management and planning should serve the company’s overall development strategy, a dedicated coordination team was formed, focusing on services such as patent searching, patent mining and analysis, and patent training. This team conducted multi-point planning, precise advancement, and coordinated arrangements to address intellectual property needs at different stages, creating a synergistic effect and establishing patents as a core component of the company’s innovation development strategy.
2. Conducting Market Risk Assessment and Overseas Risk Early Warning. Throughout the processes of technology research & development and product commercialization, it was necessary not only to avoid the dense patent thickets established by domestic and foreign enterprises but also to file hundreds of peripheral patent applications surrounding certain key foundational patents. This approach was designed to address the new business environment in the air-conditioning manufacturing industry, which is increasingly driven by intellectual property demands and technological innovation needs.
3. Addressing Patent Infringement Litigation and Patent Invalidation Proceedings. As an intellectual property-intensive industry, it was inevitably confronted with "patent wars". How should Gree respond? In 2017, AUX filed lawsuits against Gree with the Ningbo Intermediate People’s Court, alleging infringement of its utility model patent for a "Motor Steering Mounting Base" (ZL201520143902.0) and its invention patent for a "Method for Automatically Detecting PG Motor Faults" (ZL201010039703.7). AUX sought an injunction against Gree’s alleged infringement and claimed damages totaling over one hundred million yuan.
The Ningbo Intermediate People’s Court ruled that Gree must immediately cease manufacturing, offering for sale, and selling the infringing products, destroy the inventory of infringing products, and compensate AUX for its economic losses. Regarding the aforementioned utility model patent, two prior invalidation requests had been filed by well-known law firms but were unsuccessful. After Sunshine IP took over the case, it conducted a search and uncovered novelty evidence. On January 14, 2019, the Patent Reexamination Board issued a decision on the invalidation request, declaring the utility model patent for "Motor Steering Mounting Base" (ZL201520143902.0) completely invalid. Ten days later, the Patent Reexamination Board of the China National Intellectual Property Administration declared another invention patent held by Ningbo AUX, the "Method for Automatically Detecting PG Motor Faults" (ZL201010039703.7), invalid. Sunshine IP thus secured another significant patent litigation victory for Gree Electric Appliances.
Compared to invention patents, utility model patent applications fulfill an irreplaceable function, better aligning with the fast-paced changes in the market and product demands due to their shorter examination cycle. For certain household appliances and fast-moving consumer goods, rapid patent grant corresponding to the product is necessary to establish market dominance prior to product launch. This is particularly pertinent in the highly commoditized home appliance sector, where technologies among air conditioner manufacturers tend to be similar. After a new product’s launch, numerous competitors often imitate it. Rapid patent grant can serve as a strong deterrent to subsequent imitators. Simultaneously, to mitigate infringement risks, imitators are compelled to make improvements to such products, which in turn fosters technological advancement and contributes to the healthy development of innovation across the entire industry.
To date, Gree entrusts Sunshine IP with over 1,500 intellectual property projects annually, with a cumulative volume exceeding 5,000 cases and a total value in the hundreds of millions of yuan. Several patent agents have received formal "Agent Appointment Letters" from Gree in recognition of their outstanding performance. While assisting Gree in establishing comprehensive protection for new products, Sunshine IP has also helped Gree effectively and efficiently manage numerous patent disputes with its competitors. Furthermore, to support the overall improvement of Gree’s internal business level, Sunshine IP has developed a specialized patent technology mining mechanism for the company. This involves collaborating with Gree to identify, explore, and research cutting-edge technologies within the industry, fostering enthusiasm for business development and technological research, and further enhancing work efficiency and quality.
Reflecting on Gree Electric Appliances’ over three decades of growth and transformation, with Sunshine IP’s support, Chinese enterprises exemplified by Gree have navigated an era of transition from imitation to one characterized by original, independently owned intellectual property. The development philosophy of "independent innovation" has been consistently upheld throughout this journey. As Gree’s advertising slogans state, "Good Air Conditioners, Made by Gree" and "Gree: Let the World Fall in Love with Made in China", Gree’s success itself serves as the ultimate affirmation of its unwavering pursuit of the "industrial spirit". It is foreseeable that the accumulated patent momentum will provide Gree with greater resilience when encountering periods of stagnation, and we anticipate that Gree will achieve its next remarkable success.
