Hacking a ‘substantial obstacle’ for business in China

Tales of cyber warfare, hacking and industrial espionage, many of them reportedly emanating from China, have abounded in recent months and many executives are increasingly nervous about taking their laptops with them when coming to Asia to do business.

Their nerves will have been jangled further by the news that South Korea, the world's most-wired country and one of its biggest tech hubs, has been hit with a wave of attacks on major media and banks by what the South Korean military has described as "malignant code".

Overseas agencies were blamed, possibly North Korea or China again.

International newspapers have been targeted by Chinese hackers, businesspeople claim their laptops have been tampered with in their hotels, and there are many tales of corporations finding files missing or projects turning up at rivals after in-house theft or hacking.

"Whether it is world of finance, critical infrastructure or military assets, there is a constant battle already being played out in cyberspace. While some may over-sensationalise incidents, the reality is that we are still likely to see more of it in 2013," said Dermot Williams, founder and head of Irish-owned IT security and data communications solutions company, Threatscape.

Prolific player
Williams said there was little doubt that China was among "the most prolific and relentless actors in cyber warfare". "But is the USA just as capable and active in cyber offense? You betcha," he said.

Beijing tends to deny the reports, saying it is a victim of hacking. The Chinese blame the US, saying Washington is talking up threats from cyberspace to help stop plans by the Obama administration to cut defence spending.

Twenty-six per cent of firms in the US Chamber of Commerce in China said their proprietary data or trade secrets had been compromised or stolen from their China operations.

“This poses a substantial obstacle for business in China, especially when considered alongside the concerns over IPR (intellectual property rights) enforcement and de facto technology transfer requirements,” the chamber said.

US congressman Dutch Ruppersberger said in February that American companies suffered estimated losses in 2012 of more than €234 billion due to trade secret theft, much of it the result of Chinese hacking.

The chamber’s survey also cited a steep rise in concerns over IPR enforcement, with 72 per cent of respondents saying enforcement was ineffective or totally ineffective, an increase of 13 percentage points over last year.

US cyber security group, Mandiant, in February said that cyber attacks by a state-sponsored group known as "Comment Crew" or "Shanghai Group" were behind attacks involving hundreds of terabytes against scores of corporate victims over the past seven years.

The most sophisticated and relentless cyber attacks today are typically of one of three types – nation states/cyber warfare, cyber criminals or cyber activists.

“Understanding the motives and methods of these different groups (and there can be a lot of overlap between them, particularly when it comes to their attack vectors) is imperative today for any large organisation with business critical data systems, and yes we find people take the threats very seriously,” said Williams.

To combat the threat, he advises companies to focus on their people as much as their systems in their security initiatives.

“Remember to secure the route data can take out of your organisation just as carefully as you guard inbound connections at the perimeter. Many cyber attacks are motivated by a desire to steal information – and once they have compromised your network and gained access to your critical systems, the attacker will eventually need to ‘exfilrate’ what they are stealing,” said Williams.

It’s also a good idea to continually monitor the data from multiple elements of your IT infrastructure so that you can spot trends and incidents which one data source alone might not be able to discern, said Williams. “Threats evolve – so must your defences.”