Chapter 229 Strong Rejection

As President Li Zhiping's voice faded, the conference room fell silent. Zhou Mingyuan's pen stopped on the last page of the project progress tracking sheet.

He had already been writing the summary, but this demand from President Li Zhiping was not among any of the possibilities he had anticipated last night.

Mu Xin leaned back in his chair, clasping his hands on the table. He was thinking about how to refuse in a way that wouldn't be interpreted by the legal department as a sign of failed negotiations, while still ensuring President Li Zhiping took his words to heart.

"President Li, the brand reversion clause—this point is inappropriate, or perhaps I should say, it's a bit excessive."

His voice was not loud, but everyone in the conference room heard him, and simultaneously, everyone looked at him.

Jack even gave Mu Xin a thumbs-up under the table. Mu Xin's refusal made him breathe a sigh of relief; if they had agreed now, the subsequent negotiations would have become quite troublesome.

"Let me explain the reason. I personally believe that at some point in the future, Chinese electric vehicles will be allowed to enter the US market."

"Not through white-labeling, not through transshipment via Mexico, but normally, legally, entering American lanes with the identity of a Chinese brand."

"This is not a question of 'if,' but a question of 'when.' This is an inevitable result of China's development."

"You are asking me to sign a brand reversion clause now, which is equivalent to asking me to hand back the trademark, supply chain, dealer network, after-sales service system, and brand recognition that I spent years building in the US to BYD the moment the policy window opens."

"You might say that the reversion clause comes with a compensation mechanism, but compensation is just a sum of cash, whereas the brand is something I will invest all my resources into building over the coming years."

"You're trying to trade a sum of cash for a brand I've spent years building. Even if I calculated it with my feet, it wouldn't be a good deal."

"Your factory doesn't touch the joint calibration; that's BYD's technology. You yourself said that in the technology licensing framework, BYD's name will appear on the engineering report of every vehicle." President Li Zhiping looked at him.

Mu Xin chuckled softly and continued:

"Joint calibration is BYD's technology, that's correct. The engineering report lists BYD's battery and electric drive models, that's also correct."

"But the car logo is not an engineering report. The car logo is the first thing a consumer recognizes after seeing a car on the street."

"Engineering reports are kept in the factory archives; no one opens them to look. The logo is mounted on the front of the car; everyone is looking at it."

"If you take away my trademark, in the eyes of the consumer, this car becomes an entirely different vehicle."

"I can cooperate with any Chinese electric vehicle brand—Great Wall, Geely, Chery, Nio, Xpeng, and even Xiaomi is within my consideration. I can go and talk to any of them directly."

"If it weren't for the fact that the US is continuing to sanction Huawei, I could even go directly to talk to Huawei about cooperation. I think Huawei would definitely be very willing."

"Their batteries might not be that far behind BYD's, but the recognition of my trademark in the eyes of consumers cannot be replaced by any other brand."

"The reason I am sitting in this conference room today talking to you about cooperation is not because I can only cooperate with you, but because, at this current stage, your Blade Battery and electric drive system are indeed the most cost-effective on the market."

"My factory is currently positioned for vehicle assembly, but that doesn't mean I can't simultaneously set up a technical center, hire a group of engineers, and develop my own electric drive platform."

"Before coming here, I talked with McCarthy. We'll start with vehicle assembly. For the first generation, we'll rely on external technology licensing to get the production capacity and supply chain running, and for the second generation, we'll start developing our own technology."

"Tesla also started with the body of a Lotus Elise and someone else's batteries. Now, no one cares about that initial stage."

"My trademark is the core asset of my entire company; it is not something you can just take away with a brand reversion clause. I cannot compromise on this bottom line."

President Li Zhiping did not respond. He opened and closed the compilation of US trademark law cases in front of him. He still wanted to say something, but Lin Ruohua spoke up.

"President Li, if I may interject, from a legal compliance perspective, the brand reversion clause poses compliance risks under the current review framework of the Committee on Foreign Investment in the United States (CFIUS)."

"If a commercial contract between a Chinese and American company includes a provision stating that the ownership of a US trademark can be forcibly returned to a Chinese supplier after the US government changes its tariff policy, this clause might be identified under the Department of Justice's review standards as a provision involving foreign control of a US enterprise."

"This would trigger a comprehensive review by CFIUS. The result wouldn't just be this project getting stalled; other related businesses of BYD in the Americas would also be brought into the same review framework."

"This is no longer just a matter of legal risk; it is a political risk, which is far more serious than a legal issue."

"You spend most of your time in the United States, so you should know this better than I do."

The atmosphere in the conference room changed after Lin Ruohua finished saying this. Just a moment ago, when President Li Zhiping threw out the brand reversion clause, he had been the person with the most authority at the entire table.

But now, Lin Ruohua had forced him back onto his own ground using the framework of compliance risk, and she was using his own language.

President Li Zhiping was the head of Americas affairs who had been flying between Washington and Los Angeles for twenty years; he knew best what a CFIUS review would mean for a company with Chinese background.

He couldn't refute Lin Ruohua because every word she said was true.

Jack, sitting opposite, chuckled silently. Lin Ruohua had previously been the hardest person for Mu Xin to deal with, but now, with a single round of dialogue, she had helped Mu Xin resolve President Li Zhiping's brand reversion clause.

"And President Li," Mu Xin picked up the water on the table and took a sip, "what I just mentioned—Great Wall, Geely, Chery, and Nio—I'm not threatening you."

"Under the current tariff policy environment, the only reasonable choice for my car is to cooperate with BYD."

"Because your Blade Battery is indeed the most cost-effective in the world, but once the policy changes, I don't need to come back to you."

"I can go directly to someone else. The brand reversion clause you want today has no practical value to you at this stage, because even if signed, it can only be triggered when tariffs are lowered, but for my factory's asset structure, it is a significant hidden danger."

"I cannot accept any clause that weakens our brand property rights, whether legally or commercially, so there is no room for compromise on this issue."

President Li Zhiping was silent for a long while, then he picked up the cup of tea in front of him, which had gone completely cold, and took a sip.

"I flew for over ten hours to come back just to get this clause. The legal department isn't on my side, and you are very forceful, but I accept the reasons you've given."