Industry Market Trends

Editor's Note: Protect This House

Aug 25, 2014

Intellectual property theft is a greater risk for manufacturing businesses today, with the growing deployment of digital management tools. Network hacks are on the rise, according to a new cyber-security study, and malware presents dangers to IT systems, too. The thieves could come from not just China, but anywhere.

In the digital manufacturing era, it's time for manufacturers to step up on intellectual property protection with stout, proactive defense. And it's not just China that companies should be keeping their eyes on while handling proprietary data.

IP theft provides free R&D to beneficiaries, which lowers their investment costs and allows them to manufacture and sell products below cost to undercut victims. The National Association of Manufacturers chalks up IP theft's economic impact over 10 years. It's easy to point the finger at the Chinese, since they are responsible for 70 percent of all IP piracy, inasmuch as a NAM study cited that software theft by Chinese solar manufacturers abetted the U.S. solar manufacturing industry's collapse. In May, a federal indictment was brought against the Chinese military for cyber-espionage of U.S. manufacturers - including a solar company -- to give China's state-owned companies competitive trade secrets.

Today, a company doesn't have to be doing business in China to be victimized. As the indicted hackers illustrate, digital tools like malware and network intrusions make it convenient to steal from halfway around the world, in a Shanghai building -- or from anywhere for that matter, by anyone with enough financial motivation and wherewithal. A new Kaspersky Lab study says IP loss affected 21 percent of surveyed manufacturing businesses over the past year, with internal operational information and customer data stolen most commonly. These and IP are the three things manufacturers fear most losing.

But what's alarming is that businesses reported they were willing to suffer some financial losses from cybercrime because it is less costly than upgrading their preventative IT. With so much end-to-end collaboration in today's supply chains, that attitude could result in far-reaching damage to customers and suppliers that ought to make everyone nervous.

William Ng,