Guarding against industrial espionage
- Source: Global Times
- [07:10 July 13 2009]
- Comments
According to China’s foreign ministry, serious evidence exists that four Shanghai-based employees of the Anglo-Australian mining giant Rio Tinto committed acts of espionage and stole State secrets.
Detained on July 5, the four, including Australian citizen Stern Hu, general manager for the Chinese operations of Rio Tinto’s iron ore division, allegedly committed crimes including “procuring national secrets by bribing insiders with Chinese steelmakers” during iron ore price negotiations between China and mining giants Rio Tinto, Vale of Brazil and BHP Billiton of Australia earlier this year.
Cases involving industrial espionage are new in China, as the country’s market economy has developed much later than that of Western countries. Normally, when talking about espionage, people think of James Bond and spying in the 1950s just after the founding of the People’s Republic of China in 1949.
However, as China becomes more open and increases its international economic exchanges, it will be more vulnerable to commercial espionage, which could cause huge economic losses and even threaten China’s security interests.
The United States created the Economic Espionage Act of 1996 to prevent and punish the leaking of trade secrets that would damage its national security. The law criminalized the misappropriation of trade secrets with the knowledge or intent that the theft would benefit a foreign power.
A survey by PricewaterhouseCoopers and the American Society for Industrial Security revealed that Fortune 1000 companies lost more than $45 billion in 1999 due to theft of their proprietary information.
According to a report by Business Week in 2001, many big US companies spend up to $1 million every year tracking their competitors.
As a fast-growing economic power, China still has a long way to go in writing laws to punish industrial espionage, which could cause Chinese companies, as well as China’s government, huge losses.
China’s State-owned enterprises and State-controlled enterprises constitute the backbone of China’s economy, playing key roles in areas like national resources, finance, telecommunications, high-tech industries, and so on.
As China’s government and its companies expand their global reach, it’s crucial that industrial intelligence be protected. China’s commercial interests are closely linked with its national interests and security.
China needs legislation on industrial espionage so the government and companies understand what constitutes a trade secret, and how to protect that information. Such a law will also eliminate any gray area foreign companies or institutions might use to steal commercial secrets.