In 2017, China passed the National Intelligence Law which places a duty on all its citizens to act as “intelligence organs” of the state security and support the national intelligence network.
In a development that underscores growing concerns among German officials and executives of industrial espionage by Chinese agents of Europe’s largest manufacturing nation, German prosecutors have filed criminal charges against a former employee of Lanxess for allegedly stealing trade secrets to set up a Chinese copycat chemical reactor.
In June, German state prosecutors from Cologne-based Lanxess had brought criminal charges against a Chinese-born German national based on a complaint filed with police by Lanxess nearly 2 years ago.
In the past, there have been numerous instances in Germany of manufacturers with operations in China catching local staff doing work for copycat rivals. This particular case assumes significance since the alleged data theft at Lanxess has been narrowed down to a suspect in Germany.
In July, BfV, Germany’s intelligence agency had warned companies that China could resort to theft of intellectual property so as to realize its ambition of becoming an exporter of high-tech products.
This Lanxess case, which has not previously been reported, a 48-year-old engineer was fired when the company chanced upon the data theft related to a chemical reactor, said prosecutors.
The trade secrets were received by a 40-year-old German associate, of Chinese descent, who allegedly received the trade secrets via email and sought to commercially exploit them in China. Both are being prosecuted in Germany.
In a statement, Lanxess disclosed that a group of employees of Chinese origin stole confidential information about a new, innovative product several years ago and tried to exploit it commercially.
“The main culprit was a former employee, who abused a position of trust and access to confidential business information,” said Lanxess.
It went on to add, “Lanxess was able to secure evidence and is holding the perpetrators accountable in court. Lanxess therefore managed to avert damage from the business”.
Lanxess declined to provide further details of the case.
According to court filings from the civil lawsuit in Duesseldorf, Lanxess had accused the defendants of working on a 400 tonne-per-year chemical reactor in China and promoting the copied product globally.
As a measure of defence against such strategies, BDI, an influential German industry group, in a its draft China strategy paper called on German firms to reduce their dependence on the Chinese market despite the size of the market.
The criminal court in Cologne has yet to decide if and when it will begin hearing the case.