April 26, 2024

Survey Details Data Theft Concerns for U.S. Firms in China

BEIJING — A quarter of companies that are members of a leading U.S. business lobby in China have been victims of data theft, a report by the group said Friday, as ties between Beijing and Washington have become increasingly strained over the threat of cyberattacks.

Twenty-six percent of the members who responded to an annual survey said that their proprietary data or trade secrets had been compromised or stolen at their China operations, according to the report from the business lobby, the American Chamber of Commerce in China.

“This poses a substantial obstacle for business in China, especially when considered alongside the concerns over I.P.R. enforcement and de facto technology transfer requirements,” the chamber said, referring to weak enforcement of intellectual property rights.

Mandiant, a U.S. computer security company, said in February that a secretive Chinese military unit was likely behind a series of hacking attacks that targeted the United States and stole data from more than 100 companies.

That set off a war of words between Washington and Beijing.

Representative Dutch Ruppersberger, Democrat of Maryland, said last month that U.S. companies had suffered estimated losses in 2012 of more than $300 billion due to the theft of trade secrets, much of it the result of Chinese hacking.

China says the accusations lack proof and that it is also a victim of hacking attacks, more than half of which originate from the United States.

Hong Lei, a spokesman for the Chinese Foreign Ministry, called the survey a “completely irresponsible action.”

“We hope the relevant side doesn’t politicize financial and trade problems, does not exaggerate the so-called issue of online leaks and does more conducive things for China and the United States,” Mr. Hong told reporters Friday.

The survey by the chamber, commonly known as AmCham, was conducted among 325 members across China late last year, before the release of the Mandiant report.

Only 10 percent of companies in the survey said they would use China-based cloud computing services, with most citing security concerns. Blocked Internet searches in China had impeded business for 62 percent of respondents.

U.S. officials have pressed China to address Internet attacks and cyberspying against U.S. companies. President Barack Obama raised hacking concerns in a phone call with President Xi Jinping of China earlier in March.

A recent assessment by U.S. intelligence leaders said that for the first time, cyberattacks and cyberespionage had supplanted terrorism as the top threat.

Most companies in the AmCham survey expressed optimism about the business outlook in China, with many reporting higher profit margins for their China units. But companies gave lower expectations for future investment and cited rising labor costs as a top concern. Perceptions that China’s investment environment is stagnating are increasing, according to the survey.

Member companies “have not felt over the last four or five years that there have been commercially significant positive changes in the business environment or the investment environment,” Christian Murck, president of AmCham China, told reporters.

“When you have an economy which is making a transition to a market economy, but which is not yet there, there is a feeling that if you are not moving forward with an indicated path of future policy that you are effectively moving backward,” he said at a briefing on the survey.

The survey also cited a steep increase in concerns over the protection of intellectual property, like copyrights and trademarks, with 72 percent of respondents saying enforcement in China was ineffective or totally ineffective, an increase of 13 percentage points over last year.

Perceptions that technology transfer was increasingly a requirement for access to China’s market also jumped 10 points to 37 percent, the chamber said, with higher rates of concern reported in the aerospace, automotive, chemical in information technology sectors.

Article source: http://www.nytimes.com/2013/03/30/business/global/survey-details-data-theft-concerns-for-us-firms-in-china.html?partner=rss&emc=rss

DealBook: In Court, Gundlach Denies Using Trade Secrets

Jeffrey Gundlach of DoubleLine Capital testified in a Los Angeles court on Thursday.Pool photo by CVNJeffrey Gundlach of DoubleLine Capital testified in a Los Angeles court.

LOS ANGELES — In a courtroom here, Jeffrey E. Gundlach, one of the most prominent bond managers in the country, on Thursday defended himself against claims that he had planned to sabotage his former employer, Trust Company of the West, by using stolen data and client information to start a competing firm.

“I took my responsibility at TCW very seriously, “ he testified. “I loved TCW.”

The trial involving Mr. Gundlach and TCW, as Trust Company of the West is better known, resembled a breakup tale as Mr. Gundlach detailed his falling out with TCW, which fired him in December 2009. Soon afterward, TCW sued Mr. Gundlach, accusing him of breaching his fiduciary duty and stealing trade secrets to start his new firm, DoubleLine Capital. TCW is seeking more than $375 million in damages.

On the witness stand, Mr. Gundlach, dressed in a gray pinstripe suit and a blue tie, told the jury of seven men and five women that although he and his colleagues had once made preparations to leave TCW, including looking at office space and registering a Delaware corporation, he had “mothballed” those plans by the time he was fired in December 2009.

When a TCW lawyer asked him about a DoubleLine logo he helped design as early as July 2008, he played it down as a “doodle.”

“I’m very interested in the artwork of Piet Mondrian,” Mr. Gundlach said. “I was wondering if I could make a convincing Mondrian.”

So far, TCW’s case against Mr. Gundlach has hinged on testimony that he and his lieutenants took confidential and proprietary data for use at the new firm. Also named as co-defendants in TCW’s lawsuit are former employees Cris Santa Ana, Barbara VanEvery and Jeffrey Mayberry, all of whom currently work at DoubleLine.

All three have all testified that they downloaded TCW information to external hard drives, but have said that none of the data was used at DoubleLine. Mr. Santa Ana has testified that Mr. Gundlach told him to download information, a claim Mr. Gundlach disputed on Thursday. After Mr. Gundlach was fired in December 2009, more than 40 of his TCW team members followed him to DoubleLine.

“Anything that was downloaded, we never used at DoubleLine,” Mr. Gundlach said in a taped deposition that was played for the jury.

The trial is notable for occurring at all. Most financial employment disputes are settled quietly, but Mr. Gundlach said in an interview this week that the settlement offers he received from TCW were “worse than losing in court.”

In a countersuit, Mr. Gundlach is seeking more than $500 million, claiming that he was a victim of a conspiracy to oust him from the firm.

For a case involving the sleepy mutual fund world, the testimony has at times been shockingly personal. So far, witnesses called by TCW have testified that Mr. Gundlach was “a cultural cancer” who referred to himself as “the Pope” and “the Godfather.”

In an interview this week, Mr. Gundlach said he did not expect his aggressive personality to be a factor in the trial.

“The fact that they don’t like me doesn’t mean I’ve breached my fiduciary duty,” he said.

Earlier in the day, Richard Villa, TCW’s chief financial officer, told the jury that Mr. Gundlach had been paid more than $40 million in 2009, the year he was fired, and that he had had earned compensation totaling about $240 million for the years from 1991 to 2009.

A rare moment of levity occurred during the court session when, in his taped deposition, Mr. Gundlach was asked by John B. Quinn, a lawyer for TCW, if he knew of any data at TCW, other than a portable alpha trading system, considered proprietary.

After a long pause, Mr. Gundlach responded, “A recipe in the dining room?”

Mr. Gundlach will continue his testimony on Monday.

Article source: http://feeds.nytimes.com/click.phdo?i=ac576ccefb9b3d8edaaecb5ce622d18e