A British scientist, concealing his employment by a multinational trader, gained access to a processing plant in Fujian and obtained critical trade secrets. These profited his company and ultimately stimulated the British economy. The scientist was Robert Fortune, the employer was the East India Company, the year 1848 and the processing plant a Chinese tea factory. Tea manufacturing is convoluted: cultivation, picking, drying, heating, rolling, firing, sorting and packing, with specific methods for each stage. The process had been refined over centuries; outsiders could not discover it by experimentation. So the East India Company cheated. This story explains why some Chinese believe it is unfair to call China the villain in world intellectual property theft . Everyone does it, they say. But British corporate spying is rare: when it occurs, as in the Matrix Churchill case of 1989, it involves not theft of foreign intellectual property, but gaining access to a coveted market by acquiring knowledge of a foreign tender process or of a rival’s bargaining position. A famous example of the latter occurred in 2010, when China imprisoned Rio Tinto’s Shanghai boss, an Australian, for theft of commercial secrets. Chinese commercial spying, by contrast, is generally aimed at intellectual property. It is driven less by nationalism than by commercial objectives, and is more commonly committed by Chinese companies against other Chinese companies than against foreign companies. The cases that hit the headlines, however, are those where the Chinese government has actually taken part in the theft. Between August 2017 and October 2018, the US Department of Justice made public several separate indictments against Chinese nationals and people of Chinese origin for intellectual property theft and cybercrimes related to aerospace targets. Many of those charged were affiliated with the Ministry of State Security’ s Jiangsu bureau. A report by cybersecurity firm Crowdstrike used these indictments and its own intelligence to explain how “Beijing uses a multifaceted system of forced technology transfer, joint ventures, physical theft of intellectual property from insiders, and cyber-enabled espionage to acquire the information it needs”. Many Chinese businesses assume Western countries behave similarly. Recently one of our Chinese clients was presented with an information request by Britain’s Competition and Markets Authority during a national security review. Our client killed the deal rather than make disclosure, believing the United Kingdom was trying to steal secrets to help British companies compete. This was not the case. While Britain’s Department of International Trade does help British companies export goods to China, there is no government department authorised to obtain and pass on commercial secrets to civilian recipients. China’s government, on the other hand, does share commercial secrets of foreign companies with Chinese enterprises that might benefit, and in some cases facilitates the acquisition of those secrets. China intellectual property cases surge as US complains of rampant theft Chinese and British companies thus have different things to worry about in terms of commercial espionage. Chinese companies should concentrate on preventing leakage of information, which often happens via WeChat. Many Chinese bosses demand their staff respond to questions immediately, day or night. Consequently, staff constantly check WeChat , and since company information is therefore accessible at any time, foreign counterparties who make friends with junior staff via WeChat can receive sensitive information. The friendships struck up are often genuine, though short-lived, and can trump any corporate loyalty the Chinese employee may feel. Senior management of that same Chinese company, however, having been fed a diet of distrust by state media, is likely to be feverishly protecting intellectual property assets rather than worrying about communications. For example, a Shanghai-based newspaper urged Chinese food manufacturers to be wary of foreigners stealing their ancient recipes, an imaginary problem, and encouraged makers of jiaozi (dumplings) and tangyuan (sweet rice balls) to set up safeguards to stop this. For British companies, the problem is a manic belief that transparency will buy trust. Only last week a colleague was asked to advise a UK technology company dealing with a Chinese supplier. She advised the client to perform due diligence on the supplier, but the company instead asked the Chinese entity directly for suggestions. Chinese subsidies fuel surge in patents but experts warn of quality issue The supplier gave the details of another company, suggesting that our client contact them for a reference. This would be like a detective conducting an investigation like this: “Excuse me, but are you the murderer?” “No, I am not.” “Sorry, my mistake.” Due diligence is one area where Chinese and British companies have something in common: they’re bad at it. Businesspeople believe in their own perceptive powers – because they have served them well in their own country. Those powers disappear when dealing with people overseas, and investigatory work becomes critical. It involves lawyers and accountants poring over data, using their contacts to carry out gumshoe work, and identifying problem areas. Companies frequently proceed straight to contract without doing any of this work. Sometimes their reluctance to do it stems from fear the investigation report will discourage shareholders from proceeding, but in reality the investigation seldom reveals a counterparty so dreadful that one should not work with it; more commonly, the investigator identifies risk areas and then produces a plan to reduce danger. Trade war, IP theft the top risks for firms in China, Kroll report finds Chinese and British business owners often see each other in black and white. Tremendous optimism becomes black despair when a deal doesn’t come off, and the counterparty’s entire nation is written off as either incompetent or dishonest or both, when in fact the problems arise from cultural differences. It is these very differences that educate us, though, and businesspeople should deploy persistence and care to build profitable relationships. Nicolas Groffman, who practised law in Beijing and Shanghai, is a partner at law firm Harrison Clark Rickerbys in London