Chinese home appliance producer Gree Electric Appliances Inc., said its US partner Soleus has seriously distorted the facts in the latter’s recent lawsuit filed in California, which involves $150 million in compensation, Beijing Youth Daily reported.

US home-comfort product manufacturer Soleus International Inc, a partner with Gree of Gree USA, its operator in the US, has accused the Chinese company of asking Soleus to hide facts relating to defects found in their fire-prone air dehumidifiers sold in the US and then threatening retaliation after it was reported to the US government.

According to Soleus, Gree USA signed a contract worth $150 million with Sears Holdings Corp., a top US retailer, in December 2011, but the agreement was sabotaged because of "unreasonably high price quotes" for Gree USA's products from the Chinese side.

Furthermore, Gree Electronic Appliances was also said to have allegedly tried to do business directly with Sears, without participation from Gree USA.

Soleus then asked for more than $150 million in compensation for violations under the terms of their contract agreement and fair trade practices.

Soleus said it hired product-testing experts to investigate the faulty products, and confirmed that there was a design problem with the dehumidifiers produced for Gree USA, and the products made between 2010 and 2012 were all made with disqualified material. As a result, Soleus removed the products off the market.

Soleus claimed Gree pressured them to hide customer complaints, and then tried to ruin Soleus by ignoring contracts regardless of their relationship as a business partner, as well as luring customers to engage in under-the-table dealings.

Gree admitted some disputes existed between the two companies, but the accusations stated in a California federal court are “fabricated and groundless,” and completely inconsistent with the facts, Gree told Beijing Youth Daily.

Gree did receive some complaints from customers that the dehumidifiers were prone to ignite, and the company reported them to the U.S. Consumer Product Safety Commission and also hired a third party assessment organization to assess the problems.

Gree stated, “The number of fire-prone dehumidifiers is only 0.005 percent of all the similar products on sales in US. Meanwhile, Gree hasn’t received any legal documents from the California federal court so far.”

As for their partnership with Soleus, Gree said it never ever threatened or pressured them, and it would take active legal proceedings to assert their rights and protect Chinese companies abroad.

Soleus and Gree formed Gree USA in April 2010, with the latter taking 51 percent of the compay’s shares. Gree USA also sells products in the US market under the brand name "Soleus Air" and "Soleus Air Powered by Gree."