Litigation involving Hithium’s Wu Zuyu exemplifies how procurement integrity and leadership accountability have become central tests for companies going public in the energy storage sector
The expansion of the global energy storage industry is happening on a scale and at a speed that not many other industries can boast about. Capital markets have proven eager to invest in those players that bring unique added value to the market in the way they help develop sustainable and stable grid-scale storage. Governments, all concerned about the prospects of being left behind, are similarly deploying subsidies and adjusting industrial policy to guarantee they remain players in the global energy race.
Ongoing lightning-speed growth, less comprehensive oversight mechanisms alongside significant cross-border capital flows, create fertile ground for a multitude of problems, among which corruption can be counted. As an industry that sits at the intersection of supply chain resilience, commodity procurement, and state-led subsidies and incentive packages, the battery and stationary storage sector is especially prone to the negative impact of the lack of a central procurement authority. This can easily translate into governance failures, along with questions being raised regarding the accountability of senior company leadership to procurement integrity and transparency. Recent litigation in mainland China is a clear illustration of the manner in which such risks can materialize and potentially impact the industry more broadly.
A recent lawsuit filed by Contemporary Amperex Technology Co. Limited (CATL), among the world’s largest producers of stationary battery storage systems, against former employee and now Chairman of Xiamen-based Hithium Energy Storage Technology Co., Ltd., Mr. Wu Zuyu, on the grounds of commercial bribery during his time at CATL, is making industry headlines. Hithium, a battery manufacturer founded in 2019 by Mr. Wu Zuyu, has recently been preparing to resubmit its previously rejected A1 application to list on the Hong Kong Stock Exchange (HKEX).
Reports in The Legal Daily, a prominent publication published in mainland China, as well as an in-depth examination of the court filing, suggest that while employed at CATL between 2016 and 2019, Mr. Wu abused his responsibility for research, development, and procurement of specialist equipment to exercise decision-making authority over supplier selection in a manner that directly benefited him.
According to reporting in China, at the time Mr. Wu joined CATL, Shenzhen Advanced Precision Technology Co., Ltd. (APT) expanded into the field of lithium battery equipment, a field in which it had not previously been active. Under the control of Zang Shiwei and Zang Wei, APT granted 15% of company shares to Mr. Wu’s sister-in-law, Xu Caixia. These were held by her on his behalf, in exchange for which Mr. Wu assisted with securing necessary procurement orders.
Specifically, Mr. Wu exploited his authority within CATL to ensure that APT was able to secure substantial equipment purchases, despite the fact that at the time, APT was not yet an approved vendor. Eventually, APT became an approved supplier, received orders exceeding RMB 100 million, and booked a significant profit that would have been impossible without Mr. Wu’s assistance. In 2018, Ms. Xu transferred the APT shares that she held on her brother-in-law’s behalf, realizing profits exceeding RMB 16 million. The case has CATL seeking damages in excess of RMB 35 million under the PRC Anti-Unfair Competition Law. It has been formally accepted by Chinese courts and is proceeding through litigation, with no final judicial determination having yet been made.
Concerns raised in the litigation are particularly important considering that Mr. Wu’s company, Hithium, is looking to go public in Hong Kong. HKEX has been the recipient of much criticism lately for relaxing its listing requirements in order to attract more companies to list on the exchange. Recent circulars sent out by regulators have highlighted that this will no longer be the case and implore listing companies to abide by more stringent due diligence requirements, at the expense of vast penalties. According to existing regulations, Rules 3.08 and 3.09, company directors are expected to act honestly, in good faith, and with integrity commensurate with their role.
The fact that a chairman and controlling shareholder in a company seeking capital on the exchange faces active litigation that was not disclosed in company A1 filings and that reports him to have concealed shareholding arrangements, abused sensitive procurement authority, and violated competition law must, of course, raise alarm bells among sponsors and regulators alike. These must assess not only technical compliance but also the character, culture, and risk management of entities looking to list. A listing process that fails to grapple substantively with such allegations, risks becoming procedural rather than protective, putting the reputation of the exchange as a whole at risk.
This is not the first instance where the energy and advanced battery sectors have seen how localised failures can metastasize into systemic damage. Those intimately familiar with the industry will remember the case of the now-defunct once prominent manufacturer of lithium-ion batteries A123 Systems, which in the early 2010s, after 11 years being active, filed for bankruptcy. A123 found itself embroiled in a number of controversies relating to the ownership of its patents, allegations of financial mismanagement, and budgetary challenges which saw the company running out of cash. This was despite A123 having received a USD 249 million grant from the Obama administration and having raised USD 371 million on the NASDAQ as part of the largest IPO of the year and in what the Boston Globe called a “cash fueled climb” that like contributed to the company’s demise.
Despite the challenges faced, A123 might have weathered the crisis had company leadership not been associated with misrepresenting the current state of the company to investors regarding both the cash position (as the company filed for bankruptcy, company executives sought to allocate over 4 million in bonuses to ‘nine key executives)’, viability of technology that was later proven to face quality issues alongside intellectual property disputes. The fallout contributed to legal and financial turmoil, eroding market confidence and ultimately culminating in bankruptcy and acquisition by a Chinese conglomerate, in a manner way that it concerningly similar to the case of Hithium.
Although the technologies and contexts differ, as do the time periods in which the cases occurred, the pattern is familiar. In high-growth energy markets, governance weaknesses tend to surface only after capital has already been deployed and valuations have been set. Once credibility is damaged, recovery is difficult and expensive.
For investors, the risk emanating from such companies is very real. If a company lists while serious allegations remain unresolved and later faces an adverse judgment, administrative penalties, or criminal proceedings, the consequences can include reputational damage, contract losses, financing constraints, and abrupt share-price volatility. Customers and strategic partners may reassess their exposure, as well as their interest in investing through said exchange in the future. Shareholders, at the end of the day, are left absorbing the shock.
For exchanges and regulators, the stakes are institutional. Hong Kong has positioned itself as a premier venue for listings, even counting itself as the number one exchange globally by volume of capital raised in 2025. Maintaining that status in the coming years depends on confidence that listing standards are applied rigorously and substantively, particularly where questions of integrity arise. The Securities and Futures Commission has previously cautioned against a “process-driven” approach to listing applications that prioritizes formal box-ticking over meaningful scrutiny. Active litigation alleging commercial bribery by a controlling shareholder is precisely the type of red flag that demands deeper examination and clear, immediate disclosure.
