Wednesday, July 16, 2008, 7/16/2008 12:40:00 PM

Taiwanese Company Complains "Ancient Chinese Secret, Huh?"

By Todd
Forbes.com is reporting that giant electronics manufacturer Hon Hai Precision Industry Co. recently took out half-page ads in major Taiwanese newspapers to complain about delays in a Chinese court over the prosecution of a Chinese competitor for allegedly stealing its commercial secrets.

Spokesman Edmund Ding says Hon Hai's China problems center around concerns that BYD Company Limited, a Chinese electronics maker based in the southern Chinese city of Shenzhen, is systematically looting its trade secrets.

The purpose of BYD's actions, say Taiwanese media, is to give the Chinese firm a leg up against Hon Hai in winning big parts orders from international mobile phone powerhouse Nokia.

Hon Hai's China saga began in 2006, when it sued BYD for infringing on its trade secrets after two former China-based Hon Hai employees allegedly took secret Hon Hai information with them when they went to work for BYD.

The employees have since been convicted in a Chinese court on infringement charges.

But according to Hon Hai, that may be only the tip of the iceberg.

Ding says that 400 Hon Hai employees have moved to BYD over the past 4-5 years, and many are suspected of providing the company with proprietary Hon Hai information.

To protect its interests, Ding says, Hon Hai is suing BYD in Hong Kong. In parallel, he says, Chinese prosecutors have opened a criminal investigation against BYD in Shenzhen.

But Hon Hai fears that the cards may be stacked against it - at least in Shenzhen.
BYD's head is a member of the city's powerful People's Congress, "with the power to remove members of the judiciary," its recent newspaper ad said

"This results in a certain degree of unwillingness among local judicial and police members to deal with the case," the ad concluded.

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