January 26, 2001, 3:36 PM — Intelligence and security experts are warning foreign firms in China of a growing threat of Internet-related crimes, government surveillance and loss of proprietary data. But some U.S. companies said they view those threats as exaggerated.
The latest warning comes from a report published last month by a network security firm founded by two former U.S. Navy intelligence officers. The report, released by Dublin, Ohio-based LogiKeep Inc., cautions companies that the government-controlled Internet environment in China could put the integrity of their networks at risk.
"The most important consideration is that, in one way or another, the government is involved in the operation, regulation and monitoring of the country's networks," states the report, "The People's Republic of China: A Network Security Threat Assessment." As a result of this and other factors, such as tensions with Taiwan, "U.S. companies could see an increase in scans, probes and attacks" that could be aimed at gaining technical information, the report states.
But representatives from companies with major operations in China said they have never had problems and don't plan to run scared now.
"I would discount most of the alarmist reports," said David Blumental, a corporate lawyer at the law firm of Vinson & Elkins in Houston who has represented numerous firms doing business in China.
"The real focus of their control efforts is what the Chinese call 'black and yellow,' or political and pornographic material," said Blumental. "How serious an issue [economic espionage] is depends on who you are and what business you're in." And it isn't unique to China, he added.
Philip Leung, vice president of the American Chamber of Commerce in Hong Kong, also expressed doubts.
"I am not convinced that the Chinese government is overtly -- or, for that matter, covertly -- engaging in corporate espionage via the Internet," said Leung.
Yet U.S. intelligence experts interviewed by Computerworld say China's vast intelligence-collecting apparatus has a voracious appetite for any U.S. technology that could help speed the People's Republic's military modernization and boost the country's economy. That puts high-tech vendor companies particularly at risk.
"Businesses operating in China are up against a national government that has essentially unlimited resources and a long track record of industrial and economic espionage," said one intelligence official.