China's Borg Assimilation Strategy Part II: the "Honeytrap" the "Lamprey" and the "Mushroom Factory"; Seduced by China

As noted in China's "Borg Strategy" Seeks to Assimilate all Known Technology, China will stop at nothing to "assimilate and absorb" technology. China used those exact words in a lengthy document on procuring technology.

China also uses the "Honeytrap" method, the "Lamprey" method, and the "Mushroom" method of acquiring technology. The "Honeytrap" method was featured in the James Bond film 'Quantum of Solace' with double agent Honeytrap.

History of the Honey Trap

In the History of the Honey Trap, Foreign Policy Magazine has five lessons for would-be James Bonds and Bond girls -- and the men and women who would resist them.

In a 14-page document distributed last year to hundreds of British banks, businesses, and financial institutions, titled "The Threat from Chinese Espionage," the famed British security service described a wide-ranging Chinese effort to blackmail Western businesspeople over sexual relationships. The document, as the London Times reported in January, explicitly warns that Chinese intelligence services are trying to cultivate "long-term relationships" and have been known to "exploit vulnerabilities such as sexual relationships ... to pressurise individuals to co-operate with them."

This latest report on Chinese corporate espionage tactics is only the most recent installment in a long and sordid history of spies and sex. For millennia, spymasters of all sorts have trained their spies to use the amorous arts to obtain secret information.

The trade name for this type of spying is the "honey trap." And it turns out that both men and women are equally adept at setting one -- and equally vulnerable to tumbling in. Spies use sex, intelligence, and the thrill of a secret life as bait. Cleverness, training, character, and patriotism are often no defense against a well-set honey trap. And as in normal life, no planning can take into account that a romance begun in deceit might actually turn into a genuine, passionate affair. In fact, when an East German honey trap was exposed in 1997, one of the women involved refused to believe she had been deceived, even when presented with the evidence. "No, that's not true," she insisted. "He really loved me."

Five Lessons

1. Don't Follow That Girl
2. Take Favors from No One
3. Beware the Media
4. The Deadliest of Honey Traps
5. All the Single Ladies

See the article for details.

The Telegraph discusses the "Honeytrap" method, the "Lamprey" method, and the "Mushroom" method in Chinese use honeytraps to spy on French companies, intelligence report claims

The use of honeytraps to extort information and the placement of spying interns are among the techniques employed by Chinese spies in their industrial espionage operations, according to leaked French intelligence files.

Among the cases cited by the intelligence reports, is the predicament of a top researcher in a major French pharmaceutical company wined and dined by a Chinese girl who he ended up sleeping with.

"When he was shown the recorded film of the previous night in his hotel room ... he proved highly co-operative," said an economic intelligence official.

In another case, an unnamed French company realised too late that a sample of its patented liquid had left the building after the visit of a Chinese delegation. It turned out one of the visitors had dipped his tie into the liquid to take home a sample in order to copy it.

Among the most frequent techniques cited by French intelligence was the so-called "lamprey technique", which usually takes the form of an international tender for business.

"The aim of the project is to attract responses from developed countries," notes the report. When Western companies vie to respond, they are cajoled and "told to improve their technical offering".

"Each (company) tries to outdo the other, once, twice, several times until the Chinese consider they've had enough." Once key information has been gathered, the competing bidders are summarily informed that the project has been shelved and the information used by the Chinese to develop its own products.

A prime example of this technique was recent a multi-billion pound tender to build China's high-speed train, with France's TGV being a bidder. As part of the process, the French embassy in Beijing organised a six-month training course for Chinese engineers. A few months after the course, China brought out its own high-speed train remarkably similar to the TGV and Germany's ICE train.

Another technique is the "mushroom factory", in which French industries create a joint venture with a local Chinese firm and transfer part of their technology. Soon afterwards, the French "discover that local rivals have emerged ... offer identical products and are run by the Chinese head of the company that initiated the joint venture." Danone, the French dairy and drinks group allegedly fell foul of this technique when it teamed up with the Chinese drinks giant, Wahaha.

The Spy Who Loved Me

In The Spy Who Said She Loved Me, Slate asks and answers the question: Are "honey traps" real?

Are honey traps real, or are they found only in James Bond movies?

Oh, they're real. Honey traps, also called "honey pots," have been a favorite spying tactic as long as sex and espionage have existed—in other words, forever. Perhaps the earliest honey trap on record was the betrayal of Samson by Delilah, who revealed Samson's weakness (his hair) to the Philistines in exchange for 1,100 pieces of silver, as described in the Book of Judges. The practice continued into the 20th century and became a staple of Cold War spy craft. Governments around the world set up honey traps to this day, but it's an especially common practice in Russia and China. The Central Intelligence Agency doesn't comment on whether its agents use their sexuality to obtain information, but current and former intelligence officials say it does happen occasionally.

No one has perfected the honey trap quite like the Russians. One former KGB agent has said that the Soviet intelligence agency didn't ask Russian women to stand up for their country but "asked them to lay down." One of the biggest Cold War spy cases was that of Clayton Lonetree, a Marine Corps security guard entrapped by a female Soviet officer, then blackmailed into sharing documents. In 1987, he became the first Marine convicted of espionage.

Russian spy craft didn't disappear with the Soviet Union. Russian political satirist Viktor Shenderovich was recently filmed cheating on his wife with a young woman named Katya, who had also seduced a half dozen other Kremlin critics. A similar trap appeared to catch an American diplomat in Moscow in 2009, but the State Department said the evidence was fabricated as part of a smear campaign.

China, too, seems to employ honey traps regularly. When former Deputy Mayor of London Ian Clement was seduced and drugged in his Beijing hotel room in 2009 only to find his BlackBerry stolen the next day, he admitted that he "fell for the oldest trick in the book."

Seduced by China

Every company in the world has visions of grandeur when it comes to China. They all think they will be the one to make hundreds-of-billions of dollars marketing their product to the roughly 1,331,460,000 Chinese (2009 World Bank estimate).

A few companies will have success for a few years, but probably not in any revolutionary technologies. For example, GM gets set to roll out China brand

GM, Honda and Nissan Motor Co. are creating unique brands for the world's biggest car market as they try to boost sales in China's interior, where incomes rose almost 11 percent last year. The cheaper nameplates will help them compete on price against local manufacturers without diluting their cache among Chinese buyers, said John Zeng, an industry analyst at J.D. Power & Associates in Shanghai.

"It's a win-win situation," Zeng said. "Consumers pay a lower price for foreign-brand technology, and the foreign makers benefit from an increase in sales volume without hurting their brand image."

These "low-budget cars" will use older model platforms and have few extra features, said Leah Jiang, an analyst with Macquarie Research Ltd. in Shanghai.

Anti-lock brakes, automatic air-conditioning and reclining seats may be excluded to keep prices as low as 50,000 yuan, said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo.

That market segment is dominated by domestic automakers BYD Co., Geely Automobile Holdings and Chery Automobile Co. Local brands sold three of every four cars priced below 50,000 yuan, and more than half of those costing between 50,000 and 80,000 yuan, according to Jiang.

"I'm not worried about these new brands at all," said Jin Yibo, assistant general manager for Wuhu-based Chery, whose sales increased 36 percent last year. "Chinese cars offer better value for money, and we understand the local market and consumer very well."

Please forgive my skepticism, but it will be interesting to see how long this remains a "win-win" situation. Then again (also forgive my cynicism), given those are low-budget, low-technology cars, perhaps the setup lasts for a while, if for no other reason than to allow China to tout such "win-win" successes.

Here's the question on my mind: For every "win-win" success, how many companies will end up victims of the "Honeytrap", the "Lamprey" or the "Mushroom" as China marches down its stated path to assimilate all worthwhile technology?

Addendum:
I made a blatant typo that spellcheck did not catch in one of the subtitles in my last post on Pension Overhaul. It was a context I do not use or condone and has been corrected. Apologies offered to anyone offended.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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