By Zak Doffman
Il buono, il brutto, il cattivo.
On Tuesday, China and the European Union agreed to strengthen their trade relationship, enabling European companies and investors to gain easier and faster access to China.
"Negotiations were difficult but ultimately fruitful," said EU Council President Donald Tusk.
"We managed to agree on a joint statement which sets the direction for our partnership based on reciprocity."
Annual trade between the EU and China is valued at more than 575 billion euros.
Annual trade between the EU and China is valued at more than 575 billion euros.
Only the United States is worth more to the EU, and for China, no other nation or trading bloc is larger than Europe.
At the heart of the agreement is eliminating discriminatory requirements for foreign companies who will no longer be forced to transfer their technology.
The joint EU-China statement said that "China and the EU commit to building their economic relationship on openness, non-discrimination, and fair competition, ensuring a level playing field, transparency, and based on mutual benefits... Both sides underlined the importance of following international standards in intellectual property protection and enforcement."
Somewhat awkwardly, just two days later the Dutch newspaper Financieele Dagblad reported on the theft of trade secrets from chipmaker ASML by "high-ranking R&D employees of the company," claiming it was linked to the Chinese state.
The joint EU-China statement said that "China and the EU commit to building their economic relationship on openness, non-discrimination, and fair competition, ensuring a level playing field, transparency, and based on mutual benefits... Both sides underlined the importance of following international standards in intellectual property protection and enforcement."
Somewhat awkwardly, just two days later the Dutch newspaper Financieele Dagblad reported on the theft of trade secrets from chipmaker ASML by "high-ranking R&D employees of the company," claiming it was linked to the Chinese state.
The newspaper said that it had found "indirect links with the Chinese Ministry of Science and Technology."
Devil and detail
ASML makes lithography systems, used to trace the circuitry of semiconductor chips.
Devil and detail
ASML makes lithography systems, used to trace the circuitry of semiconductor chips.
The insider theft took place at the company's premises in California, with files smuggled offsite on memory sticks.
According to Financieele Dagblad, "the theft occurred under the direction of ASML's [Chinese owned] competitor XTAL."
XTAL "was able to process the stolen knowledge at breakneck speed, and a year later had already stolen large customers from ASML, including electronics giant Samsung. A California judge sentenced XTAL to damages of $223 million at the end of 2018, according to a verdict that has so far gone unnoticed, except on some legal blogs."
XTAL "was able to process the stolen knowledge at breakneck speed, and a year later had already stolen large customers from ASML, including electronics giant Samsung. A California judge sentenced XTAL to damages of $223 million at the end of 2018, according to a verdict that has so far gone unnoticed, except on some legal blogs."
After the award of damages against them, XTAL filed for bankruptcy a month later.
ASML first disclosed that there had been a breach back in 2015, but played down the impact and released almost no detail.
ASML first disclosed that there had been a breach back in 2015, but played down the impact and released almost no detail.
According to Reuters, "the documents from the California Superior Court in Santa Clara show six former ASML employees, all with Chinese names, breached their employment contracts by sharing information on ASML software processes with XTAL, according to the report."
"FD research shows that XTAL's Chinese parent company Dongfang Jingyuan has links with the Chinese Ministry of Science and Technology. It receives state support for a project designed to strengthen the Chinese position on the chip market in areas where ASML is the world leader, according to a confidential report from Dongfang in the hands of this newspaper."
The theft was a serious setback for ASML, causing damage running into hundreds of millions of dollars and opening the door to a level of competition that the business had believed itself protected against.
The theft was a serious setback for ASML, causing damage running into hundreds of millions of dollars and opening the door to a level of competition that the business had believed itself protected against.
"The captured technology is a crucial building block within the ASML production process."
Handle with care
Financieele Dagblad also reports that AIVD, the Dutch intelligence agency "has been warning about Chinese corporate espionage in the Dutch high-tech sector for some time."
The situation shines a light on the challenge for high-tech firms like ASML seeking to operate in China's buoyant market while protecting the security of their solutions and intellectual property. ASML's fast-growing Chinese market accounts for almost $2 billion of sales.
Handle with care
Financieele Dagblad also reports that AIVD, the Dutch intelligence agency "has been warning about Chinese corporate espionage in the Dutch high-tech sector for some time."
The situation shines a light on the challenge for high-tech firms like ASML seeking to operate in China's buoyant market while protecting the security of their solutions and intellectual property. ASML's fast-growing Chinese market accounts for almost $2 billion of sales.
The company has engaged with senior Chinese officials and politicians in the past, as it seeks to strike the right set of relationships.
The delicate balance will explain the lack of allegations coming from the company over the events.
That said, "it is important that China shows that it takes this topic seriously and that it adds action to its words," said a company spokesperson.
And so China remains an enigma, how to access the world's second-largest economy safely, and how to play nice in the open when the media is filled daily with accusations of what is going on behind the scenes.
"EU and Chinese officials meeting in Brussels on Tuesday proclaimed their summit as a win-win."
Implementation, though, might take more work.
And so China remains an enigma, how to access the world's second-largest economy safely, and how to play nice in the open when the media is filled daily with accusations of what is going on behind the scenes.
"EU and Chinese officials meeting in Brussels on Tuesday proclaimed their summit as a win-win."
Implementation, though, might take more work.
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