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China offers businesses big opportunities, including the chance to have your data stolen

AP Photo/Andy Wong
Behind the grin US Treasury Secretary Jacob Lew, pictured here with Chinese Premier Li Keqiang, has been pressing Beijing on the issue of computer hacking.
By Naomi Rovnick
Published Last updated This article is more than 2 years old.

International businesses have flocked to China for years to try and grab a slice of the nation’s economic growth. That is why publishers never stop producing upbeat books such as this one, or this one, which appeal to entrepreneurs dreaming of the riches they could make by selling to just a fraction of the nation’s 1.35 billion people.

Yet according to a survey, a quarter of American businesses in China say they have experienced the expensive theft of proprietary data since setting up in the country.

Commercial data theft puts businesses at risk of having their technology and intellectual property stolen and copied. In February, American computer security firm Mandiant said in a report that hackers linked to the Chinese military were stealing technology blueprints, business plans, pricing documents and other sensitive material from American corporations and government departments.

Operating in China, then, requires heavy financial and management investment in security to mitigate these risks. For instance, Quartz contributor James McGregor detailed last September how international corporations were flying China-based executives to South Korea so they could make important phone calls without being compromised.

And while Washington is trying to protect its corporations from Chinese hackers by making it hard for government departments to buy Chinese-made computer equipment, the Beijing government appears to have begun retaliating by victimizing US technology companies, such as Apple and Google.

This attack on Western companies makes China an even riskier place in which to operate. So given that the nation also offers a weak rule of law, scant property rights and the danger of your local business partner being suddenly thrown in jail, it is worth reading the excitable business books about the opportunity it presents with caution.

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