Former Japanese Tech Company Staff Under Investigation for Passing Trade Secrets to Chinese Competitor

Brightly lit signs advertise businesses in the Dotonbori district of Osaka, Japan, on April 23, 2016. Carl Court/Getty Images

A former employee at Japanese plastics company Sekisui Chemical is under police investigation for allegedly passing on corporate trade secrets to a Chinese company, reported Japanese media Nikkei on Oct. 15.

Sekisui fired a 45-year-old male researcher in May 2019 after an internal investigation. Prior to his dismissal, the man passed on information about the company’s know-how in producing conductive particles, to a Chinese tech company called Chaozhou Three-Circle Group Corporation (CCTC). The particles are used in manufacturing touch screen displays.

According to its company website, Sekisui manufactures fine particles for liquid-crystal display (LCD), semiconductor materials, optical films, and non-flammable plastics. According to Nikkei, the company is one of the world’s biggest manufacturers of these conductive particles.

CCTC reached out to the man—whose name is not disclosed in the Nikkei report—in 2018 by sending him a message on LinkedIn, according to Nikkei. The man had on his LinkedIn page information about his Sekisui position, which was why he was targeted by the Chinese company.

The man eventually traveled to China several times, with CCTC paying for his travel and hotel stays, according to Nikkei. During one of those trips, CCTC proposed exchanging its technology for Sekisui’s information.

The man downloaded information about the particles from Sekisui’s server and emailed the data to CCTC, according to Nikkei. It is unclear how many times the man emailed the CCTC, but his alleged wrongdoing spanned from August 2018 until January 2019.

According to Nikkei, citing police in Osaka, the man did not receive any money from CCTC, and he claimed that he wanted to obtain CCTC technology “that Sekisui did not have,” in order to “boost his standing” at the Japanese company.

Police have not arrested the man, and he has been cooperating with its investigation.

CCTC, located in Chaozhou city in southern China’s Guangdong Province, is a publicly-traded company on the Shenzhen Stock Exchange. According to its website, it is a manufacturer of electronic materials, electronic components, and communication devices.

The Chinese company has received funding from the Chaozhou municipal government in recent years. In 2019, it has received at least 100,000 yuan (about $15,000) in government subsidies, as a reward for filing patents in China and Europe, according to a Chinese government document.

Also in 2019, CCTC received 150,000 yuan (about $22,290), a provincial government subsidy to develop a company tech project, according to the Chaozhou government website.

CCTC appears to enjoy a close relationship with the Chinese Communist Party. In June, the Chaozhou municipal government website reported that Lin Shaoming, the city’s deputy mayor, visited CCTC to take part in the company’s “Party-building” activities organized by the company’s Party unit.

Lin called on Party members to “strengthen their Party nature” and make contributions to help China become a “tech superpower country.”

In April last year, CCTC also announced on its website that the company’s Party secretary Huang Xueyun hosted a meeting for the company’s Party committee.