Businesses warned of Chinese state interference

MI5’s Director General, Ken McCallum, and the FBI’s Director, Chris Wray, took the unprecedented step of sharing a platform to publicly warn businesses of “the growing threat posed by the Chinese Communist Party to UK and US interests.”

Relocate Editorial

22 August 2022

This article is included in the Autumn issue of Think Global People magazine (5831k) .

The joint speech, delivered at Thames House in July, specifically addressed business leaders and aimed “to send the clearest signal we can on a massive, shared challenge: China” and to talk about a “whole-of-system response...to protect our economies, our institutions, our democratic values.” The two organisations set out steps leaders should take to safeguard their enterprises and institutions from threats like covert theft, research exploitation, information advantage and tech transfer. It sent a robust warning to businesses that they must be alert and prepared for existential risks to their business and research.As well as outlining individual cases of corporate espionage involving individuals, the speech gave the example of Smith’s Harlow, a UK-based precision engineering firm. In 2017 Smith’s Harlow entered into a deal with a Chinese firm, Futures Aerospace. The first of three agreed technology transfers saw Futures pay £3m for quality control procedures and training courses. After further sharing of valuable IP, Futures abandoned the deal. Smith’s Harlow went into administration in 2020. As their chairman put it: “They’ve taken what they wanted and now they’ve got it, they didn’t need the shell of Smith’s”.

An uneven playing field

“Early in his time as leader, President Xi said that in areas of core technology where it would otherwise be impossible for China to catch up with the West by 2050, they ‘must research asymmetrical steps to catch up and overtake,’” explained Ken McCallum. “The scale of ambition is huge. And it’s not really a secret. This means standing on your shoulders to get ahead of you.“It means that if you are involved in cutting-edge tech, AI, advanced research or product development, the chances are your know-how is of material interest to the Chinese Communist Party. And if you have, or are trying for, a presence in the Chinese market, you’ll be subject to more attention than you might think.”The protective responsibility for hostile Foreign Direct Investment today rests with the Centre for the Protection of National Infrastructure, CPNI, working in close partnership with the National Cyber Security Centre. Mr McCallum encouraged businesses to reach out to its advisers who can offer expert insights into the risks and work alongside businesses to make them more resilient to interference.“Please take advantage of the advice that’s available,” he said. “No set of guidance can cater with precision for each and every situation: I’m afraid I can’t make this simple for you. The answers have to lie in combining our unique knowledge of the threats, with your unique knowledge of your business.”

Checklist

Mr McCallum was also clear and upfront that his warnings were not about Chinese people or the country, but its state interests. “First, the aim here is not to cut off from China – one fifth of humanity, with immense talent. China is central to global issues: economic growth, public health, climate change. Having, for example, almost 150,000 Chinese students in the UK’s universities is, in almost all cases, good for them and good for us. The UK wants to engage with China wherever it’s consistent with our national security and our values.“My second point is we’re talking today about the activities of the Chinese Communist Party and certain parts of the Chinese State. We’re not talking about Chinese people – in whom there is so much to admire. We wholeheartedly welcome the Chinese diaspora’s hugely positive contribution to UK life. Responding confidently to specific covert activities is just us doing our job.”Closing his address, Mr McCallum asked companies, research institutions and ventures to carefully consider:

Do you have a strategic approach to managing the risks described and discuss those risks round your board table?
Do you have a thoughtful security culture at all levels in your organisation?
Does your organisation know what its crown jewels are, which if stolen would compromise your future?
Have you put in place the right controls to assess the risks attached to your funding sources and partnerships, and to protect your supply chain?

This article is included in the Autumn issue of Think Global People magazine (5831k) .

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