China’s continued efforts to acquire advance technologies is not a casual endeavor. Indeed, many times the government’s public statements highlight the technology desired and for which funds may exist to facilitate the research and development. Most countries have such programs. What makes China’s program unique is that far too often the highlighting of the need for a technology includes a wink and a nod toward obtaining the technology via intellectual property theft.
Such was the case in the targeting of Houston based Trelleborg Offshore’s marine buoyancy research into syntactic foam.
In the PRC’s 13th Five-Year Plan (2016-2020), the desire to become a strong maritime nation became a national priority. The Ministry of Industry and Information Technology (MIIT) and state-owned enterprises (SOE) were tasked by the PRC government to advance these goals. MIIT’s role was to prioritize the development and engineered components of deep-water buoyancy materials. It was through this effort that PRC government funds floated down to Taizhou, China based CBM-Future New Material Science and Technology Co., Ltd (CBMF), and the subsequent creation of Houston-based, CBMF International, whose president was Shan Shi.
China funneled $3.1 million to CBMF International from 2014-17 to fund Shi’s activities. The decision had been made that theft was cheaper and more cost effective than research and development. The means by which this was accomplished lacked technological sophistication, but would make any intelligence officer involved in human intelligence (HUMINT) raise an eyebrow.
Shi was hired by CBMF to set up CBMF International and hire experts to tackle their marine buoyancy research and development needs. Shi – selected no doubt because he was a naturalized U.S. citizen – wasted no time in advancing his mission. He knew his target was Trelleborg Offshore and their syntactic foam. He systematically put together a targeting matrix (no doubt with help from the PRC) and assessed the individuals willing to entertain what Shi had to offer – employment with a bonus plan.
Over the next three years he systematically hired personnel away from Trelleborg Offshore. The kicker being that the individuals were required to bring Trelleborg intellectual property with them to CBMF International. The information was then shared with CBMF in China so the company could create a functional manufacturing facility, pumping out syntactic foam.
Once CBMF’s manufacturing capability was up and running, they reached back to Trelleborg Offshore and offered Trelleborg the opportunity to be their “exclusive” U.S. customer.
Yes, Trelleborg now had the opportunity to purchase goods which were being manufactured in China (for less than it costs Trelleborg, as there was minimal R&D involved) based on their own technology – which had been stolen.
It would be hard to find a more pure circle of how intellectual property theft at the nation state level works.