Watching the detectives

Private detective firms are considered illegal operations in China, but the sector is thriving as demand for personal and business information grows.

On March 12, a Beijing court sentenced four men to prison terms ranging from seven to eight months for running an illegal private investigation service. They also received fines totalling 300,000 yuan (about $US44,000). The judge explained that the men, all former farmers from Liaoning province with middle-school educations, had illegally profited from violating the privacy and property rights of others.

When the men were arrested in September 2009, police found cameras, telescopes, a tracking device, a "secret filming device” and a watch with a hidden camera, among other tools of the trade. One person who had hired the men as private investigators testified that he had paid them 215,950 yuan (about $US32,000) to find personal information such as marital status, family background, assets and bank accounts on a person of interest.

In October 2009, when Premier Wen Jiabao signed a new law regulating private security services in China, STRATFOR took a look at this related field and explored the legal and business hurdles of private firms offering services similar to those provided by police. While tightening regulatory scrutiny and raising the threshold of entry, the new law was also intended to create more of an open market, one without the involvement of state security organs. But the new law has not been enforced in very many places – indeed, it doesn’t even specify a penalty. It is effectively optional at the local level, where Public Security Bureaus don’t really have the resources to enforce it.

Private detectives operate in a similar grey area. Private detective firms are considered illegal operations in China, but many continue to offer the same sort of investigative services under different business registrations. Though existing law does not specifically outlaw private detective agencies, the Ministry of Public Security in 1993 issued a "notice” that it would interpret the law as though it did. Since there is no registration category for that type of business in China, no one can legally register as such. In 1996, a former police officer from Nanjing opened what was considered the first de facto private detective agency in China, and in 2003 a handful of companies attempted to register publicly as private detective agencies on the mainland. When they held an industry meeting in Shenyang, however, local police raided the meeting and shut all the agencies down.

Enterprising private eyes in China, many of them military veterans or former police officers and government officials, usually register their businesses as intellectual-property agencies, market research firms or other kinds of consulting groups. And many activities they carry out, such as surveillance and acquiring personal or business information, continue to be illegal. According to STRATFOR sources, former officials with the Administration of Industry and Commerce – which controls business registrations in China – often are involved in private intellectual-property investigations.

There is certainly a burgeoning public demand for personal and business information in China far beyond what the police are responsible for or would provide. Private detective agencies by any other name have grown to fill this gap. And it is not unusual for private investigators to be involved in criminal activity. As part of Chongqing’s organized-crime crackdown, a former police officer named Yue Cun was arrested for operating a gang that owned, among other enterprises, several private detective agencies. His Bangde Business Information Consulting firm, whose name plays on the Chinese words for James Bond, used eavesdropping devices to collect information on businessmen and government officials in order to blackmail them.

In order to succeed in business, it is no doubt important for private detective agencies in China to be officially protected in some way. STRATFOR has written extensively about the power of guanxi, the Chinese word for "connections,” which can help secure favours from the authorities. That likely explains why some Chinese private eyes get prosecuted and some don’t. And those like Yue Cun, who threaten to blackmail competitors and officials, can be shut down very quickly. Others, like the four farmers from Liaoning, simply make mistakes that expose their illegal operations.

Stratfor provides intelligence services for individuals, global corporations, and divisions of the US and foreign governments around the world.

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