UNCLASSIFIED

Targeting U.S. Technologies

Regional Collection Trends


East Asia and the Pacific

Overview

As was the case in previous assessments, entities from the East Asia and the Pacific region retained their status in FY06-FY07 as the most prolific collectors of U.S. technology, far outstripping collection efforts emanating from the Near East region, the second most frequently noted collector. However, there was a significant change in the frequency of which kind of entity, within the region, originated the contact. In FY04-FY05, most Suspicious Contact Reports (SCRs) originated from "Government" entities located in the region. In FY06-FY07, however, "Commercial" entities dominated as the region's most active collectors. East Asia and the Pacific entities used "Attempted Acquisition of Controlled Technology" as the predominant Method of Operation (MO) to gain restricted information. Also during this reporting period, East Asia and Pacific entities focused their collection efforts on "Information Systems" technology, especially targeting various components of military "Command, Control, Communication, Computers, Intelligence, Surveillance, and Reconnaissance" (C4ISR) applications.

Collector Affiliations

DSS analysis of the 696 SCRs associated with actors in the East Asia and Pacific region revealed that "Commercial" entities in the region surpassed "Government" affiliated collectors as the preeminent entities attempting acquisition of restricted, classified, and proprietary technology.

During FY06-FY07 "Commercial" collection within the East Asia and the Pacific region accounted for 42 percent of all SCR reporting. This category's significant increase over FY04-FY05 figures drove a concomitant change in the overall standings of collector affiliations, with "Commercial" affiliations replacing "Government" as the most commonly encountered collector-entity. In fact, the "Government" collector category, despite consistent collector reporting, fell from first to the third position in the hierarchy slightly behind "Government Affiliated" entities. "Commercial" collection attempts often mirrored "Government" collection efforts as an effective way for surrogate collectors to meet government collection requirements. The increase is also partially due to the rise of "Commercial" non-traditional collectors such as post-graduate and graduate students applying for positions in U.S. cleared industry. Analyst Comment: We cannot rule out the increase of non-traditional collectors based on increased participation in the global marketplace, but the shift in collector affiliation is more likely due to governmental entities' successful use of legitimate and illicit front companies as surrogates to acquire controlled technologies. It is likely that commercial affiliations increased as third party countries, within the East Asia and Pacific region, used smaller commercial venues as surrogates to navigate around restrictive import / export procedures. (Confidence Level: Moderate)

Affiliations

Methods of Operation

In FY06-FY07, the top three East Asia and Pacific collection MOs remained unchanged from FY04-FY05, but the order of precedence changed. Cleared Defense Contractors (CDCs) reported the most frequent MO was "Attempted Acquisition of Controlled Technology," reflected in 35 percent of the SCRs. "Request for Information" (RFI) dropped to second at 28 percent of reporting, while "Solicitation and Marketing of Services" remained as the third most active method of choice. Also, a common collection trend was to combine the MOs of "Attempted Acquisition of Technology" or "RFI" with "Exploitation of a Foreign Visit (CONUS)." For example, often a visiting delegation would request additional classified information during a visit to the CDC. Analyst Comment: This moderate increase of attempted acquisition of controlled technology was likely attributable in part to the influx of engineers into CDCs as part of joint memorandums of agreement giving direct access to U.S. technology. It is likely these collectors are no longer just seeking information but are attempting to procure specific items for development in various military and civilian programs. (Confidence Level: High)

Methods of Operation

Targeted Technologies

The East Asia and Pacific top five targeted technologies did not change significantly from FY04-FY05. Most of the technology categories remained the same or saw a slight increase in reporting; however, "Armaments and Energetic Materials" technology dropped from the second position to the fifth position. "Information Systems" technology retained its prominent position as the most sought-after technology, consistent with the collection focus on C4ISR and military systems technologies. Each of the top five targeted technology areas represented ongoing "Commercial" and "Government" efforts to modernize and develop R&D programs. Analyst Comment: This increase of information systems is likely attributable to collectors focusing on R&D shortcomings and desiring to modernize aging military and C4ISR capabilities. (Confidence Level: High)

Targeted Technologies

Analytical Forecast

Entities originating from East Asia and the Pacific region are highly likely to remain focused on acquiring advanced technologies to strengthen their indigenous R&D programs. With increased military systems technology collection efforts, government and government affiliated collectors are likely to apply pressure on commercial entities to continue and increase their collection efforts. Also, given the trade restrictions in the East Asia and the Pacific region, collection attempts are likely to be more subtle via third party commercial collectors as a means to skirt import / export restrictions. Commercial entities, through joint agreements and potential purchase of U.S. companies, are highly likely to engage in dual-use technology acquisition. Technology acquisitions will likely focus on areas of R&D shortcomings, especially C4ISR technology and its subset, Unmanned Aerial Vehicle (UAV) technology. As the region with the most active collectors, it will be critical for defense contractors to clearly identify technology end users to protect their products from reverse engineering and exploitation. Countering this prolific threat will require the highest degree of awareness and diligence within the U.S. cleared industry. (Confidence Level: High)

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