China’s Private Security Companies: Domestic and International Roles

Aubervilliers is a bustling suburb of Paris known for its small and medium-sized enterprises. Among its predominantly Arab and African population are 4,000 Chinese, more than a quarter (1,200) of whom are traders prominent in Aubervilliers’s textile industry (Daily Mail, May 10, 2015). In recent years, the Chinese have achieved impressive economic success, making them a prime target for local criminals. According to the Franco-Chinese Friendship Association, more than one hundred Chinese have been attacked and robbed in Aubervilliers since December 27, 2015 (Shenzhen Daily, August 24).

While walking with a friend on August 7, 2016, Zhang Chaolin, a textile designer and a father of two, was viciously beaten by three thieves. After five days in a coma, Zhang passed away as the latest casualty in Aubervilliers’s crime epidemic (RFI, August 15). The attack struck a chord with the local Chinese community, resulting in a street demonstration against targeted attacks on the area’s Chinese residents.

The death of Zhang Chaolin highlights a long-standing problem for overseas Chinese enterprises. Whether it is small business owners or large corporations, the Chinese often find themselves helpless in areas where law and order cannot be properly maintained. The 2004 murder of eleven Chinese workers in Afghanistan by local gunmen was the catalyst that changed Chinese perceptions on commercial activities abroad (People’s Daily, June 25, 2004). More than a decade later, Chinese companies are increasingly opting to invest in protective measures, chiefly in private security. As Chinese enterprises continue to “go out,” especially to dangerous regions of the world where lofty profit is accompanied by equally high risk, security is becoming more and more important for any smart investor.

Enter the Chinese private security companies (PSCs). Chinese PSCs growth has steadily accompanied China’s economic takeoff since the early 2000s, and is presently a multi-billion RMB industry. Their growth and rising prominence in firms at home and abroad acts as a useful indicator for the Chinese economy while posing important questions about the future of China’s domestic and foreign policy. Available evidence supports the idea that although the Chinese government does not proactively suppress PSCs, existing laws limit their growth potential, and ultimately their ability to compete on the international market.

What Constitute a Chinese PSC?

Unlike their large and globally renowned Western counterparts, Chinese PSCs are small, young and largely unknown. Most firms are not more than a decade old. As of 2013, there are 4,000 registered PSCs in China employing more than 4.3 million security personnel (QQ News Online, October 20, 2013). [1] Prior to 2010, the private security industry was in a legal limbo because of the lack of laws and regulations, but the passage of the “Regulation on the Administration of Security and Guarding Services” in January 2010 supplied the legal definition and framework needed for mainstream growth.

The “Regulation” categorized PSCs into two types: security companies (保安服务公司) and security companies engaged in the armed escorting services (从事武装守护押运服务的保安服务公司) (Central People’s Government of the PRC, October 13, 2009). The industry is advised and monitored by China’s public security system (公安机关) which has the power to approve or deny any PSC business license application. To register as the former, one must have at least one million RMB of registered capital, a professional staff with a clean record, facilities and equipment needed for security service, and “a sound organizational structure and security and guarding services management system, post accountability system and security guard management system” (Law Info. China, October 13, 2009). The latter requires registered capital assets of at least ten million RMB, “being a wholly state-owned company or having state-owned capital which accounts for at least 51 percent of the total amount of its registered capital,” and most importantly, “having escorting security guards who meet the requirements as prescribed in the ‘Regulation on the Management of Use of Firearms by Full-time Escorting Security Guards’ (Law Info. China, October 13, 2009).” An analysis of a dozen registered, leading Chinese PSCs reveals that all belong to the category of unarmed security companies, except one that proudly proclaims its contractors’ experience with firearms in a “mission abroad” (Weilong Baobiao). A review of news reports on the industry further confirmed the near absence of armed security companies. This is likely due to the government’s long-held concern over allowing civilian firearm ownership—a major barrier for PSCs seeking professionalization and international competition (see China Brief, December 21, 2015).

Given this reality, the use of martial arts, in addition to cold and electroshock weapons are much more common in Chinese PSCs than Western counterparts. Sanda/Chinese kickboxing champions, retired sportsmen, police and army veterans are given priority by recruiters. Most firms seem to share commonality in terms of service features. One such firm, Shamo Tewei (沙漠特维; Desert Special Guards; SMTW), headquartered in Urumqi, Xinjiang allows a glimpse into the operations of a typical yet successful Chinese PSC.

Founded by three veterans from the Chinese army and armed police in 2013, SMTW provides personal protection to individuals, patrols properties, secures public events, trains security guards and offer martial arts classes. The company also uses high-tech communications and surveillance equipment—but its bodyguards do not have lethal weapons. (The expandable baton is the most “deadly” weapon in its arsenal.) SMTW only employs male guards, between 25 to 40 years old, preferably veterans (SMTW). To hire SMTW guards, one must apply through their website. A contract is signed after an agreement on price and personnel is reached, as required by law. Three years into the business, SMTW has provided security services to concerts, meetings and individuals. This latter demographic represents the highest profile and largest segment of demand for these security personnel.

Domestic and International Roles

Besides routine security guard duties, the biggest pool of customers for China’s PSCs is the country’s nouveau riche, making up around 80 percent of contracts (Huaxia News Online, September 30, 2013). With some 1.3 million millionaires and growing, China’s rich have a propensity for luxury and extravagance, a habit that draws unnecessary attention upon themselves (South China Morning Post, October 13, 2015). Moreover, China’s business world is full of intricacies and skullduggery, which makes the position of a rich Chinese quite unsafe. The risk of robbery and assault prompted the rich to hire bodyguards. Salary depends on one’s skillsets and experience: some are paid as much as 200,000 RMB per year, while others earn a yearly income of 28,000 to 56,000 RMB (Sina History, May 29, 2014; SMTW). But safety is not the only reason to hire bodyguards; sometimes businessmen do it to flaunt their wealth. Female bodyguards, a rarity in a male-dominated industry, are exceptionally popular. From a practical perspective, female bodyguards are less noticeable when in a crowd and could surprise assailants (BBC Chinese, May 19). Moreover, having a pretty yet deadly female bodyguard is viewed as a sign of prestige in the Chinese business world.

In addition to domestic security contracts, Chinese PSCs have picked-up international jobs as well. With rising Chinese business presence in the developing world, including conflict zones, security is in ever-greater demand. Although most Chinese security personnel have similar backgrounds as Western colleagues, i.e. ex-military or police, Chinese PSCs have a hard time competing with British and American firms due to their inability to legally own and operate firearms.

Chinese PSCs are hampered by the strictness of domestic gun laws. Chinese law prohibits individual transport of firearms out of the country, not to mention the near impossibility for civilians to acquire guns legally. Therefore, private Chinese security contractors in conflict zones face a constant dilemma; remain disarmed or purchase guns from the local black market. In most of the conflict zones, firearms are very easy to purchase. But fearful of tough gun laws back home that could put future business ventures in jeopardy, Chinese PSCs have not made armed guards the norm for their foreign operations. At the end of the day, Chinese PSCs are registered in China and must work with, not against, the state. There is also the concern that armed contractors might accidentally provoke or escalate conflict with the locals—leading to diplomatic troubles. In direct contrast, British and American private military companies arm their security contractors to the teeth with the best gear available. Without firepower, in many occasions Chinese contractors must rely on the assistance of local security forces, which are known for their unreliability, or pay criminals to go away, which creates an incentive for them to return on a later occasion (Southern Weekend, April 17, 2015).

Securing Chinese Business Interests in High Risk Areas

“When are you guys going to get guns?” is a question often raised by overseas Chinese workers with their protectors. In 2014, after a dispute between a Chinese company and an Iraqi tribal chief over property ownership, armed Iraqi villagers simply stormed Chinese company grounds and took whatever they wanted while Chinese guards stood by in fear. Calls for help to the Iraqi police brought more chaos, as they happily joined the looters. In a country where most fighting age men are armed, Chinese contractors, regardless of their skills in martial arts, are helpless during a crisis. Chinese companies therefore do not have confidence in PSCs run by their fellow countrymen. Although some still favor Chinese PSCs due to language and cultural affinity, others would rather award Western firms with contracts, even if it means doubling the costs (Southern Weekend, April 17, 2015).

The prevalence of unarmed security guards does not apply to all situations, however. On the high seas, a Chinese contractor can legally use firearms for defensive purposes. On many occasions Chinese guards have opened fire to disperse pirates during escort missions in the Gulf of Aden (Sina Military, October 25, 2013). There are also isolated examples when an extraordinary situation forced Chinese contractors into disregarding company rules and picking up a gun. At the beginning of the Libyan Civil War of 2011, Pan Xianjin, a ten-year veteran bodyguard was tasked with transporting ten million RMB out of Libya. By that point, the country was already on the brink of total social breakdown. Checkpoints were set-up all across Libya by self-proclaimed revolutionary groups or in other cases local thugs. Pan had to get a gun if he wants to complete the mission and make it out of Libya alive. Travelling on Libya’s long desert highways, Pan kept his black market gun close and was “ready to shoot immediately… if someone not in official military uniform yells ‘stop, money!’” (Sina History, May 29, 2014). With increasing engagement in international commerce, especially in conflict zones, Chinese enterprises are going to need more men like Pan Xianjin who has the guts and means to fight back when staring down the barrel of a gun.

Conclusion

“The Party controls the gun” (党指挥枪) is a core principle of the People’s Liberation Army that is also applicable to the whole of society. Chinese gun control measures are the strictest in the world, since the state is wary of armed civilians, including the PSCs. However, in an industry where the ownership of and expertise in the latest firearms is a determining factor on a firm’s competitiveness, China’s existing policy constraint have not helped Chinese PSCs in expanding profits abroad in countries where gun violence is an everyday reality. Besides the policy issue, the belief of some industry specialists in complete reliance on non-lethal force and superior negotiation skills over firepower is as laughable as the Boxers of a century past who believed they could ward off whizzing rifle rounds with qigong and magic spells (Southern Weekend, April 17, 2015). Without the tools of the trade, the lives of contractors and their clients will always be in much greater danger. Nonetheless, the Chinese state’s wariness over armed private security, oftentimes veterans with military or policing experience will ensure the status quo will not change anytime soon. Chinese PSCs therefore will not likely catch-up to Western competitors in the near future, unless they decide to break rules and adapt to local conditions.

Zi Yang is an independent researcher and consultant on China affairs. His research centers on Chinese internal security issues. He holds a M.A. from Georgetown University and a B.A. from George Mason University.

Notes

1. There is no accurate data on the total number of unregistered PSCs.