Trade secrets 'end up in Chinese hands'

A person using the HTC One X.
A person using the HTC One X. PHOTO: HTC

The six Taiwanese men were hired by smartphone giant HTC Corp. But they worked in secret with local governments in China to set up a rival phone design company, using technology stolen from HTC.

One of them, HTC chief designer Chien Chih-li, leaked key designs of a new HTC smartphone interface to the Chinese officials.

In 2013, the six were indicted under Taiwan's Trade Secrets Act. Under the law, offenders may be jailed for up to five years and fined between NT$1 million (S$41,500) and NT$10 million.

Since then, there have been at least four known cases of commercial secret leaks to China - a risk that has increased as more Taiwanese live and work in the mainland.

According to a study by the Ministry of Labour in 2012, there are between 500,000 and one million Taiwanese working in China, most of whom are senior professionals and managers.

That Chinese companies may be poaching Taiwanese talent and exploiting their knowledge of their former employers' secrets was a risk highlighted in a National Development Council paper on Taiwan's new population policy.

Overseas governments are "actively seeking to recruit talent in Taiwan - especially large-scale headhunting from enterprises in China".

"The result has been that, in recent years, Taiwan's companies have faced talent loss, leaking of commercial secrets and other problems," it warned.

This is even as the Taiwan-China economic relationship evolved. Taiwanese businessmen in the past were factory owners and investors in China. But their Chinese vendors are now their competitors.

Li Xueying

A version of this article appeared in the print edition of The Straits Times on April 11, 2016, with the headline 'Trade secrets 'end up in Chinese hands''. Print Edition | Subscribe