Leading domestic fashion producer Shenzhen Copais Industrial has launched a lawsuit against SKN, an arm of South Korea-based SK Group.
Copais is suing SKN claiming they failed to fulfill its commitment based on contracts with OBZEE, a company SKN acquired in 2007.
The total loss for Copais is expected to hit 500-600 million yuan ($73.7 million to 88.4 million).
In 2005, Copais inked contracts with OBZEE to become the sole agent and operator of top South Korean fashion brand Kang Jin Young in China. Based on the contract, Copais was due to open 50 shops of the brand in top end shopping malls in China within five years.
According to Zhao Yunhu, president of Copais, SKN made a series of "malicious" deeds to hinder Copais' efforts to open enough shops of the luxurious brand and decided to use the excuse to terminate their contracts.
SKN stressed that, to date, Copais only opened 17 shops.
However, Copais said it applied to launch 60 stores, and SKN.
Since the merger in late 2007, only fewer than five shops have been authorized by SKN to be opened.
Zhao said he contacted SKN for more than two years, but SKN, which eyed Kang Jin Young's sound sales growth in China, revealed ambitions to operate the brand by itself.
