Sinovel to divest overseas units

Updated: 2013-07-03 05:45

By Joseph Boris in Washington (China Daily)

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Sinovel Wind Group Co, China's third-biggest maker of wind turbines, will divest four foreign units, including in the United States, where the company and two senior executives have been indicted on charges of stealing trade secrets.

Sinovel disclosed the termination of the overseas branches in a statement filed on Monday with the Shanghai Stock Exchange, saying its seven-member board of directors had approved the plan.

Besides the US, the locations are in Canada, Belgium and Italy. The company provided no further details.

Last Thursday, a US federal grand jury in Wisconsin decided prosecutors had presented enough evidence to charge Beijing-based Sinovel, along with executives Su Liying and Zhao Haichun, with stealing the software source code for turbine controllers made by American Superconductor Corp, a former supplier.

Su and Zhao, respectively, are deputy director of research and development and a technology manager for Sinovel.

Also charged was Dejan Karabasevic, a Serbian national who, as an employee of AMSC's subsidiary in Austria, was allegedly recruited to secretly copy the software code from AMSC computers, costing the company $800 million in intellectual-property losses, according to the US Justice Department.

Sinovel then retrofitted the stolen software into wind turbines it had previously manufactured for sale and installation in Massachusetts, where AMSC is based.

AMSC CEO Daniel McGahn said his company had worked with US authorities to verify that certain turbines produced by Sinovel contained AMSC's intellectual property. AMSC, in a statement the same day the charges were announced, called on Congress and US President Barack Obama's administration to "re-evaluate the US trade relationship with China" in light of the indictment.

The case poses yet another technology-related challenge for US-China relations and may be part of next week's bilateral Strategic and Economic Dialogue in Washington.

Leading the US delegation will be Secretary of State John Kerry, who, as a senator from Massachusetts in 2011, spoke in defense of AMSC's claims, and Treasury Secretary Jacob Lew.

On Sunday, Lew drew a distinction between theft of a company's intellectual property and trade secrets, as the US has repeatedly accused China of doing, with National Security Agency surveillance of foreign phone-call data and Internet traffic.

China has countered by saying that it is also a victim of cyberattacks, and it has cited disclosures by former NSA contract worker Edward Snowden as proof of US hacking against Chinese entities' networks.

Many officials and citizens in China see a US double standard, and the NSA programs have sparked anger even among Washington's allies.

"Cyber is part of the larger debate over China's problems in protecting intellectual property," said James A. Lewis, a former US foreign-service officer who studies technology and public policy at the Center for Strategic and International Studies.

(China Daily 07/03/2013 page16)