Sunday, November 10, 2013

Economic Espionage: Competing For Trade By Stealing Industrial Secrets

In September 2012 FBI agents in Kansas City, Missouri, arrested two Chinese nationals, Huang Ji Li and Qi Xiao Guang, after they paid $25,000 in cash for stolen trade secrets pertaining to an American company’s manufacture of cellular-glass insulation, or foam glass.

Huang trespassed onto the company’s flagship plant in Sedalia, Missouri, 3 months prior and asked suspiciously detailed questions about the facility’s manufacturing process for the insulation. It also is believed he approached an employee at the company’s corporate headquarters in Pittsburgh, Pennsylvania, just days before seeking to build a foam-glass factory in China.

A judge sentenced Huang to 18 months in prison and a $250,000 fine in January 2013 and Qi, Huang’s interpreter, to time served, a $20,000 fine, and deportation. During sentencing, company officials estimated the value of the targeted trade secrets at $272 million. 

The threat of economic espionage and theft of trade secrets to U.S.-based companies is persistent and requires constant vigilance. Even after Huang was arrested, pled guilty, and was sentenced, investigators believed the company’s trade secrets still were at risk for targeting by would-be competitors. (more)