Edited by Robert Bird and Subhash C. Jain
Chapter 7: Employee Disclosures of Trade Secrets in China: Prevention Strategies
7. Employee disclosures of trade secrets in China: prevention strategies Marisa Anne Pagnattaro1 Spies are a key element In warfare. On them depends An army’s Every move. (Sun-Tzu, 2002) INTRODUCTION In the heated competition between companies doing business in China, protection of trade secrets is a daunting challenge (US–China Business Council, 2006). Economic espionage causes US companies enormous losses in their global operations (Oﬃce of the National Counterintelligence Executive, 2006). China is well known for aggressive targeting of US technology and has one of the highest rates of infringement of intellectual property rights in the world (Congressional-Executive Commission on China, 2006). This reality was egregiously evident when General Motors Corporation discovered that the Chinese automaker Chery Automobile Co. Ltd was marketing the ‘QQ’, a nearly identical copy of GM’s Chevrolet ‘Spark’. The only substantial diﬀerence between the cars was QQ’s sticker price: $3600 – a third less than Spark’s (Forney, 2005; Buckley, 2005). As US Commerce Secretary Donald Evans stated, ‘[t]his incident deﬁes an innocent explanation. The QQ and the Spark are twins because both cars were built from the same DNA – the proprietary mathematical data and formulas – that were stolen from GM Daewoo and used to build the QQ’ (Evans, 2005). GM brought a lawsuit against Chery in a Shanghai court; soon thereafter the parties entered into a conﬁdential settlement (Roberts, 2005). Just a little over two years later, Chery announced its plans to raise its annual output to one million vehicles by 2010...
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