How Foreign Companies Lost Their Trade Secrets in China—and What You Can Learn

Imagine losing years of research and development overnight. Unfortunately, that’s exactly what happens to many foreign companies operating in China. In fact, trade secret misappropriation costs U.S. businesses alone up to $600 billion every year. Moreover, China is linked to 80% of economic espionage prosecutions in the United States.

However, here’s the good news: by learning from others’ mistakes, you can protect your valuable business secrets. This article walks you through real-world trade secret misappropriation China case studies, shows you what the law says, and gives you practical steps to safeguard your intellectual property.

What Counts as Trade Secret Misappropriation in China? (The Basics First)

Understanding Trade Secrets in Simple Terms

First, let’s break down what a trade secret actually means. In China, a trade secret is any business information that meets three important conditions:

• It’s not known to the public – Your competitors don’t have this information
• It has commercial value – The information gives you a competitive edge in business
• You’ve taken steps to protect it – You’ve used reasonable measures to keep it confidential

Think of it this way: your secret recipe for making the perfect pizza is valuable because customers love your pizza. Additionally, you keep the recipe locked in a safe and only share it with trusted employees who sign agreements. That’s essentially how trade secrets work in business.

Common Ways Companies Lose Their Secrets

Now that you understand what trade secrets are, let’s look at how companies typically lose them. Trade secret misappropriation in China happens through several common methods:

Employee theft remains one of the biggest risks. In fact, insiders account for 18% of all trade secret theft cases. For instance, an employee might copy important files before leaving to join a competitor. Sometimes, competitors even actively recruit your employees specifically to gain access to your confidential information.

Furthermore, cyber attacks are becoming increasingly sophisticated. Hackers use AI-enhanced reconnaissance tools to break into company systems. In 2025, the average detection time for such breaches is 52 days, which means thieves have plenty of time to steal valuable data.

Supply chain vulnerabilities pose another serious threat. When you work with manufacturers, suppliers, or distributors in China, you often need to share sensitive information. Unfortunately, some partners may misuse this trust and share your secrets with competitors.

Additionally, there’s the problem of physical access theft. This happens when someone physically enters your office or factory to photograph documents, steal prototypes, or observe your processes. The T-Mobile v. Huawei case (which we’ll discuss later) is a perfect example of this type of theft.

Why China Presents Higher Risks for Foreign Companies

Operating in China comes with unique challenges that increase your risk of trade secret theft. Here’s why:

First, cultural differences in how intellectual property is viewed can create problems. While Chinese law protects trade secrets, enforcement has historically been inconsistent. However, as you’ll see later in this article, recent improvements show courts are now awarding record-breaking damages.

Second, state-sponsored threats add another layer of complexity. According to recent statistics, China is linked to 60% of global trade secret theft cases. This doesn’t mean every case involves government actors, but it does highlight the scale of the problem.

Third, the competitive pressure in Chinese markets is intense. Companies sometimes feel desperate to catch up with foreign technology, which can lead to unethical behavior. For foreign businesses, this means you need to be extra vigilant about protecting your innovations.

“The average tech sector incident results in losses of $4.2 million, and only 15% of stolen trade secrets are ever recovered. For companies with strong protection programs, that recovery rate improves to 25%.”

At Yucheng IP Law, we’ve seen firsthand how devastating trade secret theft can be for foreign companies. That’s why we always advise our clients to implement protection measures from day one of their China operations. Our consultation and litigation support services include conducting thorough audits to identify vulnerabilities in your current setup.

Real Cases: How Major Companies Lost Millions in China

The Geely v. Weltmeister Case: A Record-Breaking RMB 640 Million Lesson

In 2024, the Supreme People’s Court of China delivered a landmark ruling that sent shockwaves through the automotive industry. Chinese electric vehicle maker Geely sued competitor Weltmeister for one of the most brazen cases of trade secret misappropriation China case studies have ever documented.

Here’s what happened: Weltmeister systematically recruited nearly 40 engineers from Geely. However, these weren’t just any engineers—they were key personnel who had worked on Geely’s cutting-edge electric vehicle chassis designs. Shortly after joining Weltmeister, similar products began appearing in their product line.

The court’s response was unprecedented. First, they awarded Geely a staggering RMB 640 million in damages, which included double punitive damages. Second, they ordered Weltmeister to destroy all stolen files. Third, they imposed daily penalties for non-compliance to ensure the company followed through.

For foreign companies, this case teaches several important lessons. First, you must have robust non-disclosure agreements (NDAs) with all employees who access sensitive information. Second, monitor employee movements, especially when key personnel leave for competitors. Third, document everything—Geely’s strong evidence made their case compelling.

Motorola v. Hytera: Cross-Border Enforcement Success

Sometimes, trade secret theft that occurs in China can be pursued through courts in other countries. The Motorola v. Hytera case perfectly illustrates this principle.

U.S.-based Motorola discovered that Chinese company Hytera had stolen their two-way radio technology. Although the theft involved Chinese defendants and some activities occurred in China, Motorola successfully pursued the case in U.S. courts. In 2024, a U.S. appeals court upheld a $407 million judgment against Hytera.

What makes this case particularly interesting is the concept of extraterritorial enforcement. Essentially, this means that even if the theft happens partly in China, foreign companies can still seek justice in their home countries. Furthermore, the U.S. Defend Trade Secrets Act provides legal tools specifically designed for these situations.

However, there’s a practical challenge: enforcing foreign judgments in China remains difficult. Nevertheless, this case shows that multiple legal pathways exist for victims of trade secret theft. At Yucheng IP Law, we help clients develop multi-jurisdictional enforcement strategies that maximize their chances of recovery.

T-Mobile v. Huawei: The Dangers of Physical Access

Back in 2014, T-Mobile accused Huawei of sending engineers to steal robotic testing technology from their U.S. laboratories. While this case didn’t occur entirely in China, it highlights a critical vulnerability that many foreign companies face when dealing with Chinese entities.

The thieves didn’t use sophisticated hacking tools. Instead, they simply took photographs and measurements of T-Mobile’s proprietary robot called “Tappy.” They even broke off a piece of the robot’s arm to study its mechanics. This physical theft was shockingly simple yet incredibly damaging.

The case resulted in settlements and ongoing scrutiny of Huawei’s business practices. More importantly, it revealed how physical and cyber access by Chinese entities can threaten tech supply chains globally.

“Sometimes the simplest theft methods are the most effective. Physical access to your facilities, prototypes, or documents can be just as dangerous as sophisticated cyber attacks.”

Sennics Co., Ltd. Case: Chemical Industry Vulnerability

Trade secret theft isn’t limited to high-tech industries. In 2023, the Supreme People’s Court awarded RMB 201.54 million in a case involving rubber additives technology stolen from Sennics Co., Ltd.

This case is particularly relevant for foreign manufacturers operating in China’s chemical and materials sectors. The stolen information involved manufacturing processes and formulations—exactly the type of technical knowledge that gives companies their competitive advantage.

What’s significant here is that chemical processes are often easier to reverse-engineer once you know they work. Therefore, protecting these secrets requires strict confidentiality measures throughout your supply chain. Companies must carefully control who has access to formulations and manufacturing procedures.

What These Cases Teach Us

After studying these trade secret misappropriation China case studies, several patterns emerge:

1. Employee movement is a major risk factor – When key employees leave, your secrets may go with them
2. Chinese courts are awarding significant damages – The days of weak enforcement are ending
3. Documentation is crucial – Companies that maintained clear records of their secrecy measures won their cases
4. Multiple legal pathways exist – You can pursue remedies in China, your home country, or both
5. Prevention is better than litigation – Even when companies won, they lost years of competitive advantage

If you’re concerned about protecting your innovations in China, our team at Yucheng IP Law, led by patent and trade secret expert Peter H. Li, can help you implement comprehensive protection strategies. We’ve assisted numerous foreign companies in securing their valuable intellectual property.

China’s Legal Weapons Against Trade Secret Theft (What the Law Says)

The Foundation: China’s Anti-Unfair Competition Law

China’s primary weapon against trade secret theft is the Anti-Unfair Competition Law (AUCL). This law was amended in 2019 and revised again in 2025, showing China’s commitment to strengthening intellectual property protection. Understanding this law is crucial for any foreign company operating in China.

The AUCL provides three types of protection: civil (where you sue for damages), administrative (where government authorities investigate and fine violators), and criminal (where serious cases lead to imprisonment). This multi-layered approach gives you several options when your trade secrets are stolen.

Article 9: What Qualifies as a Trade Secret

This definition contains three essential elements that we discussed earlier. However, let’s dive deeper into what each element means in practice:

Unknown to the public means the information isn’t generally known or easily accessible to people in your industry. For example, if your manufacturing process uses a unique combination of temperature and pressure, that can be a trade secret even if individual techniques are publicly known.

Commercial value means the information provides economic benefits. This could be cost savings, improved quality, faster production, or any advantage that helps your business compete. Courts will look at whether losing this information would harm your competitive position.

Confidentiality measures are the steps you take to protect the information. This includes NDAs, access controls, employee training, and physical security. Importantly, Chinese courts are quite strict about this requirement—if you didn’t take reasonable precautions, you might not win your case.

Article 10: How Misappropriation Happens

Article 10 of the AUCL clearly defines what counts as trade secret theft. According to this law, misappropriation includes several specific actions:

What’s particularly important here is that third parties can also be liable. If someone acquires your trade secrets and “knows or should have known” they were stolen, they can be held responsible too. This means that even if a competitor didn’t steal your secrets directly, they can still face penalties if they used information they suspected was stolen.

Article 22: The Money You Can Win Back

Now let’s talk about what really matters to businesses—compensation. Article 22 of the AUCL gives you several ways to calculate damages when your trade secrets are stolen.

Here’s what makes China’s system powerful: punitive damages. If someone deliberately steals your trade secrets, the court doesn’t just make them pay back what they stole—they can multiply that amount up to five times as punishment. Remember the Geely case? That RMB 640 million included double punitive damages, sending a strong message to would-be thieves.

Additionally, you can recover “reasonable costs” for stopping the infringement. This includes attorney fees, investigation costs, and other expenses you incurred while fighting the theft. For many foreign companies, these costs can add up quickly, so it’s good to know you can recover them.

Article 39: How Burden of Proof Works in Your Favor

One of the most helpful provisions for foreign companies is Article 39, which deals with burden of proof. In most legal cases, the person making the accusation must prove everything. However, trade secret cases work differently.

Here’s how it works: First, you (as the rights holder) need to provide preliminary evidence showing that you have a trade secret and that the defendant likely stole it. This is called making a “prima facie case.” You don’t need to prove everything beyond doubt at this stage.

Once you’ve done that, the burden shifts to the defendant. Now they must prove they didn’t steal your secrets or that they obtained the information lawfully. This shift is incredibly important because defendants often have better access to evidence about how they got the information.

“The burden-shifting mechanism under Article 39 has been a game-changer for trade secret litigation in China. It recognizes that victims shouldn’t have to prove the unprovable when defendants control most of the evidence.”

2025 Legal Updates: Stronger Protection Than Ever

The October 2025 revisions to the AUCL demonstrate China’s commitment to protecting intellectual property. Most notably, the amendments propose doubling the minimum administrative penalties to RMB 1 million for serious violations.

Furthermore, the new guidelines specifically address modern threats like AI-enhanced surveillance and supply chain attacks. Courts are now recognizing “control-loss” scenarios—where trade secrets leave your control even without traditional theft—as actionable misappropriation.

For criminal cases, Articles 219-220 of China’s Criminal Law provide for imprisonment up to seven years for severe trade secret theft that causes major losses. This criminal liability adds another layer of deterrence beyond civil damages.

If you’re developing an IP protection strategy for China, our comprehensive IP services at Yucheng IP Law can help you navigate these complex legal requirements and ensure your confidential information receives maximum protection under Chinese law.

The Numbers Don’t Lie: 2025 Trade Secret Theft Statistics

The Global Picture: How Big Is the Problem?

To truly understand trade secret misappropriation in China, we need to look at the numbers. Unfortunately, the statistics paint a troubling picture that every foreign company should know about.

Global intellectual property theft costs businesses approximately $750 billion annually. To put that in perspective, that’s more than the entire GDP of many countries. Moreover, trade secret theft specifically accounts for a significant portion of these losses.

What’s particularly concerning for companies doing business in China is that Chinese entities are linked to 50-80% of trade secret theft cases globally. Additionally, China accounts for approximately 80% of economic espionage prosecutions in the United States. These aren’t just random statistics—they represent real businesses losing real competitive advantages.

China-Specific Enforcement Data

While the global numbers are alarming, there’s actually some positive news coming from China itself. Chinese authorities investigated 11,036 unfair competition cases by October 2024. Among these, 120 cases specifically involved trade secret infringement, resulting in RMB 35.05 million in fines.

Furthermore, the Supreme People’s Court has been issuing guiding cases that consistently favor plaintiffs. In fact, recent SPC guiding cases show a 100% plaintiff win rate. This represents a dramatic shift from historical patterns where enforcement was weaker.

The average damages awarded in trade secret cases have also increased substantially. While historical awards were relatively modest, recent cases like Geely (RMB 640 million) and Sennics (RMB 201.54 million) show that Chinese courts are willing to impose penalties that actually hurt defendants.

Industry-Specific Vulnerabilities

Not all industries face equal risks. The data shows that certain sectors are particularly vulnerable to trade secret misappropriation in China:

• Electric vehicles and automotive: With China dominating the EV market, competition is fierce and trade secret theft is common
• Artificial intelligence and software: Code theft and algorithm misappropriation are growing rapidly
• Biotechnology and pharmaceuticals: Long development cycles make these secrets incredibly valuable
• Advanced manufacturing: Process innovations and production methods are frequent targets
• Chemical and materials: Formulations and manufacturing processes are relatively easy to misappropriate

If your company operates in any of these sectors, you face higher-than-average risks and should implement correspondingly stronger protection measures. Our team at Yucheng IP Law has extensive experience helping companies in these high-risk industries develop tailored protection strategies.

Emerging Trends in 2025

The nature of trade secret theft continues to evolve. Here are the key trends we’re seeing in 2025:

AI-driven attacks are becoming more sophisticated. Thieves now use artificial intelligence to identify valuable targets, map organizational structures, and automate data extraction. These attacks are harder to detect and more damaging when they succeed.

Supply chain attacks are increasing. Rather than targeting companies directly, thieves compromise suppliers, manufacturers, or distributors who have access to confidential information. This indirect approach makes attribution difficult.

Detection times are improving but still too slow. While the average detection time has dropped to 52 days (down from 142 days in previous years), that’s still nearly two months for thieves to operate undetected. Every day counts when sensitive information is being stolen.

Recovery rates remain distressingly low. Only 15% of stolen trade secrets are ever recovered. However, companies with strong protection programs achieve 25% recovery rates—showing that preparation matters.

7 Practical Ways to Protect Your Trade Secrets in China

Strategy 1: Implement Rock-Solid Confidentiality Agreements

Your first line of defense is comprehensive Non-Disclosure Agreements (NDAs). However, don’t just use generic templates—your NDAs need to be specifically designed for Chinese law and your business circumstances.

Every employee who accesses sensitive information should sign an NDA before starting work. Similarly, require NDAs from suppliers, manufacturers, distributors, and even visitors to sensitive facilities. The agreement should clearly define what information is confidential, how it can be used, and what happens if the agreement is breached.

Importantly, your NDAs should specify that Chinese law applies and designate Chinese courts for dispute resolution. This makes enforcement much easier if problems arise. Additionally, include post-employment restrictions that prevent former employees from immediately joining competitors or starting competing businesses.

At Yucheng IP Law, we draft NDAs that comply with Chinese labor law while providing maximum protection for your confidential information. Our trade secret protection services include reviewing and strengthening your existing agreements.

Strategy 2: Control Access Through Role-Based Permissions

Not everyone in your organization needs access to all your trade secrets. In fact, limiting access is one of the most effective protection strategies available.

Implement role-based access controls where employees can only access information necessary for their specific jobs. For example, your sales team doesn’t need access to manufacturing processes, and your factory workers don’t need customer lists. Use both physical controls (locked rooms, restricted areas) and digital controls (passwords, encryption, access logs).

Moreover, monitor who accesses sensitive information and when. Keep detailed logs that track downloads, copies, and transfers of confidential data. These logs serve two purposes: they deter theft because employees know they’re being monitored, and they provide evidence if theft occurs.

Remember the Geely case? One reason they won was because they could demonstrate exactly which employees had access to the stolen information and when that information was accessed. This documentation proved crucial in court.

Strategy 3: Conduct Thorough Exit Interviews and Monitoring

Employee departures present particularly high risks for trade secret theft. Statistics show that 18% of trade secret cases involve insider threats, and many of these occur around the time employees leave.

Therefore, develop a comprehensive exit process for all employees who had access to confidential information. This should include:

• Return of all company property: Collect laptops, phones, access cards, documents, and any other items that might contain confidential information
• Reminder of obligations: Review the employee’s confidentiality obligations and make clear they continue after employment ends
• Access termination: Immediately revoke all system access, email accounts, and physical access to facilities
• Post-departure monitoring: Watch for unusual data access or downloads in the weeks before departure

If an employee is leaving to join a competitor, consider whether legal action is appropriate to prevent them from using your trade secrets. Our NDA enforcement guide explains your options in these situations.

Strategy 4: Secure Your Digital Infrastructure

In 2025, most trade secret theft involves digital channels. Therefore, your cybersecurity measures need to be top-notch. This includes both preventing external attacks and detecting internal theft.

Use strong encryption for all confidential data, both when it’s stored and when it’s transmitted. Implement multi-factor authentication for accessing sensitive systems. Deploy data loss prevention (DLP) tools that automatically block unauthorized transfers of confidential information.

Additionally, segment your network so that a breach in one area doesn’t compromise everything. Regular security audits can identify vulnerabilities before thieves exploit them. The 2025 New Guidelines on Trade Secrets Protection specifically address digital safeguards against modern cyber tactics.

Strategy 5: Train Employees on Trade Secret Protection

Your employees are both your greatest asset and your biggest vulnerability. However, with proper training, you can dramatically reduce risks.

Conduct regular training sessions that explain what trade secrets are, why they matter, and how employees should protect them. Make the training practical—give real examples of what to do and what not to do. For instance, explain why they shouldn’t discuss confidential matters in public places or over unsecured communication channels.

Furthermore, create a culture where protecting trade secrets is everyone’s responsibility. Encourage employees to report suspicious activity without fear of retaliation. Studies show that companies with comprehensive employee training programs reduce insider theft risks by up to 65%.

Strategy 6: Carefully Vet Business Partners and Suppliers

When you work with manufacturers, suppliers, or distributors in China, you inevitably need to share some confidential information. However, not all partners are equally trustworthy.

Before sharing any sensitive information, conduct thorough due diligence on potential partners. Check their reputation, look for any history of IP disputes, and verify their security measures. Visit their facilities to see how they handle confidential information from other clients.

Additionally, limit what you share. Use the “need to know” principle—only provide information that’s absolutely necessary for the partner to perform their role. Consider splitting sensitive work among multiple partners so that no single entity has all your secrets.

Our guide to doing business in China provides detailed advice on evaluating and managing relationships with Chinese business partners.

Strategy 7: Register IP Rights Where Possible

While trade secrets remain unregistered by nature, you should register related IP rights whenever possible. For instance, if your trade secret involves a unique process, consider whether parts of it could be patented. If it involves distinctive branding, register those trademarks.

Patent protection and trade secret protection can work together. You might patent the basic concept while keeping implementation details as trade secrets. This layered approach provides multiple levels of protection.

Additionally, consider registering copyrights for software code, technical documentation, and training materials. Our patent services and trademark and copyright services can help you develop a comprehensive IP protection strategy that includes both registered and unregistered rights.

“The most effective protection programs combine legal, technical, and organizational measures. No single strategy is sufficient—you need multiple layers of defense working together.”

What to Do If Someone Steals Your Trade Secrets (Your Action Plan)

Step 1: Document Everything Immediately

The moment you discover trade secret theft, start documenting everything. Time is critical because evidence can disappear quickly, and your actions in the first days can determine whether you win or lose in court.

First, preserve all relevant evidence. This includes emails, access logs, security footage, and any documents showing what information was accessed and when. Don’t delete anything, even if it seems insignificant—courts will want to see a complete picture of what happened.

Second, prepare a detailed timeline showing exactly what occurred. Note when you first discovered the theft, what information was taken, who had access, and any suspicious activities leading up to the discovery. This timeline will be crucial when you meet with lawyers.

Third, secure your systems to prevent further theft. Change passwords, revoke access for suspected individuals, and implement additional monitoring. However, be careful not to destroy evidence in the process of securing your systems.

Step 2: Evaluate Your Legal Options

Once you’ve secured evidence, you need to decide how to respond. China’s legal system offers several pathways for addressing trade secret theft, and you can often pursue multiple options simultaneously.

Civil litigation allows you to sue for damages in Chinese courts. As we’ve seen from the trade secret misappropriation China case studies discussed earlier, courts are now awarding substantial damages including punitive multiples. Civil cases also allow you to seek injunctions stopping further use of your trade secrets.

Administrative complaints involve reporting the theft to Chinese administrative authorities. These authorities can investigate, impose fines up to RMB 5 million, and order cessation of infringing activities. Administrative actions are often faster than civil litigation and can be pursued in parallel.

Criminal prosecution is available for serious cases under Criminal Law Articles 219-220. If the theft caused major losses or involved particularly egregious conduct, criminal charges can result in imprisonment up to seven years plus fines. Criminal cases carry the strongest deterrent effect.

Step 3: Consider Cross-Border Enforcement

If the theft involves parties with assets outside China or if you have operations in other countries, cross-border enforcement might be an option. The Motorola v. Hytera case demonstrated that foreign courts can exercise jurisdiction over Chinese defendants in certain circumstances.

The U.S. Defend Trade Secrets Act, for example, provides for extraterritorial application when conduct occurs in the United States or has effects there. Other countries have similar provisions. However, enforcing foreign judgments in China remains challenging, so you’ll need expert legal advice on the best approach.

At Yucheng IP Law, our international experience allows us to coordinate multi-jurisdictional enforcement strategies that maximize your chances of recovery. We work with partner firms globally to pursue thieves wherever they operate.

Step 4: Act Quickly to Preserve Evidence and Rights

Chinese law includes evidence preservation procedures that allow you to act before formally filing suit. If you believe evidence might be destroyed, you can apply to courts for preservation orders requiring the defendant to maintain evidence.

Similarly, you can seek property preservation orders to freeze the defendant’s assets, preventing them from hiding money before you can collect damages. These interim measures are crucial in trade secret cases where defendants often try to cover their tracks.

Speed matters because statutes of limitation apply. Generally, you have three years from when you discovered or should have discovered the theft to file civil claims. Don’t wait—evidence grows stale and memories fade.

Step 5: Work with Experienced IP Counsel

Trade secret cases are among the most complex in IP law. They require technical expertise, understanding of business operations, evidence gathering skills, and litigation experience. Therefore, working with specialized counsel is essential.

At Yucheng IP Law, our litigation support team has handled numerous trade secret cases for foreign companies. We understand both Chinese law and international business practices, allowing us to bridge cultural and legal gaps effectively.

Our approach combines aggressive evidence gathering, strategic use of burden-shifting provisions, and coordination with technical experts who can explain complex technologies to judges. We’ve helped clients recover millions in damages and, more importantly, stop ongoing theft of their valuable information.

Frequently Asked Questions About Trade Secret Protection in China

What is considered trade secret misappropriation in China?

Trade secret misappropriation in China includes any improper acquisition, disclosure, or use of confidential business information. Under Article 10 of the Anti-Unfair Competition Law, this covers obtaining secrets through theft, bribery, fraud, coercion, or electronic intrusion. It also includes breaking confidentiality agreements, inducing others to breach their obligations, or using information when you know or should know it was improperly obtained. Even negligent handling of trade secrets can constitute misappropriation if it leads to unauthorized disclosure. The 2025 legal updates have expanded this to include “control-loss” scenarios where secrets leave your custody through unauthorized downloads or removals.

How can foreign companies protect trade secrets in China?

Foreign companies should implement multiple layers of protection including comprehensive NDAs with employees and partners, role-based access controls limiting who can see sensitive information, exit interviews and monitoring for departing employees, strong cybersecurity measures including encryption and data loss prevention tools, regular employee training on confidentiality obligations, thorough vetting of business partners before sharing information, and registration of related IP rights like patents and trademarks where appropriate. Companies with strong protection programs achieve 25% recovery rates for stolen secrets compared to just 15% for companies without such programs. The key is combining legal, technical, and organizational measures rather than relying on any single strategy.

What are the penalties for trade secret theft in China?

China imposes severe penalties across civil, administrative, and criminal channels. Civil penalties include damages up to RMB 5 million in statutory damages when actual losses are hard to quantify, plus punitive damages of 1-5 times the base amount for intentional serious infringement. The Geely v. Weltmeister case awarded RMB 640 million including punitive multiples, setting a new record. Administrative penalties include fines up to RMB 5 million for serious cases and orders to cease infringing activities. Criminal penalties under Criminal Law Articles 219-220 include imprisonment up to seven years for severe cases causing major losses. The 2025 amendments propose doubling minimum penalties to RMB 1 million to increase deterrence.

What are some recent trade secret cases in China?

Major recent cases include Geely v. Weltmeister (2024) where the Supreme People’s Court awarded RMB 640 million for theft of EV chassis designs through systematic employee poaching; Sennics Co., Ltd. case (2023) with RMB 201.54 million awarded for rubber additives technology theft; and multiple Supreme People’s Court guiding cases from 2023-2025 involving AI code theft, software misappropriation, and breeding materials. These cases show 100% plaintiff win rates in SPC guiding cases, demonstrating increasingly strong enforcement. Courts are now more willing to apply burden-shifting provisions under Article 39 and award substantial punitive damages that actually deter future theft.

How does China’s trade secret law compare to the US?

Both China’s Anti-Unfair Competition Law and the U.S. Defend Trade Secrets Act emphasize burden-shifting and allow for punitive damages, showing convergence in legal frameworks. However, key differences remain: China lacks uniform federal preemption, with some variations in provincial enforcement; historical win rates in China (15%) have been lower than in the U.S. (50%), though 2025 trends show this gap closing; China provides administrative enforcement channels alongside civil and criminal remedies, while the U.S. relies primarily on civil litigation; and Chinese courts increasingly award damages comparable to or exceeding U.S. awards, as seen in recent cases. Both systems require strong documentation of confidentiality measures and provide for both injunctive relief and monetary damages.

Protect Your Business Secrets Before It’s Too Late

Throughout this article, we’ve examined devastating trade secret misappropriation China case studies that cost companies hundreds of millions of dollars. We’ve seen how Geely won RMB 640 million but still lost years of competitive advantage. We’ve learned that only 15% of stolen trade secrets are ever recovered, even with successful litigation.

The message is clear: prevention is infinitely better than cure. Once your trade secrets are stolen, even winning in court rarely restores your competitive position. The technology has already been copied, the advantage already lost, the damage already done.

However, there’s good news. Companies that implement comprehensive protection programs reduce insider theft risks by up to 65% and achieve significantly better recovery rates when theft does occur. The strategies we’ve discussed—strong NDAs, access controls, employee training, partner vetting, and digital security—work when implemented properly.

Moreover, China’s legal framework now provides powerful tools for enforcement. With punitive damages up to five times actual losses, administrative fines reaching RMB 5 million, and criminal penalties including imprisonment, the consequences for trade secret theft are more severe than ever before.

Why Choose Yucheng IP Law for Your Trade Secret Protection?

At Yucheng IP Law (YCIP), we specialize in helping foreign companies protect their most valuable assets in China. Our comprehensive approach addresses every aspect of trade secret protection:

• Prevention planning: We audit your current practices, identify vulnerabilities, and design customized protection programs
• Document drafting: Our team creates NDAs, employment agreements, and partner contracts that comply with Chinese law while maximizing protection
• Training programs: We educate your team on practical trade secret protection in ways they’ll actually remember and use
• Enforcement support: When theft occurs, we pursue aggressive civil, administrative, and criminal remedies to stop the bleeding and recover damages
• Cross-border coordination: We work with international partners to pursue thieves across multiple jurisdictions

Our track record speaks for itself. We’ve helped dozens of foreign companies secure their intellectual property in China, prevented countless thefts through proactive measures, and recovered millions in damages when prevention wasn’t enough. Our representative clients span industries from technology to manufacturing to biotechnology.

Led by Peter H. Li, an expert in patents, copyrights, trade secrets, and all IP-related matters, our core professional team brings decades of combined experience protecting foreign businesses in China. We understand both the legal technicalities and the practical realities of operating in China’s complex business environment.

Take Action Today

Don’t wait until it’s too late. Every day you operate without proper trade secret protection is a day you’re vulnerable to theft that could cost millions and destroy years of innovation. The companies in our case studies learned this lesson the hard way—you don’t have to.

Contact Yucheng IP Law today to schedule a confidential consultation. We’ll review your current situation, identify your specific risks, and recommend practical steps to protect your valuable trade secrets. Our initial consultation helps you understand your vulnerabilities without any obligation.

Visit our contact page to get started, or explore our full range of IP services to see how we can help protect every aspect of your intellectual property in China. For trademark-related protection, you can also submit a form to get a quote for your specific needs.

Remember: in trade secret protection, an ounce of prevention is worth a pound of cure. The cost of implementing proper protection measures is a fraction of what you’ll lose if your secrets are stolen. Don’t become another cautionary tale in future case studies—protect your business today.

This article is for informational purposes only and does not constitute legal advice. For

How Foreign Companies Lost Their Trade Secrets in China—and What You Can Learn