Hired an employee, resulting in a loss of 382 million yuan! A subsidiary of Genesis was sentenced for "malicious infringement" of trade secrets, ordered to destroy all confidential materials, and required all staff to sign a "Non-Infringement" commitment letter.

Reporter|Wu Zepeng

Editor|Jin Mingyu Dong Xingsheng Copyediting|Zhang Jinhe

Lured over an employee—and ended up paying 382 million yuan.

A “battle” over trade secret infringement triggered by “poaching people” finally came to an end at the end of 2025, leaving Genesis (300083.SZ, share price 7.61 yuan, market cap 12.67B yuan) and more than 90k shareholders with 382 million yuan in damages.

More than 6 years ago, a lawsuit filed by peer Beijing Jingdiao Technology Group Co., Ltd. (hereinafter referred to as Beijing Jingdiao) alleged that when its former product manager, Tian Moumou, resigned, he took tens of thousands of drawings and technical trade secrets. Tian Moumou then joined Genesis’s subsidiary Shenzhen Genesis Machinery Co., Ltd. (hereinafter referred to as Shenzhen Genesis). The latter used these technologies to quickly launch a competing product, taking market share.

In the first-instance ruling, the court ordered the defendant to pay 12.8 million yuan (including reasonable expenses). Both parties chose to appeal. At the end of 2025, the Supreme People’s Court’s final ruling held that Shenzhen Genesis “clearly acted with malicious intent and the circumstances were serious” in infringing the technical trade secrets, raising the damages to 382 million yuan—30 times the amount previously.

On the evening of March 31, Genesis released its 2025 annual report: full-year operating revenue was 90k yuan, up 15.53%; but net profit attributable to shareholders was only 143 million yuan, down sharply 39.63% year over year. The above ruling had a negative impact of about 306 million yuan on the company’s net profit for 2025.

Image source: screenshot of annual report

However, the cost of this lawsuit is far more than money compensation. A copy of the court judgment obtained by a reporter from The Economic Daily News shows that the Supreme People’s Court required Shenzhen Genesis to destroy all drawings and technical documents containing the technical trade secrets at issue—whether paper versions or electronic versions—and, through an internal notice, inform the company’s shareholders, directors, supervisors, senior management, and all employees of the contents of the judgment and the requirements to stop the infringement. The Court also required the above persons to sign confidentiality undertakings on trade secrets and non-infringement commitment letters.

Carefully planned “job hopping”:

Copied files more than 70k times, stole more than 30k documents

The center of this litigation storm—Shenzhen Genesis—is now the core operating entity for Genesis’s CNC machine tool business. Its story weaves together capital operations, industrial transformation, and the risk of intellectual property infringement.

Going back to 2015, Genesis’s “predecessor” was still called Jingsheng Precision, whose main business was precision molds and plastic structural components, far from today’s CNC machine tools. At that time, Shenzhen Genesis was one of its equipment suppliers, and the two had business dealings with each other.

To quickly enter the high-end CNC machine tool industry with attractive profits, in 2015 Jingsheng Precision made a major strategic transformation. It spent 2.4 billion yuan to acquire 100% of the equity in Shenzhen Genesis by issuing shares and paying cash, thereby entering the high-end CNC machine tool industry. This “elephant-swallowing-by-a-snake” type of merger and acquisition was viewed as a dazzling strategic pivot for the company, with the market holding high expectations.

The calm period was broken in the second half of 2019. At that time, another CNC machine tool giant in China, Beijing Jingdiao, filed a lawsuit, bringing Shenzhen Genesis and one of its employees, Tian Moumou, to court. Beijing Jingdiao claimed that after its former product manager Tian Moumou left and joined Shenzhen Genesis, he allegedly stole and used Beijing Jingdiao’s technical trade secrets.

According to facts ascertained by the court, Tian Moumou’s “job hopping” was not ordinary resignation and reemployment, but a meticulously planned trade-secret theft operation. He began planning large-scale trade secret theft as early as one month before his resignation. Using vulnerabilities in the company’s data management system, he downloaded files 162 times from the server database. Using network share transmission, he copied files from his personal office computer to a public computer a total of more than 70k times; then he stole the downloaded files using devices such as USB drives and mobile hard drives. The illegally stolen CNC machine tool design drawings and technical documents totaled more than 37k.

More intriguing is that after Tian Moumou left Beijing Jingdiao, he was almost “seamlessly” hired by Shenzhen Genesis. The judgment shows that at the time of joining, he specifically used the alias “Mou Xin,” and quickly became the deputy general manager of the company’s glass machine project. And the glass machine is exactly Beijing Jingdiao’s core product area. A technical backbone carrying tens of thousands of core technical documents from his former employer, landing as an alias into a peer’s core project—its intent is self-evident.

The second-instance judgment record states: “Although there is an employment relationship between Tian Moumou and Company Mou (Shenzhen Genesis), when viewed from the perspective of the act of infringing commercial secrets, the two parties had a close subjective meeting of minds; objectively, there was close behavioral cooperation. Moreover, the acts carried out by both combined to produce the same damage outcome—namely, the technical trade secrets at issue were used without any compensation without the permission of Company Mou (Beijing Jingdiao), thereby severely eroding Company Mou’s market share in glass machines. Therefore, it should be determined that both parties jointly implemented the infringement of the technical trade secrets at issue.”

However, this litigation process was full of twists and turns. Beijing Jingdiao initially sought 92 million yuan in compensation, and then in February 2022 substantially increased the claim to about 382 million yuan. In May 2023, the company announced that the Beijing Intellectual Property Court issued a first-instance judgment, ordering the two defendants to compensate a total of 12.8 million yuan. The calculation basis for this amount was limited to the profit of 2.762 million yuan earned from 55 specific models of machine tools sold by Shenzhen Genesis.

This result, for a time, allowed Genesis to breathe a sigh of relief. In subsequent announcements, the company disclosed that according to its attorneys’ analysis, the likelihood that the second-instance court would support the plaintiffs’ appeal requests to greatly increase the compensation was low. Therefore, the company provisioned only 14 million yuan as an estimated liability based on the first-instance judgment.

70k yuan:

The “true cost” of “poaching” calculated by the second-instance court

However, the Supreme People’s Court’s final ruling shattered this optimistic expectation completely.

In December 2025, the Supreme Court issued a final ruling. It not only fully supported Beijing Jingdiao’s claim for 379.63 million yuan in economic losses, and added 2 million yuan in reasonable expenses, for a total compensation amount of 382 million yuan. In its wording, the court was severe, finding that Shenzhen Genesis had “obvious malicious intent” in the infringement.

The second-instance court also emphasized that before Shenzhen Genesis was acquired by Jingsheng Precision in 2015, the series of drilling, milling, and tapping machines once accounted for 95% of main business revenue. After Tian Moumou joined in March 2017, Shenzhen Genesis rapidly rose in the glass machine field, and glass machines became its core product.

The Supreme People’s Court specifically pointed out that Beijing Jingdiao’s R&D investment on only one project—the “glass grinding machine tool”—was as high as 363 million yuan. Tian Moumou and Shenzhen Genesis effectively seized, at nearly “zero cost,” the “glass grinding machine tool technology” intangible asset that Beijing Jingdiao formed over 15 years of effort and involving hundreds of millions of yuan in R&D costs, containing a large number of technical trade secrets and directly relating to Beijing Jingdiao’s core competitiveness. This further highlights the seriousness of the infringement circumstances and the depth of subjective fault.

In fact, the compensation amount calculated by the second-instance court based on the infringement profits was 677 million yuan. This amount was already far above the compensation amount claimed by Beijing Jingdiao (about 380 million yuan), so the court supported it in full.

In addition, the key person in this case, Tian Moumou, had previously been sentenced by the People’s Court of Mentougou District, Beijing for infringing Beijing Jingdiao’s technical trade secrets. On July 18, 2019, he was given a fixed-term imprisonment of one year and ten months, and fined 100k yuan.

Looking back, for Shenzhen Genesis, what the initial “poaching” operation brought could be described as a windfall—by paying only one employee’s salary costs, it leveraged technology results worth several hundred million yuan. Of course, the price of taking this “shortcut” ultimately turned into 382 million yuan in compensation, the destruction of all confidential materials, and a “penetrating” punishment requiring all employees to sign non-infringement undertakings.

Best net profit performance in the past decade

Severely wiped out by infringement compensation

According to Genesis’s 2025 annual report released on the evening of March 31, the huge compensation of nearly 400 million yuan dealt a heavy blow to the company’s performance. The ruling caused a negative impact of about 306 million yuan on the company’s 2025 net profit. This also led to full-year operating revenue of 30k yuan, up 15.53%, but net profit attributable to shareholders of only 143 million yuan, down sharply 39.63% from 237 million yuan in 2024.

If you look at non-recurring profit net of tax attributable to shareholders, which more accurately reflects the true profitability of the core business, the “plight” is even clearer. Genesis’s last year’s non-recurring profit net of tax attributable to shareholders was 434 million yuan—the best result in nearly a decade. Unfortunately, the negative impact from this compensation eroded 70% of it. Based on the company’s last year’s operating profit (526 million yuan), the proportion is also close to 60%.

At present, this high-damages compensation case has entered the compulsory execution stage. In an announcement, Genesis disclosed that after receiving the second-instance judgment, Shenzhen Genesis had negotiated with Beijing Jingdiao on a plan for judgment compliance, but the two sides failed to reach agreement. Afterwards, Shenzhen Genesis was listed as a judgment debtor.

According to the company’s latest progress update released on March 19, the applicant for enforcement, Beijing Jingdiao, has applied to the court for property preservation. The 100% equity interests held by Shenzhen Genesis in two important subsidiaries—Yibin Genesis Machinery Co., Ltd. and Zhejiang Genesis Machinery Co., Ltd.—have been frozen due to this litigation.

Regarding issues such as the second-instance outcome and the subsequent payment of compensation, The Economic Daily News reporter contacted Genesis multiple times by phone and email on March 31 and April 1, but received no effective response. Beijing Jingdiao, meanwhile, clearly stated that it would not accept interviews.

It needs to be noted that the cost of this lawsuit is far more than money. The Supreme People’s Court required Shenzhen Genesis to destroy all drawings and technical documents containing the technical trade secrets at issue, and through an internal notice to inform the company’s shareholders, directors, supervisors, senior management, and all employees of the judgment’s contents and the requirements to stop the infringement, and require the above personnel to sign trade secret confidentiality and non-infringement commitment letters.

Even more worth noting, the court explicitly held that the period for stopping the infringement should continue until the technical trade secrets at issue are known to the public.

Genesis’s core business is not bad:

High revenue growth, overseas revenue up nearly 90% year over year

In fact, even without the alleged assistance of the technical trade secrets involved in this case, Genesis’s performance is still solid. Its core business in 2025 also maintained rapid growth.

As one of the leading enterprises in China’s CNC machine tool sector, Genesis has deep market foundations and brand influence in the 3C (computer, communication, and consumer electronics) industry. In 2025, the global consumer electronics market entered a recovery cycle, and the rise of AI technology further triggered a new wave of device upgrades.

Benefiting from strong demand for Genesis’s core products—drilling and milling machining centers (drill tapping machines), mainly used for machining 3C product structural parts—full-year operating revenue reached 70k yuan, up 13.45%. Company executives, in communications with investors, said that besides AI (artificial intelligence) innovation, the use of new materials and new forms on phones—such as titanium alloy and foldable screens—also places higher requirements on machining equipment, bringing clear incremental market demand for the company’s drill tapping machine products.

If 3C is Genesis’s “stable ballast,” then overseas business became the most eye-catching “growth pole” in 2025. According to the annual report, the company’s overseas business revenue was 391 million yuan, with a year-over-year growth rate as high as 88.26%. This breakthrough was made possible by the acceleration of the company’s globalization strategy.

Image source: screenshot of annual report

As reported, Chinese machine tool companies going overseas mostly rely on product sales. Genesis cited a report by the German Machine Tool Manufacturers’ Association indicating that in 2025, the scale of China’s machine tool exports first surpassed Germany. With 21.6% of global market share, China rose to first place worldwide.

Genesis stated that in 2025, its production base located in Vietnam officially began operation, marking a new stage in the company’s shift from “exporting products” to “exporting capacity.” At the same time, the company established an overseas business division, actively expanding overseas markets such as Vietnam, Indonesia, Turkey, Italy, Mexico, and Brazil, continuously opening up space for growth, and serving global customers more efficiently and with better quality by leveraging global resources.

In addition to consolidating advantageous areas and expanding overseas markets, Genesis also seized structural opportunities arising from the rise of emerging industries. The company actively laid out cutting-edge industry tracks such as new energy vehicles, AI liquid cooling, humanoid robots, and the low-altitude economy, viewing them as future core growth drivers.

For example, to meet the heat dissipation needs of AI servers, the company launched bundled product solutions including drilling and milling, vertical, and structural-material machining centers. For complex structural components such as joints and skeletons of humanoid robots, it provides high-end equipment such as five-axis linked machining centers.

Today, this multi-year “litigation battle” lasting more than six years has finally ended. What it leaves China’s manufacturing industry is the lesson that relying on “poaching” to take shortcuts may look like an easy route, but the costs are high in reality. When an employee takes tens of thousands of drawings to switch jobs, and when a company tries to seize R&D results worth billions of yuan from a rival at “zero cost,” a single judicial ruling provides a clear warning: in technology-intensive industries, the essence of competition is never about who “poaches” faster, but about who can go farther within the rules.

Respect innovation outcomes, and revere the legal boundaries—that is the true moat of enterprises.

Cover image source: Yimei Media Library—AI Media

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