Designer Seed Thought to Be Latest Target by Chinese
Tuesday, February 4, 2014
By John Eligon and Patrick Zuo, The New York Times
KANSAS CITY, Mo. — The case of the missing corn seeds first broke in May 2011
when a manager at a DuPont research farm in east-central Iowa noticed a man
on his knees, digging up the field. When confronted, the man, Mo Hailong, who
was with his colleague Wang Lei, appeared flushed. Mr. Mo told the manager
that he worked for the University of Iowa and was traveling to a conference
nearby. When the manager paused to answered his cellphone, the two men sped
off in a car, racing through a ditch to get away, federal authorities said.
What ensued was about a year of F.B.I. surveillance of Mr. Mo and his
associates, all but one of whom worked for the Beijing Dabeinong Technology
Group or its subsidiary Kings Nower Seed. It resulted in the arrest of Mr. Mo last
December and the indictment of five other Chinese citizens on charges of
stealing trade secrets in what the authorities and agriculture experts have called
an unusual and brazen scheme to undercut expensive, time-consuming research.
China has long been implicated in economic espionage efforts involving
aviation technology, paint formulas and financial data. Chinese knockoffs of
fashion accessories have long held a place in the mainstream. But the case of Mr.
Mo — who was arraigned last week in Des Moines, pleaded not guilty and
remains in custody — and a separate one in Kansas last year suggest that the
agriculture sector is becoming a greater target, something that industry analysts
fear could hurt the competitive advantage of farmers and big agriculture alike.
"Agriculture is an emerging trend that we’re seeing,” said Robert Anderson
Jr., assistant director of counterintelligence at the F.B.I., adding that the trend
has developed internationally in the last two years. "It’s pretty clear cut. Before
then, the majority of the countries and hostile intelligence services within those
countries were stealing the other stuff.”
The defendants in the Mo case visited numerous seed testing fields in Iowa
and Illinois that were used by the big agriculture companies Pioneer, Monsanto
and LG Seeds, the authorities said. They bought a test plot of their own in
Illinois, according to the complaint, and concealed stolen seeds in, among other
things, microwave popcorn boxes and napkins from Subway restaurants.
The seeds that they were after are called inbreds, meaning they come from
self-pollinating corn plants. Inbreds are eventually crossed with other inbreds to
create hybrid seeds that are then sold to farmers, and they are bred to be durable
in the face of drought and pests. One inbred line takes five to eight years of
research and can cost $30 million to $40 million to develop, federal prosecutors
A company or farmer can replant a stolen inbred seed and eventually use the
new seeds to cross with a separate inbred to produce a hybrid — a shortcut that
avoids years of costly research.
"These are quite brazen facts,” said Jay P. Kesan, a professor at the
University of Illinois who specializes in intellectual property and technology law.
"What makes this different, I guess, is really the extent to which these entities
seem to have gone to try to get at these trade secrets.”
Mr. Mo, 44, was arrested at his home in Boca Raton, Fla., but the other
defendants are not in custody, and the authorities have declined to comment on
their status. Mr. Mo’s lawyer denies that his client, a seed dealer and permanent
resident who he said moved to the United States 15 years ago, did anything
wrong. In the other seed case, Zhang Weiqiang, of Manhattan, Kan., a rice
breeder for Ventria Bioscience, a Colorado-based biopharmaceutical company,
and Yan Wengui, of Stuttgart, Ark., a research geneticist for the federal
Agriculture Department, are accused of giving proprietary rice seeds that
contained medicinal qualities to crop researchers in their native China.
In 2012, Mr. Zhang, 47, a permanent resident, and Mr. Yan, 63, a
naturalized citizen, both made trips to China, where the authorities said they
discussed research they had performed in the United States with Chinese
scientists. The men then arranged for a group from the Chinese Academy of
Agricultural Science and the Crop Research Institute in China to travel to the
United States last year. They brought the group to the Ventria facility in Kansas
where Mr. Zhang worked and to his home, and to the federal agriculture facility
in Arkansas where Mr. Yan worked.
The proprietary rice seeds were found in the luggage of members of the
Chinese delegation as they tried to leave the country, according to the
indictment, and at the home of Mr. Zhang, who, along with Mr. Yan, was
arrested in December.
As seed technology has become more costly and time consuming to develop,
"in some people’s eyes, it makes it more advantageous for them” to try to steal it
because it "enables them to get a jump on three to five years of research on the
back of somebody else’s time and effort that was put in,” said Andrew W.
LaVigne, the president and chief executive of the American Seed Trade
American farmers are concerned that stolen seeds could give their Chinese
counterparts an unfair advantage because they could get access to the
technologically advanced hybrids at lower prices, said Dave Miller, the research
director for the Iowa Farm Bureau.
Foreign vegetable seeds make up 80 percent of the Chinese market, said
Guo Ming, a consultant specializing in corn breeds for a Beijing-based
agribusiness firm. Multinational corporations’ share of the corn seed market in
China grew from a tenth of a percent just over a decade ago to 11 percent in 2011,
according to an article published last year in People’s Daily, the Communist
Party’s official newspaper. Although China’s domestic corn output has been
growing over the years, the yield per corn plant has not grown significantly.
The Chinese have not developed a major corn hybrid since 2001, though the
country’s second most popular corn, which debuted in 2007, was a collaboration
between Pioneer and a Chinese company.
Analysts say one of the major problems is the fragmented seed industry in
China. Much of the breeding research is done in state-funded universities and
academies, and there is poor communication between them and the companies
that sell and trade the seeds. So research often fails to yield strong commercial
results. This structure also has fostered theft within the Chinese seed market,
Ms. Guo, the breeding consultant, said.
"Some seed trading companies just went to breeding bases to steal the
seeds,” she said. "Some breeding companies would outsource breeding to
farmers, but when the seeds were harvested, the farmers wouldn’t sell back to
the breeding company because seed trading companies pay more.”
Those trading companies would then sell the seeds at a premium, Ms. Guo
continued, making an exorbitant profit on a product that cost them nothing to
"That’s the ethos here,” she said.
That attitude, some say, could mean that the Chinese have long been
stealing from American seed companies without getting caught. As the Chinese
government encourages more innovation from seed producers, the desire to steal
plant technology could grow.
"These varieties that Pioneer has, have shown to be better than the best
varieties they’ve got in China,” said Carl E. Pray, a professor of agriculture, food
and resource economics at Rutgers. "If they’re going to compete with
multinationals, even in China, they need to get access to the basic material that
multinationals are using.”
John Eligon reported from Kansas City, and Patrick Zuo from Beijing.