News: IP theft - no more worries
Just a brief note - the FBI has more than 1,100 China IP theft cases pending against Chinese entities or individuals. Not a typo - 1,100.
For American companies not doing business in China - we should not say, no exposure to China - the FBI investigations may still be something of a bulwark against theft. Although, one notes, most of the investigations and arrests are in arrears of the crime.
And back nearly a year ago, Mr. Xi promulgated a new IP theft policy which threatened Chinese businesses that steal. The policy was announced within hours of a Xi-Trump meeting last December, and comprised a coordinated efforts across 38 Chinese government agencies with 38 different punishments. The insincerity of this announcement, coming immediately upon the leaders' meeting, was palpable. If you want to believe, you may. I wrote about this at the time in Everything new is old again.
But with a new Chinese government policy, IP theft in China is no more.
Now comes the latest entry in China's bid to become the first panopticon state - the cybersecurity law that permits government access to all information, IP or otherwise, stored on any server available to any foreign business operating in China. China Law Blog has details - China's New Cybersecurity System - There is NO Place to Hide. From the blog post -
This result then leads to the key issue. Confidential information housed on any server located in China is subject to being viewed and copied by China’s Ministry of Public Security and that information then becomes open to access by the entire PRC government system. But the PRC government is the shareholder of the State Owned Entities (SOEs) which are the key industries in China. The PRC government also essentially controls the key private companies in China such as Huawei and ZTE and more recently Alibaba and Tencent and many others. See China is sending government officials into companies like Alibaba and Geely and China to place government officials inside 100 private companies, including Alibaba. The PRC government also either owns or controls China’s entire arms industry.
Simply put, the data the Ministry of Public Security obtains from foreign companies will be available to the key competitors of foreign businesses, to the Chinese government controlled and private R&D system, and to the Chinese arms industry and military.
The takeaway on this is that the fear of IP theft in China is no more. What used to be considered theft, done by stealth, is now a legal process. As Steve Dickinson from China Law Blog says, welcome to the new normal. And anyway, remember - information wants to be free.