China Gains Stealth Access to World’s Hotels

marketwiredThe SNS INVNT/IP Global Consortium’s Code-named “Operation BedBug” has Just Uncovered a Massive Spree of Acquisitions in the Hospitality Industry by the Chinese Government and Its Affiliates, Sparking Major Security Concerns for Global Business Leaders and Government Officials

The Strategic News Service (SNS) Global Consortium, Inventing Nations vs. Nation-sponsored Theft of Intellectual Property (INVNT/IP), has just released findings from a previously secret research project, “Operation BedBug.” These discoveries, featured in a special Fox News report last Thursday, describe a massive global acquisition of hotels funded by the government of the People’s Republic of China (PRC).

The risk of collusion and spying on behalf of the Chinese government is so high that US government representatives are not allowed to hold sensitive meetings in locations owned by the Chinese government, known to be the planet’s greatest perpetrator of nation-sponsored IP theft,” noted INVNT/IP Director of Research Evan Anderson in describing China’s new campaign.

“Operation BedBug” is one aspect of the culmination of 5 years of economic research done by INVNT/IP in tracking the dynamics and threat environment of nation-sponsored intellectual property theft. The firm’s just-released white paper, “Theft Nation,” has been described as the “best available description of the Chinese national economy” by the United States Department of Justice.

invnt-ip-logoAn interactive map of potentially compromised hotel locations can be found at the INVNT/IP website, detailing brand names and management, and showing political connections to Chinese government families.

We will not be hosting our technology or business conferences at any of the hotels on this new map,” SNS CEO Mark Anderson said this week. The company recently joined the White House and the US State Department in moving events from the Waldorf Astoria after its recent purchase by China’s Anbang Insurance Group.

INVNT/IP is a global consortium of private firms seeking to reduce nation-sponsored theft of intellectual property since its founding in 2011. INVNT/IP conducts research and advocacy work to protect inventing companies and countries from nation state-actors and their affiliates. INVNT/IP staff give cabinet-level briefings to corporate officers and leaders in all branches of government in the US, UK, EU, and Australia. Corporate members receive access to all levels of INVNT/IP research, for the purpose of better protecting trade secrets from nation-sponsored theft.

Corporate membership in INVNT/IP may be applied for at www.invntip.com/join.

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Operation BedBug: China’s Stealth Campaign to Buy the World’s Hotels

Hotels Owned, Indirectly Controlled and Influenced by Chinese Government Interests

china-owned-hotels

Locations of Chinese government-owned, controlled and affiliated hotel properties.
This map currently contains 2,818 locations worldwide, properties with a total valuation of hundreds of billions of US dollars.

View the interactive map

 

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Open Letter: Why Chinese Investment in American Hotels Could Be The Kiss of Death for Their Elite Events Business

hotel

Distinguished Member of the US Hospitality Industry,

The recent spate of US and European hotel acquisitions by Chinese interests has the hospitality industry abuzz. From Anbang Insurance’s 2015 purchase of Manhattan’s landmark Waldorf Astoria to the more recent acquisition of Strategic Hotels, Chinese money is pouring into the industry. Anbang’s recent offer for the Starwood hotel conglomerate caused concern, and it would not be surprising were the company to make a new offer attempting to beat out Marriott’s last counter. With so much foreign investment at play and so many deals clearing at record value marks, US hotel interests are right to be examining the value propositions involved.

What could possibly be wrong with taking the highest available bid for your property?

The underlying reason for these acquisitions, and for the sheer volume of record-breaking offers, goes beyond basic investment and threatens hotel revenue.

Before we look further at that statement, I will explain why the Chinese are willing to pay so much and where the money is coming from, ending with an outline of why selling to a major Chinese buyer might be the worst management decision you ever make.

Quantity

For the past few years, Chinese buyers have been acquiring foreign interests of all kinds at a breakneck pace. 2016 is already a record-breaking year for Chinese acquisitions abroad, with outbound Chinese M&A activity sitting at 102 deals worth $81.6 billion this year alone. This kind of foreign acquisition points to a very weak domestic economy in China, with market fundamentals highly unstable and physical capital investments unreliable at best.

This phenomenon, which we at Strategic News Service (SNSä) call the China Collapse, has been building momentum since the beginning of 2015 (in fact, its roots lie in 20 years of fraudulent activity). The underlying reasons for the inherent instability of the Chinese economy have been laid out in our recently published work Theft Nation, featured in January’s 60 Minutes piece The Great Brain Robbery — the most-viewed investigative segment in that program’s history. (Theft Nation is available for purchase on the SNS website.)

For now, let’s focus on just a few important takeaways:

· The Chinese economy is built on a system of fraud and theft which make the stability of the yuan, equity markets, domestic real estate prices, and companies a myth

· The Chinese elite know this, and they are all trying to move their money out of the country

· All large companies in China are controlled by the government (there is plenty of evidence to support this)

· Chinese government interests, which know how many of their domestic “assets” are actually pending liabilities, also want their money out of the country and into sound investments before the “house of cards” comes down

· China’s biggest moneymaker is stealing the intellectual property of foreign companies and making copycat companies out of it

So, the big Chinese groups you see making purchases around the world at a record pace are all owned and funded (often with fake value) by the Chinese government. This should start to make sense. This is how Anbang Insurance, formerly a small-scale insurer in rural China, suddenly began making multibillion-dollar purchases seemingly overnight. So also goes Fosun International (Fosun Group), Dalian Wanda (Wanda Group), and myriad other large interests, some of which would normally have no business investing in the hospitality industry in the first place.

You’re probably thinking, “So far, so good. The Chinese economy is unstable, and the entire country wants to buy something valuable overseas, which means big hotel deals.” So why is this a problem for the hotel industry?

Quality

The problem is not the money itself, but its origin. These companies are run by the government of the People’s Republic of China (PRC). This means exactly what it sounds like. Do not forget that at the end of the day, China is a Communist totalitarian nation. This means that these companies are the Chinese Communist Party (CCP).

Each company has an internal board for “Party oversight.” Each is held responsible for promoting the Party’s interests abroad. Each invests the massive quantities of money given them by the government of the PRC to expand China’s stability, reach, and power, as a nation.

What is more, the companies are run by the children of the Party’s leaders. Anbang Insurance grew from $0 to $250 billion in assets in just over a decade, in large part because it is so closely married to the Party. According to an article in the LA Times:

“An investigation by the publication Southern Weekend found that those involved included Zhuo Ran, the granddaughter of China’s former ‘paramount leader’ Deng Xiaoping; Zhu Yunlai, son of former premier Zhu Rongji; and Chen Xiaolu, son of Communist Party revolutionary military commander Chen Yi.”

The implications of this inconvenient truth for the hospitality industry are tantamount. This is far more important than the risk of industry over-consolidation. As an entity now owned by the government of China, any hotel acquired by these large Chinese interests becomes immediately unsafe for sensitive meetings; and every well-informed government staffer and C-level executive knows it. These hotels become unacceptable for top-level meetups among the most successful — and for a hotel, the most high-value — customers.

Since, for obvious reasons, this issue isn’t publicly discussed, I will offer some anecdotal evidence. Here at SNS, we hosted our annual Predictions Dinner in New York at the Waldorf Astoria for many years, for world leaders in technology and global economics. What better choice than a landmark hotel with a history of political and private-sector caché, offering event hosting with excellent service? We were extremely happy with the Waldorf.

After Anbang acquired the hotel last year, we immediately had to switch venues. There was no question, no hesitation, and no choice. One cannot bring high-level officials and executives into sensitive meetings where intellectual property is discussed, in a hotel owned by the biggest (State-sponsored) thief on the planet. If one of the greatest worries of informed executives traveling on business is that the Chinese government has hacked their hotel network to steal trade secrets from hotel guests (and it is), is it acceptable to stay in a Chinese-owned venue in the US? Of course not. Will there be bugs imbedded in every wall, every desk, every chair? Probably. Is half the staff eavesdropping? Possibly. Is the network secure? Absolutely not.

This may sound like the paranoia of someone who spends too much time in the security world, but I have bad news: This is exactly what every major company with something valuable to discuss will be thinking. Just as SNS did, any sane executive will move post-haste out of a hotel owned by a Communist government with a proven interest in stealing sensitive information.

A few months after the Waldorf acquisition and our sudden venue change, President Barack Obama relocated meetings previously destined to be held at the hotel, for the same reason. The Waldorf Astoria is now losing business fast, and that business isn’t coming back.

If government officials and business executives are the kind of people you wish to have as customers, you do not want your hotel to be owned by the Chinese.

As you are aware, the recent spree of Chinese-US hospitality industry acquisitions now includes landmark hotels across the country, from the Waldorf to the Ritz Carlton Half Moon Bay, the Fairmont Chicago to San Francisco’s Westin St. Francis. We have hosted our annual 200-person, four-day Future in Review (FiRe) conference multiple years at both San Diego’s Hotel Del Coronado and the Montage Laguna Beach, and would have happily returned had it made sense to do so. Now we never will; both were recently acquired by Chinese interests.

For some of you this will be good news. Major hotels across the country (and the West Coast in particular, with the purchase of Strategic Hotels) are now shut to informed execs. This will mean a lot of shuffling of event hosting, and where there is shuffling, there is opportunity. For others which have already been sold out, this will be very bad news indeed.

The rising PRC has created an entirely novel dynamic in the M&A world. In the hospitality industry, this dynamic is a perilous one.

To your success, and wishing you good choices and good luck.

Sincerely,

Evan Anderson

Director of Research

INVNT/IP

Director of Marketing

Strategic News Service

E: evan@stratnews.com

Please feel free to contact me directly if you would like to learn more about the Strategic News Service, FiRe, or INVNT/IP (our intellectual property protection branch).

You can find us online at:

www.stratnews.com

www.futureinreview.com

www.invntip.com

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SNS INVNT/IP Consortium Director of Research Issues Warning to US Hospitality Industry

marketwired

Open Letter to US Hotel Owners and Managers Highlights Risks of Chinese Government Investment

Strategic News Service’s INVNT/IP Consortium issued an open letter warning last week [March 24, 2016] regarding Chinese government investment in the US hospitality industry. The letter focuses on the recent offer by Anbang Insurance Group Inc., a Chinese government-owned conglomerate currently striving to expand holdings in the US hospitality industry through the purchase of major US hotel interests. The open letter, published on March 24th, detailed the potential problems with Chinese government ownership in the industry.

The increase in Chinese-foreign M&A activity in the last few years is stunning in scale,” noted Evan Anderson, INVNT/IP’s Director of Research. “The funding for this is often coming from the Chinese government, and industry leaders across the board should be thinking carefully about the possible consequences of selling assets to that entity. In the hospitality industry, we’re looking at Chinese government control of the country’s most important, and sensitive, meeting places. These hotels are an intellectual property hotbed, and it’s critical to understand them as such. They are a part of our inventive infrastructure, and they are vulnerable.

As of Monday, March 28th, Anbang Insurance Group raised its bid on Starwood Hotels to $82.75 per share, exceeding Marriott’s last offer of $21 and 0.8 shares of Marriott per share, at a cash price roughly 4,000% above Marriott’s original bid of $2.00 (and 0.9 shares) per share.

The letter can be seen here: https://medium.com/strategic-news-service/open-letter-25698002c1fe#.dl9qgh1su

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SNS INVNT/IP on BBC Business Matters

From the BBC:

“China’s State Council is due to announce fresh GDP figures for 2015 soon after we go to air. Official sources are predicting that they’ll show growth of around 7% but does that number reflect anything like reality? Mark Anderson of Strategic News Service thinks not – and he’s convinced that impressive growth figures from recent years have been the result of what he calls systemic fraud and intellectual property theft. Those are the themes of a new report called Theft Nation. He spoke to us from Washington State.”

Listen to the discussion here: http://www.stratnews.com/mediafiles/news/BusinessMatters-20160119.mp3

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“60 Minutes” on Cyber-Espionage with SNS INVNT/IP

To All SNS Members:

invnt-ip-logoAs a member of SNS, you are no doubt aware of our ongoing efforts to reduce state-sponsored theft of crown jewel intellectual property, under the auspices of the global consortium INVNT/IP (Inventing Nations vs. Nation-Sponsored Theft of IP). We want to share with you news of a 60 Minutes television broadcast on this topic, scheduled to air this coming Sunday evening, January 17th, on CBS. (The published schedule lists the showtime as 8pm PT, but please check your local listings.) This program was the direct result of our INVNT/IP work with 60 Minutes reporter Lesley Stahl and her team during and after the Aspen Security Forum last July. We have been working with them since that time to make this happen.

We are particularly grateful to John Carlin and Marc Raimondi at the Department of Justice; Stephanie Douglas, Special Agent Kevin Phelan, and key personnel leading the FBI; Dmitri Alperovitch at CrowdStrike; and Evan Anderson, author of the research report “Theft Nation: How IP Theft Drives the Chinese National Business Model, and Its Effect Upon the Global Economy,” which provides the source material for the program. Almost everyone involved has read this report and/or been personally briefed by our team prior to the production.

We appreciate your interest in this major issue and your support of our efforts. As you know, while most of the work of our INVNT/IP Global Consortium is done in secret, we also recognize the need for public education to garner public support and corporate engagement in solving the problem of institutionalized theft and damage to innovation-based national economies.

Please feel free to contact us directly if you have any questions about this work.

Sincerely,

Mark R. Anderson

CEO
Strategic News Service(tm): http://www.stratnews.com
SNS Interactive News: http://inews.com
Blog: A Bright FiRe: http://www.abrightfire.com

Chairman
The SNS Future In Review(tm) Conference: http://www.futureinreview.com
INVNT/IP: http://www.invntip.com
SNS Project Inkwell: http://www.projectinkwell.com

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China: Innovator or Thief?

From the BBC Business Daily:

China’s latest factory data is the worst in 3 years. What’s wrong with China’s business model? Mark Anderson is CEO of InventIP, a consortium of US companies and experts who’ve put together a report, claiming that some 50% of Chinese growth in recent decades has been founded on the stealing of western business ideas, via old-fashioned industrial espionage and more sophisticated state-sponsored hacking. He exclusively tells the BBC the basis for his claims. And we also hear from Chinese author Edward Tse, who says the old stereotypes of Chinese companies leeching off western technology and possessing few ideas of their own is outdated. He’s spent years advising Chinese companies, and in a new book, China’s Disrupters, he claims a new genuinely entrepreneurial and innovative spirit has transformed the country’s business climate.

Listen to the discussion

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Chinese Economy Facing Collapse: New Report Indicates up to One-Half GDP Growth Rooted in Theft and Fraud

Research by INVNT/IP Consortium Shows Instability Is Natural Result of PRC National Business Model

A study just completed by the INVNT/IP Global Consortium suggests that China is experiencing a serious episode of domestic economic collapse, with up to 50% of GDP growth rates reported over the last three decades derived directly from the theft of intellectual property and fraudulent practices around its re-branding, amplification, and subsidized sale in global markets.

The economic instability caused by a reliance on this model has left China and its Standing Committee in a position of extremely high risk, according to the study, which is scheduled for full release later this year.

INVNT/IP CEO Mark Anderson explained: “We have just completed the best description of the Chinese national business model available today, and up to one-half of China’s growth is based on fraud and theft. The implications of this research are a cause for deep concern among China’s global partners and investors. We are now convinced that almost all aspects of the modern segments of the Chinese economy are both illegal and unstable, from the IP theft that drives it to fraudulent banks, structural trade barriers, continual currency manipulation, and WTO-prohibited subsidies.

“The result is the short-term appearance of being rich, but the longer-term risk of instability and collapse, which it is facing now.”

According to Robert Atkinson, founder and president of the Information Technology and Innovation Foundation (ITIF), “China has long relied on currency manipulation to support its mercantilist, export-driven model, and its recent decision to devalue the RMB is no different. Notwithstanding apologetic responses from organizations like the International Monetary Fund (IMF) and the US Treasury, this most recent decision continues China’s negative-sum policies of helping its own economy at the expense of the global economy.”

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COFES Keynote: Security, Risk, and Software: Protecting Crown Jewels from State-sponsored Theft

cofes-keynote

Mark Anderson, Founder & CEO, INVNT/IP

Security, Risk, and Software: Protecting Crown Jewels from State-sponsored Theft

COFES 2015: Stepping Back to See the Big Picture

 

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White House Executive Order Takes Strong Stance On Cyber Espionage

Executive Branch Commits to Serious Penalties for Crown-Jewel Intellectual Property Theft – Addresses Espionage Described by INVNT/IP (an SNS Initiative) As “National Emergency”

invnt-ip-logoThe INVNT/IP Global Consortium, a Strategic News Service global initiative, has issued a strong public endorsement of President Barack Obama’s presidential order leveling sanctions against those who steal corporate trade secrets. It applauds and supports the President and Michael Daniel, Special Assistant to the President and Cybersecurity Coordinator, in their work to curtail the ongoing epidemic of other nations stealing America’s “crown jewel” intellectual property. The Consortium has now shown that this practice does irreparable harm to the US and global economy, and believes that President Obama’s Executive Order 13964, signed on April 1st, is the first major step in a difficult path toward more equitable global competition for innovating US firms.

INVNT/IP internal research shows that Chinese cyber espionage – an ongoing nation-sponsored project targeting crown-jewel intellectual property in firms worldwide – caused at least USD 2.27 trillion in damages to the US economy in just four economic subsectors between 2003 and 2013.

Non-classified INVNT/IP information indicates that the People’s Republic of China is responsible for 80% to 90% of the theft of crown-jewel intellectual property. INVNT/IP’s work further shows that Chinese state-sponsored groups are currently targeting innovating firms in 402 different sectors specifically chosen by the Politburo Standing Committee, seeking to steal and “digest” the intellectual property of leading firms and government bodies in the United States and abroad.

The Consortium anticipates that the President’s order paves the way for further action regarding the issue of economic espionage perpetrated against US firms and government organizations. In declaring such theft a national emergency, the directive authorizes strict economic consequences, including seizure of assets, restriction of travel, and prosecution by the Treasury and Attorney General in cases of significant financial harm to US interests through malicious cyber activity.

“The INVNT/IP Consortium encourages both parties in Congress to take additional steps in this direction, united by the understanding that technology drives the global economy, and state-sponsored theft of crown-jewel secrets is a direct attack on American jobs, families, companies, and the nation’s economic security.

“We fully support the President in this action and applaud his leadership in identifying the Number One threat to American workers and business owners today. Stealing corporate trade secrets is a calculated, illegal activity which has already destroyed entire global economic sectors, creating trillions of dollars in permanent damage to American towns and cities, our most innovative companies, and the country itself. The competitive struggle so often described today between the US and China is not one of legitimate competition, but rather is a battle between thieves and victims. This has to stop, and the President’s order is a great first step,” said Mark Anderson, CEO of the INVNT/IP Consortium.

INVNT/IP represents the world’s top technology companies in working with lead government agencies and universities worldwide to protect “crown jewel” intellectual property. The Consortium conducts active programs for the promotion of IP value recognition and protection through cooperation among its corporate members and global government network. It currently operates in Australia, the US, the UK, and the EU.

For more information about INVNT/IP, visit the website: www.invntip.com.

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