Accused by the former Yueyang’s richest company of “infringing on technological commercial secrets,” Xinrui Electronics earns 300 million yuan per year and is gearing up for an IPO

Ask AI · How does the litigation case affect the technological independence of Xinrui Electronics’ IPO?

The company’s actual controller’s wife is the company’s secretary.

Author | Zhuoma

Editor | Liu Qinwen

Robots are called “the crown jewel of manufacturing,” while control systems and servo systems are known as the “brain” and “muscle” of industrial robots — one responsible for telling the robot “where to go, how fast to move, and how to move,” and the other responsible for receiving signals from the “brain” and making precise controls. These two major systems determine the robot’s response speed, deployment efficiency, and operational stability.

Xinrui Electronics Co., Ltd. in Linhai (hereinafter referred to as “Xinrui Electronics”) is a company that provides the “brain” and “muscle” for industrial robots, mainly engaged in the research, development, production, and sales of industrial robot control systems and components, servo systems and components. On April 3, the company will face a major review at the Beijing Stock Exchange.

The prospectus shows that this IPO plans to raise 140 million yuan, which will be used for production center upgrades, R&D center construction, and working capital supplementation.

01

Annual revenue of 300 million yuan from “brain” for industrial robots,

main product unit prices declining

In terms of product categories, Xinrui Electronics’ revenue comes from three main categories: industrial robot control systems and components, servo systems and components, and others.

Image source: “Prospectus”

Among them, Xinrui Electronics’ industrial robot control systems are mainly applied to Cartesian coordinate robots (also called mechanical arms), focusing on applications such as injection molding machine mechanical arms and various CNC machine tool gantry-type mechanical arms. From 2023 to 2025 (hereinafter referred to as “each period”), the company’s revenue from industrial robot control systems and components will be 127 million yuan, 216 million yuan, and 231 million yuan, respectively, accounting for 62.52%, 72.17%, and 73.09% of the main business income, making it the company’s primary revenue source.

And servo systems and related products can be applied to CNC crystal automation equipment, CNC metal polishing equipment, and other CNC machine tools, with revenues of 64.36 million yuan, 67.99 million yuan, and 63.23 million yuan in each period, accounting for 31.77%, 22.67%, and 19.98% of the main business income.

Image source: Xinrui Electronics official website

With the joint efforts of these two major product categories, Xinrui Electronics achieved revenues of 204 million yuan, 301 million yuan, and 318 million yuan from 2023 to 2025, respectively, with net profits attributable to the parent of 30.96 million yuan, 55.26 million yuan, and 59.05 million yuan.

Xinrui Electronics also released a performance forecast for 2026 in the prospectus, estimating full-year revenue of 389 million yuan, a year-on-year increase of 22.22%; and net profit attributable to the parent of 65.04 million yuan, a year-on-year increase of 10.15%.

Despite continuous growth in recent years, however, due to intense industry market competition and other factors, the sales prices of Xinrui Electronics’ main products have shown a downward trend. For example, the unit price of integrated control systems dropped from 3,490.36 yuan/set in 2023 to 2,639.24 yuan/set in 2025, a decrease of 24.38%.

Image source: “Prospectus”

Xinrui Electronics stated that industrial robot controllers are moving toward higher levels of integration. To adapt to this market trend and strengthen product competitiveness, the company is gradually reducing prices to capture emerging markets. However, the company also indicated that if industry market competition intensifies, terminal demand growth slows, or raw material prices fluctuate more, there is a risk that the main product prices will further decline, which could adversely affect the company’s profitability.

Nevertheless, the decline in main product unit prices has not affected Xinrui Electronics’ gross profit margin. The company’s overall gross profit margins for each period are 33.73%, 36.44%, and 36.02%, showing an overall upward trend.

Xinrui Electronics attributes the increase in gross profit margin mainly to the decrease in the prices of key raw materials.

The direct material costs each period account for 90.03%, 90.28%, and 89.49% of the main business costs, mainly comprising IC chips, PCB boards, motors, and electronic components purchased by the company.

In recent years, the prices of Xinrui Electronics’ main raw materials have generally declined. For example, the average purchase price of IC chips dropped from 3.09 yuan per piece in 2023 to 1.81 yuan in 2025, while the PCB board unit price also fell from 7.38 yuan to 4.77 yuan per piece, and motor purchase prices decreased from 194.19 yuan to 134.3 yuan per piece. The company states that this is mainly due to market price declines and increased procurement volume enhancing bargaining power.

Image source: “Prospectus”

02

R&D expense ratio is only one-third of industry peers,

accused of “infringing on trade secrets”

As a national-level specialized and innovative “Little Giant” enterprise, Xinrui Electronics claims that the company adheres to independent R&D as its core development model, always prioritizing R&D and innovation as the primary factors for growth and value creation, continuously increasing R&D investment.

However, Xinrui Electronics’ R&D investment lags significantly behind industry peers. The company’s R&D expenses for each period are 11.31 million yuan, 14.97 million yuan, and 17.37 million yuan, with R&D expense ratios of 5.55%, 4.98%, and 5.46%. In contrast, the average R&D expense ratios of comparable companies in the industry for 2023 and 2024 are 13.34% and 14.55%, respectively, nearly 10 percentage points higher than Xinrui Electronics.

Image source: “Prospectus”

In response, Xinrui Electronics explained that the lower R&D expense ratio is mainly because the company is currently a non-listed company with limited financial strength and a smaller asset scale, whereas comparable industry companies have larger asset bases and stronger financial resources, enabling them to fully support business development, technological R&D, and market expansion.

Notably, in the relatively modest R&D investments, employee compensation accounts for 63.99%, 62.76%, and 68.83% of R&D expenses in each period, respectively, making it the largest expenditure.

Xinrui Electronics attributes the continuous growth in employee compensation for R&D to increased R&D intensity and a rise in the number of R&D personnel. As of the end of 2025, among the company’s 262 employees, 59 are R&D personnel, accounting for 22.52%.

Image source: “Prospectus”

It is worth noting that Xinrui Electronics currently has a lawsuit dispute with Shenzhen Inovance Technology Co., Ltd. (hereinafter referred to as “Inovance Technology”).

Public information shows that Inovance Technology was founded by Zhu Xingming in April 2003 and successfully listed on the Shenzhen Stock Exchange in September 2010. After years of development, Inovance focuses on automation, digitalization, and intelligence in the industrial field, with business covering general automation, new energy vehicles, smart elevators, and rail transit.

In fact, in industrial robots, joint robots and Cartesian coordinate robots account for a high proportion. Compared to Xinrui Electronics’ focus on Cartesian control systems, Inovance Technology is an integrated solution provider offering “industrial control + process” for industry clients, and its main competitors in industrial automation include foreign brands like Siemens, Mitsubishi, and Panasonic. Both are in the same industry but in different niche segments.

According to Inovance Technology’s 2025 third-quarter report, the company achieved revenue of 7.24M yuan, a year-on-year increase of 24.67%; and net profit attributable to the parent of 9.4M yuan, up 26.84%. As of April 2, the closing price was 66.87 yuan per share, with a total market value of 11.96M yuan.

Zhu Xingming, behind Inovance Technology, has also made it onto the global billionaire list. According to the 2023 Hurun Global Rich List, Zhu Xingming and Zhu Hanyue, father and daughter, had a wealth of 19 billion yuan, ranking 1181st; at that time, Zhu Xingming was also called “Yueyang’s richest person.” In the latest 2026 Hurun Global Rich List, Zhu Xingming and Zhu Hanyue are ranked 1464th with a wealth of 22.5 billion yuan.

Image source: Hurun Rich List official website

Xinrui Electronics’ prospectus shows that on November 26, 2025, the company received a court summons. Inovance Technology sued Inovance Technology’s former R&D and marketing department employees, as well as 25 defendants including companies established or controlled by former employees and Xinrui Electronics, for “infringing on trade secrets,” demanding the immediate cessation of unfair competition behaviors, joint compensation for economic losses, and paying 30 million yuan in reasonable expenses for stopping infringement, as well as bearing all litigation costs.

Specifically, Inovance Technology’s former employees established Zhejiang Siyi and Shenzhen Siyi companies in July 2018 and January 2020, respectively. Inovance Technology accuses these former employees of using the company’s trade secrets to produce servo drive products for illegal profit.

Between 2018 and 2022, Xinrui Electronics purchased standard and universal servo drive products from Zhejiang Siyi and Shenzhen Siyi, accounting for 10.56% of the total servo drive procurement during that period, and in order to maintain consistency with customer information, the purchased products were branded with the company’s trademark.

As a result, Xinrui Electronics was accused of obtaining trade secrets from former employees and using these secrets to produce “SINSERVO” branded servo drives for illegal profit.

However, Xinrui Electronics states that the infringing products were mainly purchased before 2023, and after acquiring Shenzhen Dweixin, only 10.4k yuan was spent on after-sales maintenance in 2022, and no related products have been purchased since 2023. The company’s main servo drive products are supplied by Shenzhen Dweixin.

Xinrui Electronics also emphasizes that the involved products are not produced or commissioned by the company; the relationship with Zhejiang Siyi and Shenzhen Siyi is merely a commercial buying and selling relationship, and does not involve their trade secrets or any special technical requirements.

Based on this, Xinrui Electronics states that the company does not possess the trade secrets claimed by Inovance Technology and has not produced products using such secrets illegally. The facts alleged by Inovance are therefore unfounded.

Interestingly, the company’s controlling shareholder and actual controller, Zhang Jizhou’s wife, Xu Tiancun, was a 5% shareholder of Zhejiang Siyi from November 2018 to November 2020. Zhejiang Siyi was dissolved in December 2022.

Xinrui Electronics states that the company ranks 21st among the defendants, has no ownership or employment relationship with former employees of Inovance Technology or their established companies, and is not a main defendant in the lawsuit nor the primary infringer claimed by Inovance. Additionally, the company’s legal counsel states that the company and Xu Tiancun do not bear infringement liability, and the likelihood of losing the case is low. Moreover, the lawsuit does not involve the company’s current business and does not adversely affect normal production and operations, nor does it constitute an obstacle to this IPO.

As of now, the case is still in the pre-trial preparation stage and has not yet gone to court.

Bai Wenxi, chief economist of the China Enterprise Capital Alliance, said that listing is a key window for corporate financing. At this stage, Xinrui Electronics is highly sensitive to litigation risks. In this context, Inovance’s decision to sue may serve as a strong bargaining chip, pressuring the other party to make greater concessions in negotiations—whether in compensation, technology licensing, or market division. Once the lawsuit is public, it will also directly impact investors’ perceptions of Xinrui Electronics’ technological independence and ongoing operational capacity.

03

Three founders start a business together,

one of whom cashes out before IPO

As a manufacturing enterprise, Xinrui Electronics’ growth is closely related to the engineering background of its founder, Zhang Jizhou.

The prospectus shows that Zhang Jizhou was born in September 1975, holds a bachelor’s degree, and is a senior engineer. He previously worked as a software engineer at Chuangxin Technology (China) Co., Ltd. and as a project manager at Beijing Fuguo Digital Technology Co., Ltd.

In July 2008, Zhang Jizhou, Dong Liqiang, and He Xionglun jointly established the predecessor of Xinrui Electronics, Xinrui Limited.

Image source: Canned图库

Dong Liqiang was born in August 1978, holds a bachelor’s degree, and previously worked as a procurement specialist at Weixin Technology (Zhuhai) Co., Ltd. and as a sales manager at Shanghai Tebao Trading Co., Ltd. After Xinrui Limited was established, he mainly assisted Zhang Jizhou in daily management of the R&D department and promoted related R&D projects.

He Xionglun was mainly responsible for hardware R&D management in Xinrui Limited, but later, due to serious differences in business philosophy with Zhang Jizhou and Dong Liqiang, he intended to exit the company. In April 2020, He Xionglun transferred his 37.5% stake in Xinrui Limited to Zhang Jizhou and Dong Liqiang at a price of 6.67 yuan per registered capital, cashing out 7.5038 million yuan, and thus exited the company.

Regarding the Beijing Stock Exchange’s inquiry about the impact of He Xionglun’s exit and whether there are disputes, Xinrui Electronics stated that after his exit, the company has operated for many years, and its products have met market and customer needs well. He Xionglun’s exit has not adversely affected the company’s operations, and the equity transfer is genuine and effective, with no disputes or potential disputes.

As of now, Zhang Jizhou directly holds 34.52% of Xinrui Electronics’ shares and indirectly controls 3.8% of voting rights through the employee shareholding platform Xinrui Hong. Dong Liqiang directly holds 16.19%, acting as Zhang Jizhou’s concerted action partner. Zhang Jizhou thus controls 54.51% of the voting rights, making him the company’s actual controller and major shareholder, serving as chairman, general manager, and R&D director. Dong Liqiang is a director and deputy R&D manager.

Image source: “Prospectus”

It is worth noting that Zhang Jizhou’s wife, Xu Tiancun, also works at Xinrui Electronics but does not directly hold shares.

The prospectus shows that Xu Tiancun was born in October 1979, holds a bachelor’s degree in law. After working as a freelancer for ten years from July 2006 to March 2016, she joined Zhejiang Bingtuo Law Firm as an administrative officer for four years and entered Xinrui Limited in April 2020 as a sales supervisor and supervisor, mainly responsible for sales. After Xinrui Limited was restructured into a joint-stock company in December 2023, Xu Tiancun has served as a director and secretary of the board.

The Beijing Stock Exchange has thus inquired whether Xu Tiancun has the capacity to perform her duties as secretary.

Xinrui Electronics responded in the “Reply Letter” that, as the company’s secretary, Xu Tiancun participated in IPO counseling training and passed the Zhejiang Securities Regulatory Bureau’s guidance acceptance exam, mastering the knowledge and skills related to listing on the Beijing Stock Exchange, and has registered for the Shenzhen Stock Exchange’s pre-appointment training for listed company secretaries in January 2026. Xu Tiancun possesses the necessary knowledge and skills to fulfill her duties as secretary and can diligently perform her responsibilities in improving corporate governance and internal control.

Since co-founding the company in July 2008, Zhang Jizhou has led Xinrui Electronics through 18 years of development, and now stands at the threshold of the Beijing Stock Exchange. Do you think Xinrui Electronics’ upcoming listing is promising? Feel free to share your thoughts in the comments.

Author’s note: Personal opinions are for reference only.