Boom on the Broprus

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BGEN 360

Article
Inside the Chinese Boom in Corporate Espionage

January 23, 2013
Article Summary
The article I selected is about a US based company, American Superconductor Corp. (AMSC), founded in 1987 by four MIT professors. In 2006, after years of little to no success in their previous endeavor, superconductivity, AMSC began focusing on wind turbine control systems. Under their new vice president, Daniel McGahn, AMSC set out to capitalize on China’s newly passed clean energy law that required seven 10,000-Mw wind farms strategically placed throughout the country. AMSC produced and packaged the electronic components, which included a programmable logic controller and power converter and began selling them to China’s wind turbine manufacturers. These Chinese manufacturers built the 1.5 megawatt, 160-ton turbines and stuffed them with the electronics produced in America.

McGahn, who previously worked with other Chinese companies, was aware of the dangers AMSC was facing. By this point, it was well known that China had a knack for ripping off their partners and according to the article, Inside the Chinese Boom in Corporate Espionage, “China did not invent intellectual property theft; it’s just doing it on an unprecedented scale.” Because of his concerns, McGahn interviewed 400 people and handpicked his first 30 employees in China based off who he thought he could trust most. When AMSC’s China factory began making power converters, the firmware and other technology-rich components were still produced in the US before being shipped to Asia. The software was created at AMSC’s research facility in Austria and their control systems software was on a secured server in Klagenfurt, Austria. McGahn went to such extremes to protect this knowledge from Chinese investors that the source code was not even accessible from the Internet.

AMSC’s largest customer became China’s Sinovel Wind Group, who accounted for more than two-thirds of their $315 million...
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