US business its own worst enemy in fighting China hacking

The problem of China hacking US businesses and stealing intellectual property has been going on for decades. But when it comes to fighting the crime wave from China, the US government has been hampered by a lack of cooperation from the victims.

An investigation by National Public Radio and PBS found that fear of losing profits has driven the silence from US companies who see rocking the boat as more of a threat to their livelihood than taking strong action.

In dozens of interviews with U.S. government and business representatives, officials involved in commerce with China said hacking and theft were an open secret for almost two decades, allowed to quietly continue because U.S. companies had too much money at stake to make waves.

Wendy Cutler, who was a veteran negotiator at the Office of the U.S. Trade Representative, says it wasn't just that U.S. businesses were hesitant to come forward in specific cases. She says businesses didn't want the trade office to take "any strong action."

"We are not as effective if we don't have the U.S. business community supporting us," she says. "Looking back on it, in retrospect, I think we probably should have been more active and more responsive. We kind of lost the big picture of what was really happening."

None of the dozens of companies or organizations that NPR reached out to that have been victims of theft or corporate espionage originating from China would go on the record.

And for its part, the Chinese government officially denied to NPR and Frontline that it has been involved in such practices.

It's estimated that Chinese unfair business practices are costing American companies $57 billion a year. But the exposure of company secrets can mean an incalcuable loss. 

But now the impact of that secrecy is coming to light, they say. Companies are facing hundreds of millions of dollars in future losses from the theft, and U.S. officials say they are years behind trying to tackle the problem.

Michael Wessel, commissioner on the U.S. government's U.S.-China Economic and Security Review Commission, says it wasn't supposed to be this way. U.S. officials had high hopes when China officially joined the World Trade Organization in 2001.

"There was a honeymoon period in the first six or seven years, a desire to try [to] make things work," Wessel says.

But, he says, starting around 2006, businesses began coming to him saying that China had stolen their designs or ideas or had pressured them into partnerships and taken their technology.

Just like with Hickton, Wessel says, they wouldn't come forward publicly.

China is counting on this code of omerta by American businesses as they continue with business as usual. But you would think that eventually, China's stealing will become so prevelant, that US companies will be forced to cooperate for self preservation.

 

The problem of China hacking US businesses and stealing intellectual property has been going on for decades. But when it comes to fighting the crime wave from China, the US government has been hampered by a lack of cooperation from the victims.

An investigation by National Public Radio and PBS found that fear of losing profits has driven the silence from US companies who see rocking the boat as more of a threat to their livelihood than taking strong action.

In dozens of interviews with U.S. government and business representatives, officials involved in commerce with China said hacking and theft were an open secret for almost two decades, allowed to quietly continue because U.S. companies had too much money at stake to make waves.

Wendy Cutler, who was a veteran negotiator at the Office of the U.S. Trade Representative, says it wasn't just that U.S. businesses were hesitant to come forward in specific cases. She says businesses didn't want the trade office to take "any strong action."

"We are not as effective if we don't have the U.S. business community supporting us," she says. "Looking back on it, in retrospect, I think we probably should have been more active and more responsive. We kind of lost the big picture of what was really happening."

None of the dozens of companies or organizations that NPR reached out to that have been victims of theft or corporate espionage originating from China would go on the record.

And for its part, the Chinese government officially denied to NPR and Frontline that it has been involved in such practices.

It's estimated that Chinese unfair business practices are costing American companies $57 billion a year. But the exposure of company secrets can mean an incalcuable loss. 

But now the impact of that secrecy is coming to light, they say. Companies are facing hundreds of millions of dollars in future losses from the theft, and U.S. officials say they are years behind trying to tackle the problem.

Michael Wessel, commissioner on the U.S. government's U.S.-China Economic and Security Review Commission, says it wasn't supposed to be this way. U.S. officials had high hopes when China officially joined the World Trade Organization in 2001.

"There was a honeymoon period in the first six or seven years, a desire to try [to] make things work," Wessel says.

But, he says, starting around 2006, businesses began coming to him saying that China had stolen their designs or ideas or had pressured them into partnerships and taken their technology.

Just like with Hickton, Wessel says, they wouldn't come forward publicly.

China is counting on this code of omerta by American businesses as they continue with business as usual. But you would think that eventually, China's stealing will become so prevelant, that US companies will be forced to cooperate for self preservation.