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Self-driving espionage: US companies accelerate lawsuits against China

Tesla, Apple and GE among those who say secrets were stolen

Tesla filed a lawsuit in March accusing a former employee of transferring trade secrets to Chinese rival Xpeng Motors.   © Reuters

GUANGZHOU -- A mounting string of allegations from the U.S. paint a damning portrait of how China's advanced technology sector has rapidly grown due to corporate espionage.

Tesla, the latest to lodge a complaint, said in a lawsuit filed in late March that a former autonomous-driving engineer, Cao Guangzhi, illicitly obtained a trove of source code that he handed over to his new employer, the Chinese electric-vehicle startup Xpeng Motors.

This echoes criminal charges brought by the FBI against ex-Apple employee Zhang Xiaolang last July. Zhang is suspected of leaving the U.S. company with proprietary data on self-driving technology, including a 25-page schematic manual, which he gave to his new bosses at Xpeng. This January, the FBI charged yet another ex-Apple employee, Chen Jizhong, with transferring driverless trade secrets to an unidentified Chinese rival.

These are just a fraction of the corporate espionage cases involving Chinese persons and entities since last summer. In October, a senior Chinese intelligence official was arrested for trying to steal tech secrets from General Electric. The U.S. Justice Department indicted Fujian Jinhua Integrated Circuit in November, and Huawei Technologies in January.

The procession of legal actions dovetails with the growing body of evidence casting doubt on the novelty of Chinese innovation. In the self-driving sector, the amount of kilometers put into test-driving autonomous vehicles serves as a barometer of how advanced a driverless outfit is.

The headquarters of Xpeng Motors in Guangzhou, China. The headquarters of Xpeng Motors in Guangzhou, China.

Google affiliate Waymo claimed the distance crown between December 2017 and November 2018. But out of the top 15 companies in that metric, five are headquartered in China. Most of the Chinese contingent are startups that only came into existence within the last three years.

There is simply no way any startup could independently develop driverless technology in that short an amount of time, said a U.S. industry insider.

Xpeng, founded in 2014, has grown to be the biggest unicorn in China's self-driving industry. CB Insights values the automaker at $3.65 billion. Backers include the likes of Chinese e-commerce leader Alibaba Group Holding and Taiwan-based Apple supplier Foxconn, or Hon Hai Precision Industry.

Xpeng has distanced itself from the accusations raised by Tesla and Apple. Xpeng "has by no means caused or attempted to cause Mr. Cao to misappropriate trade secrets, or confidential and proprietary information of Tesla, whether such allegations by Tesla are true or not," the company said in a statement. Xpeng also denies that Zhang communicated sensitive information from Apple.

Baidu, China's answer to Google, has also been on the hot seat. Baidu built its second Silicon Valley research and development hub for self-driving technology in 2017, located only a 20 minutes' drive from Google's headquarters. Engineers working for Baidu at that location have recently been repatriating to China to launch their own self-driving startups.

U.S. lawmakers have accused Baidu of attempting to gain access to key U.S. technical secrets, as well as to top-flight data scientists.

China's "Thousand Talents Plan," a state program to recruit global experts, has recently received negative attention in the U.S. Since launching in 2008, about 8,000 people have been recognized, and the chosen are entitled to certain positions and funding. Xiaoqing Zheng, the U.S. citizen arrested in August for stealing trade secrets from GE, was selected for that program.

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