Korean Business Secrets Lost to Chinese Spying, Hiring

China’s corporate giants aren’t losing time by trying to play catchup with advanced South Korean rivals; they’ve been busy stealing trade secrets and hiring away key Korean talent, according to the Chinese-language newspaper Want Daily.

Corporate spies working for Chinese firms have stolen from S. Korean rivals trade secrets worth at least $430 million during the past three years, according to data from S. Korean officials.

The problem is that large numbers of Korean companies are opening branches in China without the ability to protect their business secrets, say Korean officials. Korean firms have naively believed that they won’t fall victim to the theft of trade secrets.

The data reveals a far harsher reality. Of 138 major Korean corporations with branches in China, 61 have had business secrets stolen, according to a recent report in Korea’s Yonhap news agency.

The firm’s own employees were behind 82% of the losses. Chinese counterparts provided 34.4% of the pilfered information while local franchises provided 24.6%, consulting firms, 23% and Chinese competitors, 19.7%.

Stealing corporate secrets is only one way to catch up. The other is to recruit talent from S. Korean firms. Career Care, a major S. Korean headhunter, report securing orders for Korean talent from over 100 Chinese firms during the past three years.

S. Korean firms aren’t the biggest targets of Chinese corporate espionage. US firms have lost an estimated $13 billion worth of trade secrets in just the cases currently under FBI investigation. The biggest source of that espionage has been China, according to Assistant Attorney General Lisa Monaco who heads the Justice Department’s National Security Division. Of seven cases prosecuted under the main economic espionage statute in 2010, six involved a link to China, according to a 2011 US intelligence report.