Chinese state-owned XCMG faces lawsuits alleging it defrauded Canadian equipment dealers

Chinese state-owned XCMG is one of the world’s largest heavy equipment manufacturers. The company now faces civil lawsuits from Canadian equipment dealers alleging it defrauded them. Veteran dealer Ryan Martin told Vancouver’s law courts on Friday that his family started working with XCMG in 2017 and business was good until about 2021. “It’s destroyed our family,” he said. “It’s destroyed our family business.”

Martin’s family company, Arctic Machinery, has dealerships in Prince George, Chilliwack and Kelowna. The company began selling XCMG-made heavy equipment in recent years. Martin said something changed several years ago: “The quality of the equipment that time was not what the quality was in the past.”

Martin said other XCMG dealers in Canada reported similar problems. He said that while troubleshooting, they found evidence supporting their claims, including a process of changing serial number plates and machine years, possibly to misrepresent to end users what they were buying. As an example, he said a machine built in 2020 was sold to a dealer as a 2022 model.

In July, a Saskatchewan dealer filed a lawsuit alleging XCMG unlawfully tampered with serial number plates on equipment sold to it in Alberta this year. Quebec-based LTR Equipment filed a similar case, and an Ontario lift company has also filed a case alleging serial numbers were tampered with.

In a statement to Global News, XCMG Canada said Arctic Machinery purchased approximately $18 million in XCMG-branded inventory and did not pay for it. The company said it is “fully defending the claims in the civil actions.”

Martin said XCMG called in its loans, forcing his family company into bankruptcy. He said this was retaliation for speaking out about the alleged serial number tampering.

RCMP in Alberta’s K Division confirmed that members of its auto theft unit carried out a search warrant at XCMG’s headquarters in April. The investigation is ongoing.