Monday, November 28, 2005

Industrial Espionage Grows In Korea

Korea’s National Intelligence service recently issued a report on the spread of industrial espionage in Korea.  The agency reports that 27 cases of trade theft were reported in the first 10 months of 2005, up from the same period last year. More troubling is over 85% of all industrial espionage were reported since 1998 were within the last two years. The service estimates that since 1998 the 85 reported cases of industrial espionage involved secrets worth around US$74 billion.

The National Intelligence Service further stated that the electronics, information technology, and precision instruments industries were the areas that most of the reported thefts occur. Also, bribery was the preferred method to obtain information found in the reported cases. The service went on to opine that enforcement of the laws relating to industrial espionage were either too difficult to enforce, and even if convicted the penalties are rather light.

Such statements do not come as any surprise to those who follow this area. In recent months have found a number of high profile trade secret cases involving Korean companies:

1.In July 2005, 8 current and former Hynix Semiconductor executives were arrested for stealing most of Hynix’s IP to start their own semiconductor company, LMNT.

2.October 2005, Hyundai Motor dropped a parts supplier for sharing confidential information with a competitor

3.In November 2005, 4 current and former Samsung Electronics employees were charged with stealing mobile phone technologies to set up a business. Samsung officials said the theft was from a US$25 million development project, and if the theft were successful would have caused US$500 million in lost sales for the company.

4.Also in November, in announcing their settlement with Chery Automotive, a heading grabbing infringement case, GM Daewoo noted that earlier a Daewoo executive stole trade secrets and designs regarding a small van in development.

All four of the above cases involved Chinese companies in some way, either as the aggressor or as being used as a manufacturing base for the products. The Samsung Economic Research Institute studied the trend and found that China was the preferred destination for trade secrets, one way or another, comprising 39% of the cases, followed by the United States 21%, and Taiwan 18%. The institute further estimates that 70% of all such theft was in the electronics and IT industries.


At December 14, 2005 9:41 AM, Anonymous Anonymous said...

No no no no. Korea is being unfairly targeted by foreign companies and governments. The proof is here:

Nice look to the new blog.

- Mark


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