US firms in China report data theft

A quarter of the member firms of a leading US business lobby in China have seen their data stolen according to a report by the group yesterday, as relations between Beijing and Washington continue to come under strain over the threat of cyber attacks.

Twenty-six per cent of members who responded to an annual survey reported compromise of proprietary data or trade secrets from their China operations, according to a report by the American Chamber of Commerce.

According to the chamber, this posed a substantial obstacle for business in China, especially when considered alongside the concerns over IPR (intellectual property rights) enforcement and de facto technology transfer requirements.

According to computer security company, Mandiant, a secretive Chinese military unit was likely to have been behind a series of hacking attacks that targeted the US and stole data from over 100 companies, setting off a war of words between Washington and Beijing.

According to US representative Dutch Ruppersberger,  American companies suffered estimated losses in 2012 of over $300 billion due to trade secret theft, much of it the result of Chinese hacking.

China said the accusations lacked proof and that it was also a victim of hacking attacks, more than half of which originated from the US.

Spokesman for the foreign ministry Hong Lei called the survey a "completely irresponsible action".

"We hope the relevant side doesn't politicise financial and trade problems, does not exaggerate the so-called issue of online leaks and does more conducive things for China and the United States," Hong told reporters.

The Chamber's survey was conducted among 325 members across China late last year, before the release of Mandiant's report and only 10 per cent of companies in the survey said they would use China-based cloud computing services, with most citing cyber security concerns as a reason.

Blockage of internet searches in China had impeded business for 62 per cent of respondents.

Meanwhile, foreign companies in China said they wanted the new leadership of the country to act on pledges to reduce bureaucracy and remove investment barriers, what with the business climate getting tougher, the American Chamber of Commerce in China said yesterday.

Further results of a survey of 325 businesses conducted by the chamber showed only 28 per cent saw China's investment environment improving, down from 43 per cent a year earlier.

Although 78 per cent remained optimistic about business in China in the next two years, only 18 per cent said they had plans for a substantial increase in investments in the coming 12 months, down from one-third in the year before.

A survey conducted in November and December of last year had shown that slower economic growth, market barriers and government restrictions remained the main reasons for the more modest investment plans, while rising labour costs were also a concern.

Foreign companies have had to contend with double-digit percentage growth in salaries and benefits for their workers in the past two years, even as the cost of land and raw materials also increased.

Chamber president Christian Murck said, recent statements from leaders such as premier Li Keqiang's pledge to cut the number of approvals needed for investments by one-third, were welcome but  action was now needed.