Chinese Private Security Companies

1. While there is a growing body of literature on China’s expanding network of projects and investments in One Belt One Road (OBOR) countries, less is written on how China aims to secure these overseas interests, particularly in states where rule of law and governance ? remains weak. As China’s commercial interests become increasingly globalized through OBOR, it also risks exposing Chinese officials, businessmen, and enterprises to threats of transnational terrorism, civil unrest, and anti-Chinese sentiment.

2. Thus far, China has employed three broad methods to safeguard Chinese nationals and commercial interests abroad: relying on the host country’s government for security needs, hiring local security companies, and employing a combination of foreign and Chinese security firms. This brief focuses on the third option and provides a short background of Chinese private security companies (PSCs). Specifically, the backgrounder looks at the regulatory framework of Chinese PSCs, personnel & services, types of PSCs, market opportunities offered by OBOR, and a preliminary glance at some companies providing services in South Asia.

Regulatory Framework

3. China passed the “Regulations on the Administration of Security and Guarding Services” in 2009 (enacted on 1 January 2010), which legalised the private security sector in China. While these regulations provided a legal basis for the industry in China, they did not provide details on how the industry should be governed overseas. Subsequently, in 2010, China’s Ministry of Commerce released the “Regulation on the Safety and Management of Overseas Chinese-funded Companies, Institutions, and Personnel”, which provided preliminary rules and regulations for Chinese firms operating abroad. These regulations enabled Chinese PSCs to gradually enter overseas markets.

4. However, notwithstanding these regulations, analysts have observed that the Chinese PSCs overseas conduct remain relatively unregulated, which has reportedly prompted China to explore the possibility of establishing a security agency to coordinate security for Chinese enterprises abroad.

Personnel & Services

5. Chinese PSCs employ former PLA personnel, People’s Armed Police or Chinese security officers with links to the national security apparatus. Furthermore, the services Chinese PSCs provide are still substantially different from those offered by their international counterparts. Due to strict domestic gun-control laws, Chinese PSC personnel do not normally carry or use arms when operating abroad. Generally, Chinese PSCs provide security consulting, escort services (overland & maritime), training, risk assessment, and etc.

Types of Chinese PSCs

6. In his monograph titled “China’s Private Army: Protecting the New Silk Road”, Alessandro Arduino has divided Chinese PSCs into four categories:

1. Domestic companies focused on basic personnel close protection and credit recovery.

2. Domestic companies that have evolved from the first category, offering more specialized services ranging from IPR protection, corporate security, HR security management and logistic armoured protection.

3. Domestic companies that cooperate with foreign ones in order to provide local bidding support on Chinese tenders for international security services, risk assessment and overseas support to Chinese insurance companies.

4. Chinese companies with a developed international background in security services that cooperate with the Chinese MFA and large SOEs. These companies provide services that include security consulting, risk assessment, security training, on-site security, and shipping escort services.

OBOR: A Market Opportunity for Chinese PSCs

7. According to a 2020 assessment by the Chinese Academy of Social Sciences, 84 percent of China’s OBOR investments are in medium-to-high risk countries. Confronted with growing and complex security risks, Chinese state-owned enterprises (SOEs) are turning to private security companies. For Chinese PSCs, lucrative OBOR investments and projects provides an opportunity to expand their operations abroad. While their overseas presence is considerably lower than their Western counterparts, Chinese PSCs could increase their overseas presence as the industry matures.

Chinese PSC Presence in South Asia

8. While it is difficult to ascertain the exact number of Chinese PSCs operating in OBOR countries in South Asia, this backgrounder has identified the following companies. They include DeWei, Zhongguo Anbao, Huaxin Zhongan, VSS, and COSG. These companies provide services such as security consulting, risk assessment, security training, on-site security, shipping escort services, and other services.

   
   

   (The views expressed in the article are of the author and do not reflect official views.)