Foxconn versus BYD (A): Commercial Espionage or Learning by Hiring?

How should a Chinese company respond when it suspects a rival is stealing trade secrets?
Yahong Li, Jiangyong Lu, Zhigang Tao, Shang-Jin Wei  | Fall 2009
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The Ciber Case Series

Taiwan-based Foxconn, the world's largest contract manufacturer of mobile phones, gained a Chinese competitor when BYD Company began manufacturing mobile phones in 2003. BYD at first used a learning-by-hiring strategy, wooing workers from Foxconn to help build its new business. However, in 2006 Foxconn discovered that BYD appeared to be stealing its trade secrets; subsequently, a BYD employee who used to work at Foxconn and a current Foxconn engineer were arrested. With the case developing in China, where punishment of trade secret theft is often light, Foxconn pondered its options. In this case students consider Foxconn and BYD's operations, as well as intellectual property laws in China, to debate how Foxconn should respond to the trade secret theft and the hiring away of many employees by BYD. This is the first of a two-part case.

This is a two-part case study.

Case ID: 090316
Supplemental Materials: Teaching Note

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