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DAVID KRUSE

By Staff | Jan 10, 2014

One time not long ago when tensions with Iran were heating up I asked the former CEO of a Fortune 500 cyber-security company, who happens to be in the family, where our greatest risk of cyber-security comes from. I was thinking Iran, but he said it was China, hands down, and he would know. He is now a member of the board of Microsoft.

China has an insatiable appetite to acquire intellectual property and it has no reservations, ethical or legal, about how it acquires it.

The story broke recently that a Chinese national working for a Chinese company called Kings Nower Seed, allegedly stole $30 to 40 million of proprietary trade secrets from DuPont Pioneer and Monsanto.

Robert Mo purportedly evaded some FBI tails, but they eventually caught up with him. He and five others have been charged with corporate espionage. He allegedly stole drought and pesticide tolerant inbred corn seeds from Pioneer and Monsanto’s company seed fields in Iowa and Illinois in 2011 and 2012.

Mo reportedly attended a state dinner hosted by Gov. Branstad for visiting Chinese President Xi Jinping, attended the World Food Prize symposium and used an alias to tour seed plants.

King Nower Seeds bought a farm to use as a base of operations to store and even grow seeds. The FBI was onto him relatively early and had him under complete surveillance tracking his every move.

Mo associates reportedly tried to leave Chicago’s O’Hare International Airport with seeds stuck creatively in their luggage and another was apprehended crossing the Canadian border through Vermont with 44 packages of inbred seeds.

This seed technology is reported to be worth billions of dollars so they only stole a little. It is amazing how inept their crime was.

It was the irony of that week, or maybe the year, that as China was rejecting U.S. cargos of corn and DDGs with an unapproved GMO trait, disrupting trade, their countrymen were essentially trying to steal all the U.S. GMO technology they could by smuggling GMO inbred seed out of the country to China.

I would think that would be worth an official protest from the White House. It should embarrass Beijing all the way up to President Xi, who has a relationship with Iowa, the scene of the crime. It would be ironic if they were growing the GMO trait in corn they rejected in shipments of U.S. corn there next year.

That China did this was not unusual which is why they were looking for it. They have been in the intellectual property theft business for a long time.

Many sectors and companies have been targeted and I am sure the Chinese have had some great successes at industrial larceny. Many companies remain quiet after being held-up for proprietary reasons fearing repercussions from exposure.

A local developer and entrepreneur had a machine – I believe it was some kind of air purification system for homes. He traveled to China to sell them, met with local dignitaries and businessmen there.

They treated him cordially. He had taken a working model with him. They never bought from him, but he later found out that they had reverse engineered his machine and made them in China.

Why buy from him when they could steal the technology and build them there?

Sometimes China does buy technology legally. An example is their purchase of Smithfield Foods. I am sure that one of the reasons that they wanted ownership of Smithfield Foods is to acquire all of the intellectual and proprietary property of the company.

They now own a state-of-the-art pork supply chain from semen to cellophane. I am sure there is value in learning all the mechanics of the supply chain.

To this point they have not increased pork exports from the U.S. to China, but I will bet that much intellectual property has already been transferred. They will take the Smithfield supply chain apart from sow genetics to pork processing plants, study and examine it and bring back to China anything that they see applicable to adapt to their pork production system there.

Their acquisition of Smithfield Foods will result in a transfer of working knowledge from our state of the art pork supply chain to build theirs.

So China can come and try to steal our seed technology here with the likes of spies like Mo, let us bring them the technology so they can reverse engineer and pirate it, or buy it and have free legal use of the tech information.

China appears to be doing all three.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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