In a way I think it serves US/European companies right. In the course of my work I've met too many gung ho corporate honchos who either think all this talk of intellectual property theft is overblown or stem from jealousy or think they are too smart to be conned.
The link posted by Pattom needs some selective quotes.
The best one is:
As the toll adds up, political leaders and intelligence officials in the U.S. and Europe are coming to a disturbing conclusion. “It’s the greatest transfer of wealth in history,” General Keith Alexander, director of the National Security Agency, said at a security conference at New York’s Fordham University in January.
He didn’t do it alone. Sinovel is one of the best-connected clean energy companies in China. Among its major investors is the private equity group New Horizon Capital, co-founded by Wen Yunsong, also known as Winston Wen, son of China’s premier, Wen Jiabao. Han was also close to Zhang Guobao, until recently head of China’s powerful National Energy Administration. According to a former U.S. diplomat, who didn’t want to be named because he still works in China, Han’s relation to Zhang may have given him an early look at yet-to-be-published government regulations and given Sinovel preference in the kinds of turbines chosen to power the state-planned wind farms.
In hindsight, it now appears that Han never planned to fulfill the kind of long-term partnership McGahn had envisioned. In 2010, Han helped create a company called Dalian Guotong Electric, making himself chairman and giving Sinovel a 20 percent stake. When AMSC investigators opened up a Sinovel turbine in a second location in July, they found that an AMSC power converter had been swapped out and replaced with a nearly identical one made by Guotong. It was running on a version of AMSC’s control system software obtained the year before by Sinovel and decrypted by its engineers. It looks like Han wanted to make Guotong Electric the Chinese version of AMSC.
Corruption and politician businessman nexus is full view.
In terms of outright theft of intellectual property, there is growing evidence that China’s intelligence agencies are involved, as attacks spread from hits on large technology companies to the hacking of startups and even law firms. “The government can basically put their hands in and take whatever they want,” says Michael Wessel, who sits on the U.S.-China Economic and Security Review Commission that reports to Congress. “We need to take more actions and protect our intellectual property.”
The day after the press report, AMSC computer networks in Devens were hit by a cyberattack. Forged e-mails were sent to a handful of company executives; they contained spyware designed to copy confidential data, including documents and internal communications. Fredette says e-mails were expertly crafted and had a fake link to a story about Sinovel’s troubles, a bit of irony inserted by the attackers. The FBI is investigating the incident.
As McGahn surveyed AMSC’s technology, he focused on the company’s research into wind-turbine control systems. A modern 1.5-Megawatt turbine is the equivalent of a 160-ton, high-performance pinwheel. Each gets stuffed with as much as $200,000 worth of electronics, including a power converter and what’s called a programmable logic controller, an industrial computer the size of a couple of cigarette cartons. These devices are used to do everything from filling up the bottles in a Budweiser (BUD) brewery to controlling valves in oil pipelines. In the case of turbines, they can rapidly adjust the yaw and pitch of blades, among other functions. McGahn sensed an opportunity to take this technology and capitalize on China’s efforts to harvest energy from the wind.
The gungo ho go-getting manager keen to make his fortune in China. Pre-scam.
The more wiser McGahn, after he presided over his company's virtual rape.
McGahn says he still wants to do business in China. But even if the company never sells another component there, he contends AMSC will survive. He has since moved to secure deals in Russia and is eyeing India as the next big wind market. In the meantime, McGahn has been schooled about doing business in China in a way he never imagined. “I used to be a Sinophile,” McGahn says, then pauses for a long exhale. “I don’t know what I am now.”
However, even for China, there's something called a reality check:
Stealing information, however, is not the same as being able to use it. The Soviets ended up generations behind their U.S. rivals in computing technology because they could not advance the cloned equipment fast enough. Shih says that for the Chinese to succeed at the current game, they will need to build a research and development culture that can supersede their skills at mimicry. “Many countries go through an imitation phase, but the real challenge is moving to an innovation phase,” he says.
Couldn't agree more