On July 2, 2014, the Federal Bureau of Investigation (FBI) issued a press release informing the public that it had arrested Mo Yun, a Chinese national, for conspiring to steal U.S. trade secrets and transport them to China. At the center of this bit of international corporate espionage is “inbred” (or “parent”) corn seed, which contains the genetic makeup of bio-engineered corn capable of resisting certain pests and herbicides. Those gene sequences are valuable intellectual property, and are closely guarded by U.S. seed producers.
Ms. Mo is the former chief of the research and technology division of the Beijing Dabeinong Technology Group Company (DBN), a Chinese conglomerate that owns corn seed producer Kings Nower Seed. Her division oversaw the DBN seed breeding team. Ms. Mo is also married to DBN’s founder and chairman. Her arrest was part of an ongoing law enforcement effort that also ensnared her brother, Mo Hailong, this past December.
At the time of his arrest, Mo Hailong was ostensibly employed as DBN’s Director of International Business. According to court documents, on multiple occasions, Mr. Mo and accomplices traveled the Midwest in rented cars on quests for inbred seeds. In some cases, they purchased what they wanted from stores. In others, they stole seeds and seed-bearing ears of corn from production fields owned or used by DuPont Pioneer, Monsanto, and LG Seeds. That they knew where test production fields were located suggests that they might have received direction from sources within the U.S. seed manufacturers, as such fields are generally unmarked and situated in remote areas. Instant messages exchanged between Mr. Mo and his sister indicate that she relayed instructions to him regarding which seed types to obtain. She also discussed with him plans to purchase Iowa farmland to better conceal their activities.
In 2012, the FBI and U.S. Customs and Border Protection coordinated to prevent Mr. Mo’s accomplices from smuggling seeds out of the country in, among other conveyances, microwave popcorn boxes. Mo Hailong was arrested as the group’s ringleader a little over a year later for conspiracy to steal trade secrets. His sister now joins him in custody for the same offense. Both have been indicated, along with their known co-conspirators.
This corn caper is the latest in a spate of incidents involving Chinese actors trying to surreptitiously acquire intangible U.S. assets. In May, U.S. federal prosecutors charged five Chinese military personnel with hacking into U.S. companies in search of information that might yield a competitive advantage. On July 1, 2014, one of the targeted companies, SolarWorld Industries Americas Inc., asked the U.S. Commerce Department to investigate the allegations as part of an ongoing trade dispute.
According to Science Magazine contributing editor Mara Hvistendahl, attempts to steal U.S.-origin parent seed lines might be a response to constraints imposed by a Chinese private sector “stymied by poor investment, fragmented research groups, and weak intellectual property protection.” These factors, Ms. Hvistendahl contends, undercut efforts to produce cutting edge homegrown Chinese seed lines. The U.S., on the other hand, is at the forefront of designer seed development, and has climate and crop growing conditions very similar to the Middle Kingdom’s. Meanwhile, China is the world’s fastest growing corn market and maintains strict regulations on what types of genetically modified foreign maize it will allow inside its borders. Cross-cutting tensions and powerful incentives abound.
None of this is meant to excuse trade secret or intellectual property theft. It should, however, serve as a reminder to businesses everywhere that there may be larger systemic forces at play pushing foreign competitors to use any means available to obtain an edge in an increasingly borderless marketplace. Business leaders would therefore do well to cultivate a healthy paranoia and keep their eyes on the field.