Management Guru Arindam Chaudhuri Dean Business School IIPM
Economic espionage is a global phenomenon. It is not only costing billions to the modern-day corporations but also is spreading its tentacles across the globe. According to the American Society for Industrial Security (ASIS), even in 1997, American intellectual property worth more than $300 billion was under threat due to economic espionage. In 2000, the same agency estimated the cost of economic espionage industry to be around $60 billion annually. Experts say this figure has now exponentially increased. Sample this: German counter-intelligence experts announced as recently as in October 2010 that the German economy is losing over €50 billion (equivalent to 30,000 jobs) annually due to espionage.
With the advancement of technology and corporations going online, economic espionage has become easier and. As big corporations today contribute a substantial amount to their economy, a dent in such companies shakes the very foundation of the host economy. For instance, half a decade back, Swedish authorities deported two Russian diplomats as they were found spying at Ericsson – a company responsible for missile-guidance systems for Sweden's fighter jet. Even the US has experienced several cases of economic espionage from countries like Japan, France and Israel. However, China, for that matter, is touted as the biggest player in the economic espionage market. UK’s intelligence service MI5 has warned banks and law firms of attacks from Chinese state organisations and has even written to 300 chief executives and security chiefs in UK about electronic espionage attacks. Companies like Rolls-Royce and Royal Dutch Shell have already been victims.
While MNCs indulge in this practice to know their competitors’ strategic plans in order to gain industry share, nations at large do this to track economic trends, technological progress, defence breakthroughs and progress on international relations. It thus helps them to form policy and gain strategic and political edge.
On July 13, 2010, Ke-xue Huang was arrested for passing secrets belonging to the Hunan Normal University in Changsha, China. Likewise, a year back, Dongfan Greg Chung, a former Rockwell and Boeing engineer, was convicted for economic espionage as he was acting as an agent of China and had passed restricted technology and Boeing trade secrets (information related to the Space Shuttle program and Delta IV rocket) to China. Surprisingly, Christian Science Monitor revealed how Clinton signed the Economic Espionage Act thus authorising intelligence gathering on foreign businesses and also “attached especial importance to economic intelligence, setting up the National Economic Council (NEC) in parallel to the National Security Council.” Thus, NEC was able to seek information regularly from the NSA and the CIA which was then used for American business benefit.
So where’s the solution to all this? While one would recommend a UN convention/resolution to be passed against such espionage, the developed countries would be rather pleased to have no solution as currently, they obviously have an upper hand.
Economic espionage is a global phenomenon. It is not only costing billions to the modern-day corporations but also is spreading its tentacles across the globe. According to the American Society for Industrial Security (ASIS), even in 1997, American intellectual property worth more than $300 billion was under threat due to economic espionage. In 2000, the same agency estimated the cost of economic espionage industry to be around $60 billion annually. Experts say this figure has now exponentially increased. Sample this: German counter-intelligence experts announced as recently as in October 2010 that the German economy is losing over €50 billion (equivalent to 30,000 jobs) annually due to espionage.
With the advancement of technology and corporations going online, economic espionage has become easier and. As big corporations today contribute a substantial amount to their economy, a dent in such companies shakes the very foundation of the host economy. For instance, half a decade back, Swedish authorities deported two Russian diplomats as they were found spying at Ericsson – a company responsible for missile-guidance systems for Sweden's fighter jet. Even the US has experienced several cases of economic espionage from countries like Japan, France and Israel. However, China, for that matter, is touted as the biggest player in the economic espionage market. UK’s intelligence service MI5 has warned banks and law firms of attacks from Chinese state organisations and has even written to 300 chief executives and security chiefs in UK about electronic espionage attacks. Companies like Rolls-Royce and Royal Dutch Shell have already been victims.
While MNCs indulge in this practice to know their competitors’ strategic plans in order to gain industry share, nations at large do this to track economic trends, technological progress, defence breakthroughs and progress on international relations. It thus helps them to form policy and gain strategic and political edge.
On July 13, 2010, Ke-xue Huang was arrested for passing secrets belonging to the Hunan Normal University in Changsha, China. Likewise, a year back, Dongfan Greg Chung, a former Rockwell and Boeing engineer, was convicted for economic espionage as he was acting as an agent of China and had passed restricted technology and Boeing trade secrets (information related to the Space Shuttle program and Delta IV rocket) to China. Surprisingly, Christian Science Monitor revealed how Clinton signed the Economic Espionage Act thus authorising intelligence gathering on foreign businesses and also “attached especial importance to economic intelligence, setting up the National Economic Council (NEC) in parallel to the National Security Council.” Thus, NEC was able to seek information regularly from the NSA and the CIA which was then used for American business benefit.
So where’s the solution to all this? While one would recommend a UN convention/resolution to be passed against such espionage, the developed countries would be rather pleased to have no solution as currently, they obviously have an upper hand.
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