"Is the scenario likely? Wouldn't you have patented the idea in most major markets long before commercialising it? "
Are you unfamiliar with the Chinese approach to patents? A patent provides no protection within China, hence the enormous range of knock-off Chinese goods.
As to likely, it's not just likely, it's a deal that has been done many times. China is information hungry and will take data even if they don't have a clear reason to use that information today. They have been caught fingers in the pie more than once obtaining both commercial and military information. Have a look at GhostNet, Operation Aurora, Green Dam, Lan Lee and Yuefei Ge for example.
There's also this indictment.