Canadian Corporate and Commercial Secrets: Target of Foreign Spies

While intellectual property (IP) remains a target of choice of state-led intelligence operations, foreign spies also demonstrate a fast-growing interest for other commercial secrets and corporate confidential information. This reality implies that more Canadian companies may be at risk of foreign espionage than usually assumed. How should companies adapt to this ever-evolving geopolitical reality, driven by hyper-connectivity, fierce competition for technology leadership, and the shifting status of the private sector?

The issue of foreign economic espionage, neglected or understated for many years, is now drawing more and more attention in Canada. In November 2022, the arrest of an alleged Chinese spy, accused of having compromised industrial secrets possessed by Hydro-Québec, contributed to bringing this phenomenon into sharper focus. Nevertheless, economic espionage remains too often understood as an issue strictly related to IP and technological secrets. Many companies not actively engaged in research and development (R&D) or possessing cutting-edge industrial technologies may consider themselves insulated from the threat of foreign economic espionage.

This white paper intends to demonstrate that economic espionage is evolving, quietly diversifying its purposes and targets. Indeed, the theft of commercial and corporate secrets, aimed at snooping on rival companies’ structures, leadership, and strategies, is significantly growing in importance. This issue, which we designate here as commercial and corporate espionage, is increasingly deployed by nation-states determined to tighten their grip on specific international markets and industries, and to increase the influence of their domestic or state-owned companies. To this end, these foreign powers (and, in certain circumstances, even Western countries such as Canada) do not hesitate to mobilize the whole might of the state security apparatus to help bolster their industries competitivity and empower domestic business circles.

This situation presents significant implications for Canada’s private sector. First, the nature and purposes of commercial and corporate espionage suggest that more companies may be at risk than commonly assumed: organizations that do not necessarily possess specific know-how or technological secrets may still represent significant targets of state-sponsored economic espionage. Second, this also suggests that relatively small companies with few information security resources may face well-trained and highly competent malicious state actors. Thus, this document aims to draw Canadian organizations’ attention to this threat, explain its underlying issues and challenges, and suggest ways to proactively address this problem.