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How China use hacking to'steals' Western innovation

China is seeking to "steal its way up the economic ladder" at the expense of Western innovation.

Those were the damning words of FBI Director Christopher Wray who last week said that China poses a "multi-layered" threat to US interests. His comments were made as Washington's campaign to ban Chinese telecoms firm Huawei intensified.

"China has pioneered a societal approach to stealing innovation in any way it can from a wide array of businesses, universities and organisations," he said.

"They're doing it through Chinese intelligence services, through state-owned enterprises, through ostensibly private companies, through graduate students and researchers, through a variety of actors all working on behalf of China."

It's something known only too well by businesses desperate to crack China's lucrative market of 1.3bn people.

Among them is Apple, who saw Chinese electronics business Xiaomi spend years replicating its iPhone designs. Its chief executive even modelled himself on Apple founder Steve Jobs, wearing similar clothing and copying his presentations.

For Apple design chief Jony Ive, the constant replication was a source of frustration. “You spend seven or eight years working on something, and then it’s copied. I have to be honest, the first thing I can think, all those weekends that I could have at home with my family but didn’t. I think it’s theft, and it’s lazy,” he said in 2014.

While Xiaomi was a brazen example of a Chinese business copying Western designs, there are far more advanced ways which Chinese businesses have used to copy Western innovation.

Huawei has been at the centre of a political row over concerns that its closeness to the Chinese government could introduce espionage risks if its hardware is used in the development of 5G networks around the world. Huawei denies the allegations.

Many countries, including the US, have taken a firm stance against Huawei’s involvement in the new networks, but other nations including the UK have taken a softer approach. The political row around Huawei often overlooks the company’s historic practice of copying Western innovation, however.

Over 15 years ago, Huawei took part in a costly legal battle with US technology firm Cisco over allegations that Huawei copied part of Cisco’s software for its routers. Huawei eventually admitted that it had cloned the software and pledged to remove it from its products.

Cisco suspected that Huawei had been systematically reverse-engineering its routers, a practice which would have allowed the Chinese telecoms company to peer into the inner workings of Cisco’s software and cherry pick sections to use in its own products.

Cisco sued Huawei for patent infringement in 2003, only settling the case after Huawei admitted to using Cisco’s source code.

The US government has also accused Huawei employees of attempting to copy “Tappy,” a smartphone-testing robot built by US network T-Mobile. Huawei employees with access to the robot allegedly took photographs of Tappy and one employee has been accused of removing one of its arms. Huawei denies any wrongdoing.

Concern around Chinese replication of technology doesn't end with reverse-engineering. As businesses like Huawei have become more successful and expanded around the world, they have begun investing in academic research.

Huawei has spent millions of pounds in the UK alone funding research into technologies such as mobile phone networks. But some experts have warned that these donations risk handing British innovations to China.

“China is using broad research relationships with universities and other entities to try and fill in any technological gaps,” said Michael Wessel, a commissioner on the US-China Economic and Security Review Commission.

Companies are trying to “advance Chinese standards so that Huawei and other Chinese-produced equipment will be the equipment of choice as networks get built out,” he said.

The issue of Huawei funding university research has been particularly sensitive in Canada, which has seen a political debate over the hundreds of patents Huawei has been granted thanks to Canadian research it has funded.

A similar debate has not yet taken place in the UK, although Oxford University suspended all research grants and donations from Huawei following a Telegraph report into the financial backing published last year.

Apart from the continued practice of university funding, other Chinese businesses have for years been systematically cloning Western software and hardware for sale in the Chinese market.

Earlier this month, it was reported that a cloned version of popular Nintendo smartphone game Fire Emblem Heroes had been approved by the government and was available for download on iPhones and Android phones.

The app appeared to have been reverse-engineered, with the only substantive change being the translation of the game’s text into Simplified Chinese.

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