$530 Million Lawsuit Unheard, $76 Million Counterclaim Filed: Is Qicai Chemical’s ‘Reputation Defense’ a Desperate Last Stand or a Calculated PR Gambit?

On the evening of December 24, 2025—Christmas Eve—while most were immersed in holiday cheer, Qicai Chemical (300758) quietly dropped an announcement that appeared defiant on the surface but carried undertones of quiet desperation: the company, as plaintiff, had filed a defamation lawsuit against Synkoloid Chemical (Shanghai) Co., Ltd. (“Synkoloid” or “the defendant”) with the Haicheng City People’s Court, seeking RMB 53.3147 million in damages and demanding a 15-day public apology across six major national media outlets and Synkoloid’s official website. On paper, this is a legitimate move to defend corporate reputation; in reality, it reads more like a strategic maneuver amid mounting pressure from a RMB 4 billion lawsuit and deteriorating financial performance—a small legal counteroffensive designed to offset a much larger existential crisis.

The defamation suit stems from a commercial secrets dispute that has dragged on for nearly three years. In December 2022, Synkoloid sued Qicai Chemical in the Shanghai High People’s Court, alleging theft of trade secrets related to high-performance organic pigments PR254 (industry insiders call it “red gold”), P.O.73, and di-tert-amyl succinate production technologies, and demanded RMB 200.47 million in compensation. The market was shaken—but then came a dramatic twist: in January 2024, after Qicai Chemical requested judicial technical appraisal, Synkoloid abruptly withdrew its case without explanation. Rather than calming tensions, this move fueled suspicion: was the evidence too weak? Or was it a tactical retreat?

Qicai Chemical attempted to end the uncertainty by filing a “declaratory judgment of non-infringement” with the Shenyang Intermediate People’s Court. But Synkoloid successfully blocked it by raising jurisdictional objections, leading to the case’s dismissal. Synkoloid then refiled in another court—and on December 8, 2025, Qicai received an updated complaint from the Shanghai High Court in which Synkoloid more than doubled its claim to RMB 4 billion. Astonishingly, this core lawsuit still hasn’t gone to trial, yet it already hangs over Qicai like a sword of Damocles.

Against this backdrop, Qicai’s sudden defamation lawsuit feels strategically timed. The company claims Synkoloid’s allegations have “severely damaged its business reputation, causing client attrition, financing difficulties, and stock price volatility.” While possibly true, this also resembles a carefully orchestrated public relations play: when you can’t quickly clear your name in court, seize the moral high ground in the court of public opinion first. Demanding apologies in authoritative financial publications like China Securities Journal and Shanghai Securities News isn’t just about image repair—it’s a signal to investors: “We are the real victims.”

Yet the market may not be convinced. Because the financial data has already torn off the veil, revealing deep operational distress. In the first three quarters of 2025, Qicai reported revenue of RMB 1.119 billion, down 3.04% year-over-year; net profit attributable to shareholders plummeted 38.96% to RMB 733.886 million; and adjusted net profit fell 27.43%. Even more alarming, operating cash flow netted only RMB 320.591 million—a staggering 72.39% decline year-over-year—indicating the company’s core business is nearly hemorrhaging cash. Meanwhile, investment cash outflow reached RMB 1.54 billion, confirming it remains in a phase of aggressive capital expansion despite weakening fundamentals.

Caught between halved profits, tightening liquidity, a RMB 4 billion legal cloud, and significant insider selling (controlling shareholders and key executives have cashed out over RMB 2.7 billion since 2024), Qicai’s position is precarious. This defamation lawsuit, therefore, feels less like legal confidence and more like a survival-driven tactical pivot under duress.

The following table compares the two lawsuits across key dimensions and strategic intent:

This table makes one thing clear: the former concerns survival; the latter concerns face. The former is the main battlefield; the latter is a propaganda front.

Even more troubling, Synkoloid’s claims aren’t baseless. Public records show that the Qingpu District Court in Shanghai convicted two former Synkoloid engineers who later joined Qicai Chemical of criminal trade secret infringement. The verdict stated they brought eight confidential technical documents with them and rapidly pushed Qicai to launch a RMB 220 million “high-fastness organic pigment project”—whose environmental impact report inexplicably disclosed four proprietary technical parameters directly to government regulators. That’s akin to confessing to theft in an official filing, making Qicai’s “we didn’t know” defense look flimsy at best.

Faced with such damning evidence, Qicai chose to go on the offensive, reframing a “technology theft” dispute as a “defamation” issue. It’s a high-risk strategy: if it wins the defamation case, it might gain public sympathy and buy time; but if it loses the trade secret case, today’s “strong stance” will become tomorrow’s punchline—how can a company that allegedly built its technology on poached secrets credibly claim moral injury to its reputation?

Moreover, Qicai repeatedly insists the lawsuits “do not affect normal operations,” yet its cash flow tells a different story. With shrinking core earnings, heavy capital outlays, insider sell-offs, and a 47.68% equity pledge ratio among controlling shareholders, Qicai’s liquidity is stretched thin. A RMB 4 billion judgment could trigger immediate debt distress. Every PR effort now is a race against time—buying breathing room before a potential financial storm hits.

Qicai Chemical’s “reputation defense” is less about law and more about image stabilization on the edge of a cliff. It reflects a broader dilemma among some Chinese “specialized, refined, distinctive, and innovative” (zhuanjingtexin) firms: in their rush to catch up technologically, they cut corners—opting for talent poaching over patient R&D—only to underestimate the legal red lines of the intellectual property era.

Now, that RMB 4 billion claim may well be the long-overdue tuition bill for technological shortcutting. And the RMB 530 million counterclaim? Just the last piece of driftwood the company is desperately clutching before the tide comes in. True reputation isn’t won through court orders or newspaper apologies—it’s forged in the clean technical DNA behind every gram of product. Whether Qicai survives this storm won’t depend on what it says today, but on what it did yesterday—and whether it dares to return, genuinely, to the path of authentic innovation.