Chinese Companies Poaching Western Tech Talent: Undercurrents in a Global Competition for Talent

Chinese Companies Poaching Western Tech Talent: Undercurrents in a Global Competition for TalentReports from November 28th highlight a growing trend: Chinese companies are aggressively recruiting engineers from Western high-tech sectors, offering salaries three times their current earnings to gain a technological edge. This action has sparked international attention, revealing the intensifying global competition for tech talent and prompting nations to re-evaluate and strengthen regulations

Chinese Companies Poaching Western Tech Talent: Undercurrents in a Global Competition for Talent

Reports from November 28th highlight a growing trend: Chinese companies are aggressively recruiting engineers from Western high-tech sectors, offering salaries three times their current earnings to gain a technological edge. This action has sparked international attention, revealing the intensifying global competition for tech talent and prompting nations to re-evaluate and strengthen regulations.

The Brain Drain: The Case of Zeiss

Last autumn, management at Carl Zeiss SMT, a German company producing crucial components for the world's most advanced semiconductors, discovered a Chinese company attempting to poach its employees through headhunters. The technology involved is highly sensitive. Insiders revealed that employees with knowledge of Zeiss's sensitive technologies received invitations from the Chinese company, via LinkedIn messages, emails, or phone calls, promising salaries three times their current rate. This triggered an ongoing investigation by German intelligence agencies.

This is not an isolated incident. Numerous Chinese companies are attempting to recruit top engineers in advanced semiconductors, AI, and other fields, targeting Taiwan, parts of Europe, and Silicon Valley. To avoid attracting local government scrutiny, some companies even establish local subsidiaries to mask their Chinese origins.

Global Responses: From Taiwan's Stern Measures to Cautious Observation in the West

Reactions to these mass recruitment drives vary. Taiwan has adopted stringent measures. In September, authorities launched a crackdown on "illegal" poaching by mainland Chinese tech firms, accusing eight companies of threatening Taiwan's competitiveness. This follows new regulations introduced in 2022, prohibiting the leakage of crucial technology related to security and industrial competitiveness, with penalties of up to 12 years imprisonment and approximately $3 million in fines. As one Taiwanese official stated, "Tech secrets are in the engineers brains; sometimes whole teams are poached." From 2020 to July 2024, Taiwan investigated around 90 poaching cases involving semiconductors, electronics, and machinery. A recent crackdown involved raids on 30 locations across four cities and the questioning of 65 individuals.

South Korea has also increased penalties for the illegal transfer of sensitive technologies to foreign entities. In contrast, the US and Europe remain relatively open to most Chinese recruitment activities, although European intelligence officials are closely monitoring Chinese entities attempting to recruit experts from European high-tech companies.

The Semiconductor Spotlight: ASML and its Suppliers

Western security officials are particularly concerned about targeting of ASML Holding (ASML) and its suppliers, including Carl Zeiss. ASML is the sole manufacturer of EUV lithography machines, producing chips used in advanced AI and other applications. Data reveals that since 2021, one Chinese company has employed numerous engineers previously working on lithography and optical technologies at ASML and other Western firms. ASML's registration information shows a former engineer founded a competing company in China a decade after leaving ASML. A former ASML employee in Taipei reported receiving monthly recruitment invitations from China since leaving in 2020, but never responded. ASML itself states it has not detected unusual recruitment activity targeting its employees and that its attrition rates remain low in the Netherlands and globally.

China's Response and Strategy

The Chinese Ministry of Foreign Affairs stated it was unaware of the specific details of the alleged talent poaching, emphasizing that China's interaction with foreign talent is no different from other countries, and that claims of intellectual property theft are baseless.

However, China has undeniably prioritized talent recruitment, especially in fiercely competitive fields like AI. A 2017 AI development plan mentioned attracting top international scientists in machine learning, autonomous driving, and intelligent robotics. Paul Triolo, a partner at the consulting firm DGAGroup, noted that recruiting foreign engineers provides a shortcut for Chinese companies. While many engineers reject such offers due to reputational risks and concerns about integrating into Chinese corporate culture, the "scattergun" approach of contacting numerous candidates means some individuals with relevant knowledge join new companies.

Obfuscation Tactics: Utilizing Local Companies and Headhunters

To conceal their identity, some Chinese chip companies collaborate with headhunters in Singapore and Hong Kong, establish recruitment offices in Taiwan, or even partner with local Taiwanese individuals to hire engineers. Taiwanese authorities state that they've observed an increase in mainland China's targeting of Taiwanese talent and trade secrets since 2015.

Germany's Concerns and Cautious Approach

The German government is concerned about the poaching of Zeiss engineers. Zeiss produces specialized mirrors that are core components of ASML's precision EUV lithography systems, technology considered extremely advanced. Insiders revealed that last autumn, Zeiss employees reported the poaching attempts to management, providing details of the recruiters. While no employees ultimately switched jobs, the parent company reported the incident to government officials, leading to the German intelligence investigation. The same Chinese company also showed similar interest in German company Trumpf, which produces laser amplifiers used in creating the ultra-fine structures of chipsequally advanced technology. A Trumpf spokesperson stated that the company has indeed noted increased approaches from Chinese companies targeting employees, but these attempts were unsuccessful. Germany has maintained a restrained approach to employment decisions, avoiding excessive intervention. Many government officials are skeptical about the effectiveness of preventing such poaching.

Conclusion: The Future of Global Tech Competition

The phenomenon of Chinese companies poaching Western tech talent reflects the intensifying global competition in technology. This raises concerns about intellectual property protection, national security, and prompts nations to reassess talent management mechanisms, seeking a balance between protecting their technological advantage and fostering international collaboration. Effectively addressing this challenge will be a key issue for governments and businesses alike, involving complex factors such as trade secrecy, intellectual property protection, international cooperation, and competition. A fair, transparent, and orderly global environment for the flow of tech talent requires global cooperation.