Tuesday 6 November 2018
The Issue with China and the United States: What to do about the theft of industrial trade secrets?
The Washington Post Editorial Board recently published an opinion piece, titled “The U.S. must take action to stop Chinese industrial espionage,” which strongly condemns China’s alleged theft of trade secrets. The Editorial Board pointed to the recent indictment concerning DRAM trade secrets allegedly stolen from Micron, a U.S. based company. The piece notes that a worker from Micron joined a state-supported Chinese company along with other employees--carrying with them trade secrets. The editorial ends with the statement that, “In the end, China will only respond to compulsion.” This is a powerful indictment of China from one of the leading newspapers in the United States. The editorial can be found, here.
The question is what are the next steps to exercise “compulsion." This situation is somewhat different than the Chinese government requiring the disclosure of trade secrets for essentially market access to China. Indeed, even for non-state owned Chinese companies, my understanding is that the Chinese government is involved in technology development even in early stages and exercises a veto power over the direction of technology development. Recently, the Chinese government announced a ban on all new computer games in China. As I've mentioned in a prior post, this could be a case of rogue Chinese employees attempting to become wealthy who may not be acting with express approval of the Chinese government; although perhaps with tacit approval of the government or willful blindness of the government. Of course, this ultimately is to the great benefit of China. However, what is our response? That is the very difficult question the editorial does not address. We all know there is an issue.
Moreover, the problem with trade secrets is that once they are disclosed it is very hard if not impossible to put them back in the box. Once we've lost it; it's likely lost irrevocably. And, I don't think putting a few people in prison is going to provide much general deterrence to similar behavior. Will we start seizing assets--does it matter from whom? That seems unlikely to be smart--our interests are so intertwined now. As I've mentioned before, will we attempt to ban all Chinese citizens from working or studying in the United States? Is that in the best interest of our country? That may not stop the bleeding of information through cybertheft. More tariffs? Does that work?