Chinese Hackers and Cyber-Espionage: The New Normal for U.S. Corporations

It has been widely reported that Chinese hackers recently compromised an alarming number of U.S. weapons systems. But perhaps the more alarming fact, which has not received enough media attention, is the fact that China’s attacks are increasingly targeting U.S. corporations at an unprecedented rate.

“China is two-thirds of the intellectual property theft problem, and we are at a point where it is robbing us of innovation to bolster their own industry, at a cost of millions of jobs,” said Jon M. Huntsman, Jr., the former ambassador to China, regarding a report released on May 22 by the private Commission on the Theft of American Intellectual Property, an organization he helps lead.

In advance of President Obama’s meeting with China’s President Xi Jinping this past weekend in California, lawmakers strongly urged Obama to make it clear that the U.S. is ready to “impose real costs” on China should they continue to loot our intellectual property through cyber-espionage.

The Cyber Executive Order – a policy document issued by the White House in February – declares that the federal government will share best practices and technologies to thwart such attacks among critical infrastructures. While that’s great for government entities and sensitive infrastructure, it doesn’t cover organizations, such as professional services firms and IP-centric start-ups that are some of the most highly targeted companies by hackers.

As we continue to shift from using only PCs to using network-connected devices and smartphones, which total more than one billion, businesses and governments are becoming the next big target for security breaches. Yet, less than 3 percent of smartphones have some form of mobile security installed, leaving them vulnerable to hacking, voice and data eavesdropping and network infiltration.

Sprint Nextel and Japan’s SoftBank reached a deal with U.S. authorities on national security aspects of its upcoming merger deal. The unusual mandate, for which the government will also establish a four-member oversight committee to make sure the companies abide by their national security promises, lends credence to the rise of mobile as a target amidst growing fears of Chinese espionage.

While actions of the government on the matter are important, the key players in this game are entrenched in the private sector. As Booze Allen Hamilton noted in its 2012 report, Cyber Theft of Corporate Intellectual Property, “the theft of a single piece of property has the potential to destroy the competitive advantage a company has built up over decades.”

While ultimately combating cyber espionage will require public and private collaboration, companies must take their heads out of the sand, recognize the growing threat and take ownership of solutions – ensuring they vet the best security solutions available to meet the emerging cyber espionage threats that are quickly becoming the “new normal” in corporate America.

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