FBI Director Christopher Wray Thursday warned U.S. executives that partnering with Chinese businesses makes their company a target for intellectual property theft.
“A decision to enter a joint venture or contract with a particular vendor might look good in the near term, might make a lot of money, might sound great on the next earnings call, but it might not look so hot down the road when [U.S. companies] find themselves bleeding intellectual property or hemorrhaging their most sensitive data,” Mr. Wray said in a speech at the Center for Strategic and International Studies in Washington.
The FBI currently has nearly 1,000 open investigations into economic espionage and intellectual property theft leading back to China, Mr. Wray said.
It is estimated that Chinese intellectual property theft costs the United States between $225 billion and $600 billion and the average family of four between $4,000 and $6,000 annually.
Arrests of people involved in Chinese operations to seal U.S. corporate secrets and research have increased sharply in recent months. In January, the Justice Department brought separate charges against three individuals — including the chair of Harvard University’s chemistry department and two Chinese nationals — for allegedly helping China pilfer U.S. research.
Mr. Wray said the problem is exacerbated by Beijing pressuring multinational companies doing business in China to establish a branch of the Communist Party as part of its corporate culture.
Walmart, subsidiaries of DuPont Co. and Japanese retailer Isetan Co. are among the companies that have Communist Party branches operating within their headquarters.
Most U.S. companies just dismiss the communist cells as the cost of doing business in China, but Mr. Wray said it is a conduit to economic espionage.
“The government control over our joint ventures has become so common that a lot of American companies don’t really stop to think about it, but if these companies want to protect their information they sure better be thinking about it,” he said.