November 9, 2018 / 11:52 AM / 7 days ago

Aerospace suppliers play down spying row in chase for China riches

ZHUHAI, China (Reuters) - Western suppliers have tightened security precautions at China’s largest air show after U.S. accusations of industrial espionage rather than miss the chance to vie for a slice of the country’s heavy aerospace spending.

The U.S. Department of Justice has brought three recent cases alleging Chinese attempts to gain access to aerospace and defense secrets. Engine technology - in which China remains dependent on Russia - is a particular target, U.S. filings said.

Beijing has called the charges “pure fiction and totally fabricated”.

“I have no paper. I write nothing down, certainly not figures,” said a senior executive with one of the dozens of companies at Airshow China in Zhuhai this week. “You have to be very careful, but it’s life and you get used to it. It’s not only China; it’s Russia, Turkey, many places.

“It’s important to be here. It’s an important show for meetings, for signings, for showing your presence.”

Measures deployed by foreign aerospace companies when doing business range from powerful cyber-security systems designed to shield commercial as well as classified defense secrets to tactics as straightforward as not bringing a computer.

“As you can imagine we have quite a strong security policy, so our capability of being secure is pretty high. So we don’t worry about this,” Alessandro Profumo, head of Italian contractor Leonardo (LDOF.MI), said on the sidelines of a Shanghai expo that coincided with the Zhuhai aerospace event.

In Zhuhai, Peter Anderton, technical director at British industrial engineering company Rhodes Interform, said: “We do have our own IP (intellectual property) on our products but we are fairly flexible with that. By the end of the day, we want to sell our machines.”

China’s Russian partner in several projects, including a new CR929 wide-body jetliner, played down the espionage row.

“Some people are speaking in terms of stealing, other people are saying copycat; I would say China is fast-learning,” Viktor Kladov, Russian conglomerate Rostec’s director for international cooperation and regional policy, told Reuters.

“They’ve changed their ways a lot. There is a great respect towards intellectual property in China.”

China also sells its products internationally and has set up new laws and agencies as it tackles the same problems of protecting intellectual property, Kladov said.

“So we don’t blame our Chinese partners on copying ... They’re just learning, and they’re very good learners.”

Reporting by Tim Hepher, Brenda Goh, Stella Qiu in ZHUHAI, Yilei Sun in SHANGHAI and Jamie Freed in SINGAPORE; Editing by David Goodman

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