South Korea’s Samsung Electronics, Inc.
As the U.S. and China battle it out over technology, South Korea, a U.S. ally in Asia, is also fighting a technology defense battle against the Chinese Communist Party. The Voice of America has learned from industry insiders and experts that Chinese companies have become the biggest destination for technology leaks from South Korea, using increasingly sophisticated tactics ranging from high-paying “poachers” and insider bribes to hacking attacks.
The lure of double annual salary from China
“Chinese companies are recruiting”, “more than ten years of experience in Korean semiconductor companies is required”, “private residence and children’s Education fees are provided”… …These types of job advertisements can be found on headhunting websites in Korea from Time to time. In Korea’s semiconductor, display panel and other electronic technology industry, Chinese companies are very common “poaching” behavior. Mr. A, who works for a Korean semiconductor company and frequently travels between Korea and China, told the Voice of America that in the semiconductor field, China mainly needs technical personnel in circuit board design and other areas, and the conditions offered are very generous.
“Basically, the annual salary is doubled,” Mr. A has such examples around him. “You know the module factory surface coating process, right, each factory’s process is different. Domestic talent in this area is not a lot, the manufacturer will find engineers from similar companies in South Korea, signed a two-year contract, the salary is twice as much as in South Korea, but also to provide a house, insurance fully paid. If you think about it, the salary of an engineer in Korea is only 80 to 90 million won, which is only 500,000 yuan, but China can offer 1 million. For a Korean, two years is not a long time, and with this condition, he will feel good.”
In addition to specific technologies, learning Korean management systems and production technology standards is also the main purpose of Chinese companies to poach people. “There is a gap between China and Korea in terms of product control.” Mr. A said, “(South Korea) more senior people will generally be director or vice president when they go over to coordinate the whole technical department. But there is the problem of technology renewal, so generally this kind of high salary is only signed for two years, two years later the following Chinese people have learned almost, you do not need, to put it bluntly is to squeeze the useful things dry before replacing.”
Mr. A believes that for Chinese companies, the high salary poaching strategy has a very high cost performance. “Independent research and development requires a lot of money and effort, but domestic companies want to see the benefits as soon as possible, so this can be said to be another way. South Korea’s technology is more advanced than the domestic, poaching people in the past can be responsible for new products, complete industrial upgrading; and talent flow this thing can not be restricted, unlike equipment or something, so that China can bypass the control of other countries.”
Money bribes, hacking: Chinese companies steal secrets from South Korea
“Headhunting and poaching is just the most superficial part, there are also many cases of bribing people inside companies and trading technology.” Park Won Hyung, a professor of information security engineering at South Korea’s Sangmyung University, pointed out to Voice of America. At the end of January this year, 17 people involved in SK Hynix and Samsung Electronics subsidiaries were prosecuted by South Korean prosecutors and the National Intelligence Agency for allegedly leaking core memory chip state technology to Chinese competitors. in early February, two researchers at Samsung Display were sentenced to two years in prison by a South Korean court for trying to sell technology related to Samsung Display’s world-first OLED panels to China.
According to Park, however, it is the theft of technology through hacking that is most worrisome. Chinese communist Hackers are good at finding and attacking weak links, and the most common technique is to find vulnerabilities in corporate closed-circuit surveillance systems through networked device search engines such as SHODAN to monitor important places such as research institutes and production facilities to obtain secrets. In addition, the weaker security departments of large enterprises are also the target of attacks. Samsung Electronics Russia and Italy customer service centers have suffered hacking attacks with similar techniques, “from the malicious code provided in the report, it is basically presumed to be the act of Chinese Communist hackers. But why attack the unimportant customer service center? I think their intention was to first break through weak security measures, penetrate the interior, and then attack the headquarters where security is stronger, a technique often used by Chinese Communist hackers.” Park Won Hyung said.
Whether it’s monetary bribery or hacking, “the problem is that this type of behavior is done from the Chinese government level.” Park Won-hyeong argued. Last September, a professor at the Korea Institute of Science and Technology was indicted by the South Korean government for allegedly providing technology related to Drones to Chinese institutions. The professor was in charge of an international education cooperation program between the Korea Institute of Science and Technology, a top 50 South Korean institution in the world, and Chongqing University of Technology. The investigation revealed that the professor may have been involved in China’s “Thousand Talents Program” and received additional funds from the Chinese Communist government. In addition, “As far as I know, the hackers were also hired by the Chinese Communist government and were affiliated with the People’s Liberation Army (Chinese Communist Army).” Park Won Hyung described.
China has become the largest destination for technology leaks from South Korea. A report submitted to the National Assembly by South Korea’s National Intelligence Service shows that in the five years ending October 2020, the agency found 123 technology leaks overseas, 83 of which were destined for China. Faced with this situation, South Korea is continuously strengthening the relevant legislation. But Park Won-hyung doesn’t think China (the CCP) will stop stealing technology because of this, “They will adopt more subtle and less detectable techniques, such as using cryptocurrency to buy and sell technology and conducting more hacking, and they will be more subtle.”
The strategic intent of the CCP’s quest for technological ascendancy
Yet it is an undeniable fact that the CCP’s technological prowess has been significantly enhanced. According to a report by the Korea Institute of Hyundai Economics, while South Korea still maintains a large advantage in areas such as semiconductors, the gap between the two countries’ overall technology levels has been reduced to one year, and with it, the similarity between South Korean and Chinese exports has increased year by year. South Korea mainly exports high value-added technology products and is in the middle and upper reaches of the global value chain, which means that the CCP is moving up in the global value chain.
“If China used to stay in the global product chain, it is now truly in the value chain.” Seung-Jan Park, former economic and trade officer at the Korean Embassy in China and director of the China Business Institute, told Voice of America. “Despite the Epidemic that swept the world last year, China still attracted more foreign direct investment than the U.S., according to the UN report. Foreign investors using cheap labor withdrew, but many knowledge and technology-intensive companies launched investments in China. Currently 80% of the factories or suppliers producing high value-added products are located in China, with the remaining 20% in neighboring countries such as South Korea, Taiwan and Japan. If the China-dominated value chain is to be broken, the entire landscape of high value-added manufacturing will change.”
Placing this change in the context of the fourth industrial revolution makes it even more significant. As new industries and new modes of production based on new technologies will determine the future economic paradigm and thus influence the global political and economic order, China clearly sees this as a strategic opportunity, and the U.S.-China relationship has thus reached a watershed. “The previous technological era and the era of high value-added technologies need to be viewed separately. The previous U.S.-China relationship was like ‘dancing with the wolves’, because they needed each other, so they could still coexist peacefully in the global value chain; but the fourth industrial revolution has brought changes, and China will slowly develop technologies that can be used to counteract the U.S. But the fourth industrial revolution has brought changes, and China will slowly develop technologies that can be used to counter the U.S., and on this issue, it has calculated very clearly from beginning to end,” Park noted.
Because of this, “China (CCP) also understands that it will inevitably decouple from the U.S. and go its own way in terms of technology related to the fourth industrial revolution, so it proposes technological independence and self-reliance, and pursues a policy of strengthening its industrial base. This means that important materials, components and equipment have to be produced domestically in China, but without a domestic market this is impossible to do, which is why China is emphasizing the internal cycle as the main focus.” “Ultimately it is to build up a ‘China Value Chain’ (China Value Chain).” Seung-Jan Park presents such a concept.
“This is a very long process, but China’s (CCP) mindset is that it cannot directly challenge the U.S. in the current situation, but has to look to the future and make a long-term layout.” Park Seung-Jan argued. Park Seung-Jan did not give a direct answer as to what kind of future China sees, but cited the example of electronic money. “China (the Communist Party of China) is currently stepping up the layout of electronic money, which will be fully available from next year, and the U.S. is behind China in this regard. The U.S. dollar dominates the global financial markets and its money supply has a huge impact. But the rules and status of electronic money will be completely different,” and from that point of view, “the issue between the U.S. and China relationship is on the table and cannot be backed off.”
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