back to article Megacorps accuse Chinese fab workers of pilfering designs

Multinationals based in China are increasingly worried about their local workforce stealing valuable intellectual property but many are failing to act in a timely and proactive manner to combat information security threats, according to a panel of security experts. Speaking at the 13th annual Info-Security Conference in Hong …


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  1. Anonymous Coward
    Anonymous Coward


    The phrase "No shit, Sherlock" comes to mind...

    1. scarshapedstar

      Re: uhuh

      Yeah, the chinese knockoff has been a tradition for a few millennia now.

      1. disgruntled yank Silver badge

        Re: uhuh

        Well, the New England textile industry (since departed for North Carolina, en route to Central America and China), got its start when an English weaver brought over machinery designs the English manufacturers would rather have kept home.

        1. Anonymous Coward
          Anonymous Coward

          Re: uhuh

          Industrial espionage, design and IPR theft have existed ever since the Egyptians and the Shumerians invented irrigation (if not earlier). They have been successfully prevented (and are still successfully prevented) by either fear or loyalty. Fear - I am going to get my head chopped off or spend time in chokey. Loyalty - that needs no explanation.

          Here is where China differs and we have to admit it, analyze it, take it into account for any business with them and move along. Their concepts and ordering of loyalty to family, country, employer, etc differ from the traditonal definitions of loyalty "western" world. Who is right, who is wrong - the jury is out and we are in no position to judge them. We should not throw our hands in the air and cry foul though.

          Part of moving a business into a country is doing a _COMPLETE_ homework on culture, morals, values, etc instead of assuming that everyone behaves the same as the members of your congregation. Morals are different worldwide. What is repugnant to an everage westerner is totally normal in some places elsewhere. You have to consider how this will reflect on your business and organizational structure. Most people who have moved businesses abroad have _FAILED_ to do that.

          1. gollux

            Re: uhuh

            The joke on "us" in the long run is that they're the next tech giant. I remember the old jokes about Japanese cars, they were copies (Mazda 626 engine = field repairable BMW 1600, Toyota 4M engine = field repairable Mercedes SOHC inline 6) and if you pulled the panels off the doors, you could read the beer can labels. Note that I said on the engines, that the Japanese copies were field repairable. Having worked on all four engines, it's a really important distinction. Not only were the Japanese copying, but they were modifying and changing to make stuff work better in the real world. You won't necessarily have a full machine shop to do repairs in Central America. So given the choice, the Japanese model could be the better choice in the long run.

            From copy and refine to world leader and innovator was a two decade jump and was the brute force necessary to push American car manufacturers out of the 1950's OHV engine technology they were so stuck on. Why buy a lumbering OHV, gas guzzling tuna boat when you could buy a Pentroof DOHC 4 valve per cylinder engine that outperforms in power and fuel economy, an engine three times its displacement.

            The Chinese are stepping into the arena of high-tech many decades later, the electronics fabs they use are on the leading edge, why do you think they'll sit around waiting for orders? Might as well put them to work.

            Steal, refine and innovate. It's been done in the past, and will be done in the future. If you won't do it yourself, someone else will do it for you. So, ship it overseas and lose it...

            1. gollux

              Re: uhuh

              Oh, and as a reality check, except for the Toyota Landcruiser whose engine was a copy of a Chevy 235 inline 6, all the engines copied were top-of-the-line European technology. Interestingly enough, they didn't consider US auto technology worth copying.

    2. h4rm0ny

      Re: uhuh

      In other news, "King Herod bad with kids".

      Seriously, how collossoally stupid would anyone have to be to not know this was happening from the outset? We're talking running off a building flapping your arms levels of stupid here. I know greed for big profits blinds people, but I can't think of a clearer example of it right now than the way the West has handed over all its technological know-how to China.

      Maybe it will be a good thing long-term and technological parity will lead to greater stimulous to competition and the USA and UK will start manufacturing again ourselves. But anyone who thought this wouldn't happen is less intelligent than a rock.

    3. Anonymous Coward
      Anonymous Coward

      Too true

      Too true.

      The Reg needs to add the "You Don't Say" meme picture as an icon.

  2. Anonymous Coward
    Anonymous Coward

    What Does it Matter?

    When you consider that a serious cloner can simply buy or steal one of whatever they're planning to clone, strip the binary code out, and see what parts go into the device, reverse-engineer the PCB layout, and start building their clones, it seems silly to worry overmuch about foreign-manufacturer security regarding your "intellectual property".

    That said, one can do some basic things to make it more difficult for cloners:

    #1: Develop and house all proprietary source code in a "safe" country. No foreign access! (If it's Open Source, don't worry about it.)

    #2: Compartmentalize the plans and assembly/debugging of your sub-widgets amongst multiple of your foreign contractor-manufacturers. (Yes, this costs more money and slows down production.)

    #3: Design for easy manufacturing ramp-up. Don't assume you're gonna get a 5-year run of exclusive profits out of Device X; that isn't gonna happen. Instead, be nimble. Get (debugged!) Device X into high-volume production quickly, and start your engineers developing Device X+1.

  3. JaitcH

    Day Shift for Them; Night Shift for Us.

    A few years ago I was deployed to China to assist a Canadian company set up a manufacturing line in China.

    One night I had to work late, and the plant manager said No Problem, we work 24/7. I said why had he always insisted on working days only to which he replied that the Day Shift is for Customers and the Night Shift was for themselves.

    Further discrete inquiries revealed that the production moulds used for for a Western customer had their identification / serialising modules replaced with blanks and the night production was used as knock-offs to compete with their Western customer.

  4. tempemeaty

    ...and just imagine how these cultural issues are impacting your customers...

    " “The norms we expect in more developed economies, in terms of loyalty to one’s employer and business ethics, seem to be less well-developed or at least significantly different in China,” Christofis told The Reg."

    Now imagine this realization and how the customer care agents in India, South America, and Philippines are impacting all your customers.

    Personally as a Tier 2 Tech support agent in the US who used to deal with the support agents in these countries, I rarely found that they ever gave truthful information and would do or say ANYTHING to end a call no matter how utterly absurd the lie they thought they had to tell in order to do so.

    What does it all mean. Cultures in other countries, they operate by a completely different rule set and are a HAZARD to western business success. The cost of the undermining that occurs far out-ways the cost savings of the labor.

    1. Anonymous Coward
      Anonymous Coward

      Re: ...and just imagine how these cultural issues are impacting your customers...


    2. Bucky 2

      Re: ...and just imagine how these cultural issues are impacting your customers...

      I have occasionally sent a question by email, and been presented with a response to check out the FAQ or call a phone number.

      Translation: "Find out for yourself, and if you can't do that, here's a quarter--call someone who cares."

      I couldn't say if the problem is a cultural phenomenon or a corporate one. Though I find it hard to imagine that this outrageous response would be appropriate in any language, in any country.

    3. alkali

      Re: ...and just imagine how these cultural issues are impacting your customers...

      “The norms we expect in more developed economies, in terms of loyalty to one’s employer and business ethics, seem to be less well-developed or at least significantly different in China,”

      Yes in the West we are considerably developed in terms of business ethics. We only allow giant corporations and banks to steal from us instead of we from them. Silly peasants and your backward ways.

      When I first read that quote I honestly thought it was a joke. Have you seen the news lately? And by lately I mean pretty much any time the last 5 years? And by watch i mean listen for even an eighth of a second. Im in the US and right now I'm listening to Jamie Dimon explain how banks should be allowed to gamble with our money for their profits. That worked out pretty swell last time if you remember that. In the UK cameron is making interesting "cuts" to defense right now. Man now I know what "ethics" are I feel great.

      Yep we are definitely far more developed than the east. When western business is unethical they do it on a far more developed scale. Why steal some designs when you can destroy a global economy? Why be a little greedy when you can institutionalize corruption and make it socially acceptable

      I went into this comment attempting to refute that we have "more developed business ethics" but really I couldnt agree more.

  5. Bluenose

    The problem is not really theft

    As Anonymous says, there are plenty of other ways to get access to a company's IP if they are manufacturing products so preventing people from stealing and selling it simply hits the thief, the recipients will still get the information elsewhere.

    The real problem is that despite some changes to Chinese law and that in other countries (e.g. Russia) getting local courts to actually enforce and then having local authorities implement court judgements to reclaim/prevent the use of, your IP is still pretty poor. It is this weak application of the law or even the fact that the law does not allow you to protect your IP effectively that really causes the problems.

    Of course money is more important than protecting IP for many companies (and I see that approach regularly in my work) so moving manufacturing to low cost countries is still justifiable even if it does mean giving up your actual IP because as everyone knows, thinking up new profitable ideas is easy.

  6. Arctic fox

    "This may be partly due to low wages and poorer working conditions..........."

    Let me see now. You outsource your production to a country where you can get away with paying poor wages and employing people under conditions that would be directly illegal in your company's home country. Thereupon you discover that your sweated serfs employees don't feel 100 % loyal and committed to you. Hmm, yes that might indeed be at least a part of the problem. See icon.

    1. Anonymous Coward
      Anonymous Coward

      It's worse than that

      China is an unstable country which may be in a super-bubble. Do they have any plans for if there's a revolt? New government which nationalises all the Taiwanese plants? Riots? All much more likely than people think, IMHO. Google 'chinese property crash' and be afraid.

  7. FordPrefect

    My heart bleeds...

    For these megacorps that have made redundant thousands if not millions of people in the west to save a few quid to fill there own pockets by moving production to China. Just desserts springs to mind!

  8. LinkOfHyrule
    Paris Hilton

    Imitation is the sincerest form if flattery

    When they rip you off, Mega-Hyper-Global-Corp, it's actually just their way of saying you rock and you're awesome!

  9. Blofeld's Cat


    Perhaps we could go back to designing products where value is added by new features, better performance and the like, rather than by IP lawyers fighting in court.

    That way the cloned product is always at least one generation behind the new version.

  10. Anonymous Coward
    Anonymous Coward

    a couple of Chinese proverbs

    "What goes round comes round". And they ain't really started yet.

    "You pay peanuts, you get monkeys"

    "There is no free lunch"

    "Serves you right". And you ain't seen nothing yet.

    "Good bye and thanks for all the fish"

    1. Oninoshiko

      Re: a couple of Chinese proverbs

      I'm fairly sure none of those are any more chinese then "man who walk threw airport turnstile sideways going to Bangkok"

    2. gollux

      Re: a couple of Chinese proverbs

      "What goes round comes round". And they ain't really started yet.

      Payback for the Opium Wars and all that God Bothering might be a real bitch...

  11. Tom 35

    China will bypas the middle men

    Companies outsource everything to China, teach them how to build your stuff, and before too long you will become an unwanted middle man. China will be unhappy making stuff for you cheap while you take all the profit, so they will take what you taught them, start their own companies and add some of their own innovation.

    They are raking in their outsource cash for now, soon they will join Electohome and other US TV makers that outsourced to Japan.

  12. Anonymous Coward
    Anonymous Coward

    And in other news...

    A bear was seen today defecating in the woods. Coming up later, the Pope confirms he is Catholic.

    Sometimes the Mega Corps have been known to fight back against the cloners... or rather against the people who have bought cloned items. I know, for example, that Dreambox - the manufacturer of verrrry expensive satellite receivers - put a logic bomb in their firmware that performed a check and killed any cloned devices. Eventually the cloners put out their own firmware that deactivated that bomb, but plenty of people had already been hit. But the cost of buying a 2nd clone to replace a bricked one was still significantly cheaper than buying a genuine one.

    ps - I'm not condoning buying clones but I can understand why some people do it.

  13. LewFoo

    ...and no one saw this coming?

    BWwaaaaaaaaa ha ha haha (cough) ha ha ha ha ha (cough) ha ha (cough) ha ha ha ha

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