Manufacturers: Protect Yourself as China IP Theft Takes Flight — The J-20 Stealth Fighter

This YouTube video showing a recent Chinese J-20 maiden test flight should be a wake-up call that China has graduated from achieving its Bachelor of Cheating degree to a PhD in Advanced Kleptomania. For any company sourcing from China, it’s imperative to safeguard your intellectual property, as the J-20 clearly represents a convenient repurposing of US technology (some I’ve spoken with also suggest some Russian influence). Military technology escalation and rivalry aside, I cannot think of a better poster child than the J-20 prototype stealth fighter to highlight how China is building its manufacturing economy and global might on the backs of an organized effort to steal and reverse engineer Western technology.

Even if you’re not actively selling into the market — and have not set up a JV with a Chinese state-owned entity which will legally take your IP and trade secrets — you should remember that any print, 2-D or 3-D CAD file or other documentation you send to a Chinese supplier might as well be put in the politburo’s public — or would that be “people’s” — domain. For further reading on the subject, we suggest the following articles from Spend Matters and MetalMiner:

The WikiLeaks Files – China Computer Hacking Hits US Manufacturing

Friday Rant: China — Making, Taking and Stealing

Intellectual Property Rights Loom Large in US-China Trade

How can you protect yourself?

There is only one sourcing technology that I am aware of that has a non-foolproof means of sharing engineering information with global suppliers. It’s not perfect (I can think of multiple work-arounds to break the system), but it’s pretty ingenious, and I verified its in-the-field capabilities with a large, industrial company using their technology yesterday. This organization is Co-Exprise, a vendor with a wretched sounding name but a direct materials sourcing/design collaboration product that is like nothing else you’ve ever seen. It’s ready-made for deterring IP theft by Chinese suppliers by raising the ante to take the type of intellectual property contained in engineering (and other) type of informations you need to share in an RFQ with Chinese or other suppliers.

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Obsessed with how companies manage, spend and save money, Jason writes about procurement, trade and supply chain issues @ Spend Matters. He has significant first hand experience developing and marketing technology and services products, has advised numerous companies on sourcing and related techniques as well as M&A pursuits.  In previous lives before tech, he was a management consultant and merchant banking analyst.

2 responses to “Manufacturers: Protect Yourself as China IP Theft Takes Flight — The J-20 Stealth Fighter”

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