Hitachi Metals claims Chinese companies stole trade secrets

The theft of the trade secrets could "destroy or substantially" injure the US industry, Hitachi Metals, which is based in Japan, said in the complaint.
The theft of the trade secrets could "destroy or substantially" injure the US industry, Hitachi Metals, which is based in Japan, said in the complaint. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - Hitachi Metals filed a complaint with a US trade commission on Tuesday (Sept 19), claiming that Chinese manufacturers stole secret processes for making amorphous metal ribbon that is lighter and stronger than traditional steel.

China's Advanced Technology & Materials and related companies ramped up production of the metal, thanks to secret manufacturing processes stolen by a retired Hitachi Metals employee and his assistant, Hitachi Metals and its Metglas unit said in a complaint lodged with the United States International Trade Commission in Washington.

They are asking that imports of all China-made versions of the product be halted at the US border.

The amorphous metal ribbons are an alloy with glass-like qualities. Because it has high strength and improved magnetic abilities, it is used in medical devices in place of titanium, to create stealth vehicles, and for high-efficiency transformers.

The Chinese companies have begun to enter the US amorphous steel market with imports designed for the electricity grid, which is taking away Metglas business, according to Hitachi Metals, which bought South Carolina-based Metglas from Honeywell International in 2003.

The theft of the trade secrets could "destroy or substantially" injure the US industry, Hitachi Metals, which is based in Japan, said in the complaint. "Metglas has had to reduce production capacity and head count to cope with the theft."

The issue comes as the Trump administration investigates China's intellectual property practices and allegations that it has been stealing trade secrets from American firms.

The US Trade Representative's office last month opened the investigation under authority granted by Section 301 of the 1974 Trade Act, which allows President Donald Trump to impose tariffs and quotas on foreign goods to protect American companies from unfair trading practices.

The bipartisan Commission on the Theft of American Intellectual Property estimates that intellectual-property violations cost the US economy as much as US$600 billion (S$808 billion) a year, with China standing out as the top culprit.

China's amorphous metal ribbon production "has experienced an exponential growth in manufacturing capacity" that can only be the result of information given by the two retired employees, Hitachi Metals said.

The company said it learnt of the production growth after AT&M filed a complaint with the Chinese Ministry of Commerce, accusing Hitachi Metals of dumping the product at cheap prices there. Hitachi Metals contends it was able to dominate the global market because others could not figure out its secret production process.

The commission will consider the complaint and decide within a month whether to investigate the claims. It typically completes such investigations in about 15 to 18 months.