Final Version Thesis CAS
Title: Privatized Security with Chinese Characteristics
Student: Glenn van der Meer
Student ID: 10854819
Supervisor: dr. Erella Grassiani
Second Readers: dr. Shanshan Lan & dr. Leo Douw
Programme: Contemporary Asian Studies (GSSS)
E-mail:
glennvandermeer@live.nl
Privatized Security With Chinese Characteristics:
A Research on Private Security Companies and their Relationship with the
Government in Shanghai and Hong Kong
Student : Glenn van der Meer
UvA Student ID : 10854819
Program : Contemporary Asian Studies
Faculty : GSSS
Supervisor Second Readers
: Dr. Erella Grassiani : Dr. S. Lan & dr. L.M. Douw Amsterdam, 26-06-2015
Table of Contents
Chapter 1: Introduction ... 4
Methodology ... 12
Chapter 2: Literature: Global vs. Local, State vs. Non-State and Legalistic vs. Personal ... 15
Chapter 3: The Government Tool Shed ... 23
Chapter 4: PSC Strategies and Employee Viewpoints ... 34
Chapter 5: Factors Determining PSC Strategies & Viewpoints ... 41
Chapter 6: Conclusion ... 47
Bibliography ... 49
Appendix A: Confidentiality and Anonymity Document ... 53
Chapter 1: Introduction
(…) “we had 180 people there, and we are guarding that area for 3 years without big incidents. But now this was a big tragedy, the police has taken most of the blame, because they are ultimately responsible, but of course we are also not happy. We could not do very much at the time of the tragedy. Afterwards, the police had some tough words for us as well, the relationship was quite tense after the incident.”
(interview KY, 2015)
This is what the event manager of a Shanghai-based Private Security Company (PSC) told me about the stampede that happened on New Year’s eve at the Bund just a month before. The Bund is a 1.5 kilometer long walkway alongside the banks of the Huangpu River, which cuts through Shanghai’s city-centre. In that particular tragedy, 36 people were trampled or choked to death with dozens more injured, when panic broke out on stairs that were a major access point to the venue. Security forces, both public and private, were unable to control the vast crowd of some 300,000 people. The PSC in question provided 180 guards on that tragic night, in addition to about 500 policemen. The authorities immediately started a thorough inquiry into the tragedy, and once the report came out several high-ranking Police officials were sacked (CNN, 2014; 2015).
As many scholars have noted, a privatization of security is happening all around the world, this is a process that started after the end of the Cold War (Abrahamsen & Williams, 2011; Singer, 2003; Avant, 2005). The use of private security personnel to secure events and other parts in Chinese society has increased dramatically over the last two decades as well, as the use of private security guards at the Bund in Shanghai above illustrates (Trevaskes, 2008; Dutton, 2006). The illustration on the first page of this thesis shows two private security guards (in black and yellow uniform) walking on the busy East Nanjing Road in central Shanghai. The privatization of security in China has also started, but there are certain characteristics of China’s state and society that differentiate it from other cases, and make it a very interesting case to study. Most of the academic work on the Private Security Industry (PSI) has been done in other countries such as the United States, Israel and well-known areas of conflict or high crime rates, with Iraq, Afghanistan and South Africa as prominent examples (Abrahamsen & Williams, 2011; Weiss, 2008). The Private Security Industry in China however, has seen much less academic study, as Dunigan, Petersohn and Dutton point out (Dunigan & Petersohn, 2015: 1-19; Dutton, 2006). Even though the country has over a billion inhabitants, is likely to be the world’s largest economy soon, and its PSI underwent a rapid expansion in recent years (Mitter, 2008; Dreyer, 2012). My research aims to examine the PSI in this relatively obscure country, and it will analyze common practices, features and characteristics.
The title of this thesis refers to the major reforms that China made since the 1980s. Many scholars now call the Chinese economic system ‘socialism with Chinese characteristics’ (Mitter, 2008). The quote of the event manager already illustrates an important characteristic of the PSI in Shanghai, he stated that the incident soured relations between the company and the police, both in terms of business but also on a more personal level. PSCs operating in mainland China have to cope with the fact that China’s political structure is autocratic, meaning that almost all political power lies with one actor, the Chinese Communist Party (CCP) (Joseph, 2010). People and companies have a lot less freedom in China compared to Western countries (Trevaskes, 2008). At a first glance, there is something counterintuitive to the topic of this research; an autocratically governed country that increasingly leaves matters of security to non-state actors. This thesis will examine the blurred area between state- and non-state providers of security, and analyze the complex relationships between the actors involved. I conducted research in the field for three months, visited numerous PSC offices in both Shanghai and Hong Kong, and spoke to many PSC employees working in the offices and in the field. The data gathered in the field, together with concepts and insights by academic scholars will construct my central argument, and answer my research question.
Research Question:
How do Private Security Companies (PSCs) relate to Public Security institutions and how does this affect the strategies and viewpoints of the PSCs in Hong Kong and Shanghai?
Sub-Questions
1. What tools of power do the Public Security Institutions such as the Police use to influence the PSCs in Shanghai and Hong Kong?
2. What are the government’s common practices influencing the PSCs in Shanghai and Hong Kong?
3. How powerful are these tools and practices?
4. How do the researched PSCs react to the government’s tools and practices?
5. What are the differences in strategies and viewpoints of the PSCs and their employees? 6. Which underlying factors influence the strategies of the PSCs in Shanghai and Hong Kong? 7. How do these factors relate to the reviewed literature?
8. How do these factors explain the special circumstances of the PSI in Shanghai?
The Case to be Made
In this thesis, I will argue that the private sector in Shanghai is increasingly providing security services, a process that many academics have noted is occurring around the world. However, the situation in Shanghai is different from other areas, mainly because of the autocratic nature of China’s political system. Government institutions in Shanghai are frequently using a powerful set of tools to influence the operations of the PSCs, such as licensing, recommendations, threats, raids, weapon policies and
reviews. I will contrast data gathered in Shanghai with data from Hong Kong, and conclude that the government institutions such as the police exert far more influence on PSCs in Shanghai, compared to Hong Kong. I will argue that Hong Kong’s history and its special status within the People’s Republic of China are the main reasons for the less active stance of the government institutions there. The tools and practices will be described and analyzed by using literature on power and data gathered from the field in chapter 3. Because the government’s tools in Shanghai are so powerful and frequently used, the Private Security Companies in Shanghai are facing a certain set of circumstances and practices, which requires a strategy that effectively deals with this. Five main strategies are distinguished: professionalization, embracement, only serving Western or international companies, evasion and muddling through. These five strategies, their relations to the government’s power tools and other elements of the situation they operate in are examined in chapter 4. Then, I will turn to the most analytical part of my argument, which is figuring out what underlying factors determine the PSC strategies and the viewpoints of PSC employees. In chapter 5, I will outline five factors that I think are most relevant to the strategies: PSC services, company (inter-)nationality, job position and history, incidents and guanxi (special personal relationships). These factors relate to institutions and practices on the ground in Shanghai, and in some cases in Hong Kong. I will show that PSCs in Shanghai have different ways of coping with the large and invasive powers that government institutions such as the police use, and that these strategies influence the viewpoints of the PSC employees profoundly. I will form several perspectives from academic literature: the formation of Global Security Assemblages for a global view, versus the importance of local politics, geostrategic context and guanxi with regard to the Private Security Industry for a more local perspective. Finally, insights on power and sovereignty as well as a description of the PSIs in Shanghai and Hong Kong complete the set of elements needed to make the argument and answer the research question.
Research Setting
In the following sections, I will define what composes my research population, I therefore have to give my definition of what a Private Security Company (PSC) is. After this, I will give brief description of the historical and economical backgrounds of Hong Kong and Shanghai, as well as the development of the Private Security Industry (PSI) in these areas. This introductory chapter will end with a description of the used methodology and a reflection on the research in the field. Insights from these sections will be crucial in making a convincing argument, because it provides the proper context in which to place the data I gathered in the field.
Private Security Companies and the Demand for Security
The research population of my research in the field consisted of PSC employees, both working in the offices and in the streets. This requires a definition of a PSC to make sense of what exactly I have researched. Although privately owned entities have acted on a demand for security throughout history, the last few decades have seen an expansion of the Private Security Industry (PSI) unseen before
(Abrahamsen & Williams, 2011; Singer, 2003). The global commercial security market in 2009 is valued at 165 billion US Dollar, and the growth of the sector is expected to hold at 8 percent (Abrahamsen & Williams, 2009). Security is increasingly seen as a tradable commodity, and most scholars are looking at the Private Security Industry as a marketplace in the neo-liberal sense of the term (Petersohn & Dunigan, 2015: 4). The Private Security Industry can be divided into two main types of security providers: Private Security Companies and Private Military Companies. Private Military companies are mostly operating in regions with high-risks and conflicts, and they perform military-styled operations (Abrahamsen & Williams, 2009). My research instead focuses on the gentler type, Private Security Companies. Baker describes the term as “formal commercial security groups” (Baker, 2008), these companies are founded, and act within legal and regulatory boundaries set by the state. The definition of Baker rests on two pillars, the companies are both officially recognized by both the state and the society, and their main objective is to make profit. It is clear that the term Private Security Company can be considered in a broad way. For my research, I visited companies with wide-ranging structures and services, which I will elaborate on later. My main prerequisite for including the data is if the employees of the PSCs deemed their companies to be involved in providing security in any form to clients or the society at large. I use this broad definition of a PSC, because it my search for data in the field easier, but more importantly it paved the way for my central argument that PSCs are coming up with different strategies on how to cope with characteristics and practices in the areas they operate.
A significant narrative explaining the expansion of privatized security suggests the demand for security is increasing. The increased demand has also occurred in Shanghai and Hong Kong, in this paragraph I will discuss two possible reasons for this increase. The first reason is happening globally, it is the emergence of a “culture of fear”, as Frank Furedi puts it, in societies all over the world (Furedi, 2007: 1-3). Fear of crime and terrorism has become mainstream, even though it is not necessarily connected to the actual occurrence of crime (ibid., 2007: 2-3). Fear therefore is a construct that erupts from societies, and is encouraged by actors who benefit from this increased fear. These actors can be the media, intelligence agencies, private security companies and others, and they all have their own reasons to nurture the culture of fear (Ferraro, 1995). David Altheide focuses on the role of the media with regard to fear, he defines the “discourses on fear” as: “as the pervasive communication, symbolic awareness, and expectation that danger and risk are a central feature of the effective environment” (Altheide, 2002: 41) Initially, most people feel a sense of worry, but once this feeling is encouraged enough by actors such as the media, there comes a point where it turns to outright fear (Furedi, 2007: 2; Altheide, 2002: 41-42). The increase of fear in societies lead to an increased demand for security, when public security forces cannot supply the demand, privatized security steps in to fill the void. Paradoxically, PSCs have no benefit in the reduction of fear, because this could lead to a loss of clients and income (Liu, 2005). Weiss (2008) argues that the society does not benefit very much from the
work of PSCs in terms of reducing fear and making the society safer. The direct clients of PSCs gain way more from privatized security than the society at large, according to Liu, Weiss and my own respondents in the field (Weiss, 2008: 8-9; Liu, 2005).
So the fear of crime and terrorism alone can be enough for an increase in the demand for security, but for mainland China, the crime rate has increased substantially since the economic reforms in the country started back in the 1980s. Dutton says that the increase in crime has far outpaced the public investments into the public security forces, such as the police (Dutton, 2006). Compared to public security forces, private security guards cost less and their training is quick and inexpensive (Trevaskes, 2008; Dutton, 2006). Even though my respondents in the field did not see rising crime and clients being increasingly fearful as major problems, I still believe fear is an important concept for this research. The employees of the PSCs are biased, as shown by Weiss and Furedi, so even if they think crime and fear is not that big a factor, academic studies and statistics show otherwise. Now that the research population is defined and general trends are described, it is time to focus on the context of the two areas in which I conducted my research, namely Shanghai and Hong Kong.
Shanghai
The main area of my research is Shanghai, the largest city in China. Home to over 20 million people, it is a major urban centre and a huge potential market for businesses of all kinds. The city has one of the largest ports in the world and it has large financial, manufacturing and retail sectors as well. Although it has been a large and important city for a long time, Shanghai became a major international hub after China started with substantial economic reforms following Mao Zedong’s death. These reforms opened up the Chinese economy (Dreyer, 2012). A lot of Western and international companies since then have established their regional headquarters in the city, due to its prime location and its potential to be a gateway into mainland China, as my interviewees indicated. On the administrative front, Shanghai is part of the People’s Republic of China. The city is one of four municipalities that are directly controlled by the Chinese Communist Party (CCP), along with Beijing, Tianjin and Chongqing. The GDP of the municipality is an estimated 383.55 billion US dollar, making the city one of the strongest economical areas in the country (Mitter, 2008: 102-117). Ever since the establishment of the People’s Republic in 1949, the CCP has been the primary source of political power over the city and the country as a whole (Joseph, 2010). The political structure of the People’s Republic is described as autocratic, despite all economic reforms. The CCP does not want to turn the country into a multi-party democracy (Joseph, 2010; Mitter, 2008). The CCP’s hold on political power is a major consideration when analyzing my data from the field, because it differentiates the global phenomenon and the practices on the ground.
PSI and Public Security Institutions in Shanghai
Before the economic reforms started, China had no officially structured markets, because these were considered to be going against the dominant Communist ideology (Joseph, 2010). Nowadays, the Chinese state is increasingly relying on PSCs to provide security and maintain a social order. In 2006, Michael Dutton stated that PSC employees in China’s urban areas already outnumber state security personnel by a large margin, and this margin is only getting wider due to the growth of the PSI in China (Dutton, 2006: 295). The Private Security Industry during the pre-reform era was completely incomparable with what it is today; services were offered in an unofficial manner, and the black market thrived during this period. The black market for Privatized Security in mainland China has been large ever since then, although the government recently started cracking down on these illegitimate businesses. Trevaskes (2008), Dutton (2006) and Catallo (2015) all speak of the vast black market in China’s PSI. Black market PSCs can do exactly the same operations as official PSCs, but there are also known to be considerably less law-abiding in their operations. Some black market PSCs are no more than gangs of thugs which can be hired to settle debts or other disputes (Dutton, 2006). Susan Trevaskes says that the vast majority of incidents and wrongdoings are committed by black market PSCs (2008: 38-39). I will come back to the relevance of this black market in chapter 4, because it influences the strategies and viewpoints of PSCs and their employees. The same writers all note that the government recently is trying to structure the PSI more comprehensively, to encourage new companies and reduce incidents. Jennifer Catallo says that despite the attempts at regulating the PSI in mainland China, the process of licensing remains unstructured and prone to arbitrary decisions being made by the government’s institutions (Catallo, 2015: 122-124). With the signing of the ‘Security Service Management Regulation Act’ in 2010, it became legal for foreign Private Security Companies to enter the Chinese market. In the same year, the Chinese government signed the Montreux document, which has a set of internationally used guidelines and principles with regard to privatized security (Montreux Document, 2009). Still, Catallo states that to a large extend, the PSI in mainland China is (indirectly) owned by China’s police force, also known as the Public Security Bureau or PSB (2015: 118-121). Of the four million authorized private security personnel in mainland China, about a quarter works for companies directly owned by the PSB (Trevaskes, 2008). Compared to PSIs in most other countries, the state has more influence over the sector. Several scholars who researched the Private Security Industry in mainland China argue that the state sees the PSCs as an extension of their own set of tools to control the population and maintain a social order within its borders (Trevaskes, 2008; Dutton, 2006; Catallo, 2015).
Figure 1: A Guard Taking a Nap in a Shanghai Metro Station
Services of PSCs in Shanghai vary; there are companies that offer guarding or escort services, but also those which install security systems and provide consultancy. Their main activities include: guarding entrances of public buildings (airports, schools, train stations, etc.), patrolling public and private venues, performing surveillance to combat theft and vandalism, escorting valuables for clients in the financial or art-dealing sectors, escorting dangerous chemicals and explosives, guarding leisurely used venues such as clubs, bars, cinemas, shopping malls and car parks, installing security cameras and other security systems, acting as private bodyguards, selling security-related products such as weapons, armor, security doors and vehicles, guarding large-scale events such as sports games, art performances and exhibitions and lastly, providing security consultancy services (Trevaskes, 2008: 39-40).
China’s economic reforms have caused a rapid rise of the country’s economy, creating a large group of people with tremendous wealth (Li, 2010). In recent years, many Chinese media outlets have reported the increase in kidnappings and extortions of this new class of wealthy Chinese (Florcruz, 2013; Yu, 2013). In these cases, criminals abduct rich Chinese or members of their families and demand ransom in return for their release. As a response, many of these people have hired personal bodyguards for protection, and Private Security Companies are happy to provide the manpower (ibid., 2013; ibid., 2013). China has recently seen incidents involving terrorism as well, most notably terror attacks by people involved in the Muslim insurgency in China’s western Xinjiang province. This all meant that Shanghai became a very interesting place for PSCs to settle. According to Dutton, Private Security guards already outnumber Police officers and other Public Security personnel by a large margin in China’s urban areas (Dutton, 2006: 295). One of my respondents told me that there were 176 officially licensed PSCs active in Shanghai at the time I was there. Many interviewees saw the market in Shanghai as one of the most important in China, and as a gateway from which to expand into the rest of China. On the administrative side, the municipal Public Security Bureau (PSB), or police, and the Ministry of Public Security (MPS) are the institutions most involved with policy regarding the PSI
(Catallo, 2015: 122-123). The PSB is active on a local scale, whereas the MPS sets national policy in China (ibid: 122-123; Trevaskes, 2008). Catallo notes that many provincial and local governments enforce their own rules in addition to the national ones (2015: 123). The market for security in Shanghai is full of potential, but as I will explain in this thesis, PSCs operating here have to find a way to engage with Public Security Institutions such as the MPS and the PBS successfully in order to tap into this potential.
Hong Kong
The other area I researched is Hong Kong, located in the south of China. Since 1997, Hong Kong is a so-called ‘Special Administrative Region’ (SAR) of the People’s Republic of China. The SAR is only a small area, which consists of Hong Kong Island, Kowloon Peninsula and the New Territories, and it has some 7 million inhabitants. Prior to 1997, the territory belonged to Great Britain as a Crown Colony for some 150 years (Joseph, 2010: 355-357). This period left a lasting impact on the Hong Kong of today. The administrative structure of Hong Kong is in line with the ‘One Country, Two Systems’ principle. This entails that although officially the SAR is part of the People’s Republic and falls under its sovereignty, Hong Kong will retain its special status and large measure of autonomy until at least 2047 (ibid., 2010: 355-358). There are a lot of significant differences in terms of freedoms, legislative decision- and policy making, administrative culture and law enforcement between Hong Kong and mainland China. The rules with regard to censorship and freedom of press are much more lenient in Hong Kong, there is also a form of democracy, contrary to the one-party rule in mainland China. Citizens of Hong Kong can indirectly elect the SAR’s chief executive (ibid., 2010: 357-359). Hong Kong’s laws are based on the ones used in Great Britain, although changes have been made since it became under the umbrella of the People’s Republic. Because both liberal democratic and illiberal states have had sovereignty over Hong Kong, its people are worried about the political future, demonstrated by the massive protests in late 2014 (CNN, 2014; BBC, 2014). Despite its small size, Hong Kong is a force to be reckoned with on the economic front. Being one of the first so-called ‘Asian Tigers’, it has a skilled labor force, and people on average enjoy a high standard of living, compared to mainland China (Schenk, 2008). The territories that make up Hong Kong are also a popular place to settle for multinational businesses, especially those involved in financials and services, because of its proximity to mainland China but also because of its own characteristics, linking it to the West (ibid, 2008).
Hong Kong’s Private Security Industry
The Hong Kong SAR has a vibrant Private Security Industry (PSI), one of the respondents there told me there are over 900 active Private Security Companies in the city. Because of the political, economic and administrative characteristics, there is a great demand for the services offered by PSCs. This does not mean that the streets of Hong Kong are riddled with crime, in fact, all of the interviewees in Hong Kong told me they thought it is very safe. Examples of required services named
by the Hong Kong Security Association (HKSA) are protected escorts for the large financial sector, jewelers and other businesses dealing with valuables. Many shopping malls and high-end shops have manned security guards as well as security systems that need installing (HKSA, 2015).
Methodology
Entry in the Field
My field work lasted from January 6th to April 1st 2015, with the purpose of finding out more about Private Security Companies (PSCs) in Shanghai and Hong Kong. I made two trips to Hong Kong, where I spend a total of ten days. I spend most time and did the most research activities in Shanghai, because data gathered there forms the heart of my argument. This does not mean that my data from Hong Kong is irrelevant, it proved to be very useful in supporting my argument that PSCs in Shanghai are adopting special strategies to be successful, because of the government’s tools of power and characteristics of the PSI in that area. My research population consisted of PSC employees, because their views were central to answering my research question. The PSCs I visited sometimes offered different services, so what would I consider to be suitable organizations to study then? First of all, their services had to be one or more of the ones that Trevaskes (2008) described, the list can be found in the research setting in chapter 2 (page 8). Second, the interviewees must view the companies they work for as providers in security, in whatever kind of way; so I would ask this every time I interviewed a new informant. This broad definition of my research population helped me gather enough data that would also be diverse. I wanted to speak with PSC employees who worked at the office but also those who worked in the field as a guard or team leader. Before travelling, I made appointments with two respondents who worked in the management of PSCs in Shanghai. The first weeks were very successful, I was surprised about the openness, candor and English proficiency of my respondents in the offices. The interviewees were willing to answer critical question and to discuss sensitive topics, and luckily for me, they had great narrations on common practices in the PSI in Shanghai and Hong Kong. I visited PSC offices and went to PSC operating areas on a daily basis, although occasionally, PSC employees were too busy or unwilling to speak to me. In order to reassure potential interviewees, I would sent a letter guaranteeing confidentiality and anonymity for any meeting, this letter is added in appendix A. For ethical reasons, I shall not use full names in this research, in order to avoid any chance to harm my respondents’ interests (Bryman, 2008: 113-135). Any added pictures with respondents are specifically approved by them.
Research Activities
The method I selected for gathering data from PSC employees working at the office was the semi-structured interview (Bernard, 2006: 213-215). Before each interview, I would write down a number of topics that I planned to discuss. Whenever I spoke with an informant for the first time, I let him or her lead the conversation without steering the interview too much (Bernard, 2006: 216-217). If I spoke
to the same interviewee another time, I would be more present, asking specific questions, probing and steering the conversation (Bernard, 2006: 217-218) In total, I conducted 18 semi-structured interviews with ten PSC employees at several offices in Shanghai and Hong Kong. With 5 interviewees, I had multiple conversations, because their information and knowledge proved very useful for my research. The employees worked for global companies such as G4S, Securitas, Pinkerton and ISS, as well as smaller, domestic PSCs. All but one of the respondents at the offices were high-ranking managers at their respective companies.
Figure 2: Meeting with an interviewee in Hong Kong
Figure 3: Interviewing a PSC employee in Shanghai
The conversations with field-level employees were more challenging, because they were in Chinese, which I only speak moderately. I also had more than a dozen short conversations with field-level PSC employees at several different locations in Shanghai. Examples of these places and events are the Bund, Hongkou Football Stadium and Yuyuan Gardens in Shanghai, where I made many observations and talked to a number of on-duty guards. I used a method called ‘inquisitive observation’, which means walking around, observing, and asking short questions to relevant people (Bestor, 2004). Lastly, I researched news articles, laws, regulations and literature online while I was in the field, and conducted five online questionnaires to PSC office employees in case they did not have time to meet me in person. All of these methods provided me the data to build my argument for my thesis.
Obstacles & Challenges
Before travelling to China, I was not sure on how willing PSC employees would be to talk to me, since the country is autocratic and there is quite a lot of censorship. To my surprise however, the respondents were open and candid. The main issue was making appointments and gaining access to
the right people. Many respondents were very busy and did not have a lot of time to talk to me. The English proficiency at the offices was quite good, but usually only one or two employees per company could speak with me because their English was best. The field-level guards did not speak English very well, so I had to talk Mandarin Chinese with them. Since my Chinese isn’t very good, I had to keep the dialogues simple and short, so my Chinese proficiency somewhat hindered the gathering of data. I anticipated these problems though, so I wasn’t disappointed that much whenever I had a setback. Another challenge that has emerged is that my data is of a pretty good quality, especially considering it being a controversial topic, but the topic and the problem for my research has so many angles and elements to it, that it still was tricky to make a coherent and inclusive argument. Looking back, my research has faced a number of challenges and obstacles, but I am quite satisfied with the data and the experiences in the field and how I was able to incorporate it in my analysis.
Chapter 2: Literature: Global vs. Local, State vs. Non-State and
Legalistic vs. Personal
To reiterate, my main argument is that PSCs operating in Shanghai must adopt special strategies in order to adept to the government’s tools and the local industry’s characteristics, and that these strategies depend on five underlying factors. These factors not only influence the strategy of the PSCs, they also influence the viewpoints of the PSC employees in a significant way. This means my research is centered on the relations between state and non-state actors with regard to providing security, a topic that has seen plenty of thoughtful academic discussion. In this chapter, I will outline a number of important discussions that are relevant to the research that I conducted and to my central argument. The goal of the theoretical framework is to construct a well-funded view from which to build a strong argument. First, two central discussions will be outlined: one involving the creation of global Public-Private Security Assemblages, and the other concerning the influence of local politics and geopolitical context on PSCs. After that, I will elaborate on important concepts and terms linked to these debates: power, sovereignty, globalization and guanxi. These elements combined will bring forth a mix of perspectives, in which I can analytically weigh in on the data from the field. Public-Private Security Assemblages will provide insights on global trends and similarities with regard to the PSI, whereas the importance of local politics, guanxi and, to a lesser extent, geostrategic context shape the analytical perspective on the local characteristics and practices.
Global Security Assemblages
There is a lively debate on the worldwide privatization of security today, spurred by the increasing importance of the Private Security Industry (PSI) over the last 20 years. The PSI has become a force to be reckoned with in international politics, as many writers have shown (Avant, 2005; Singer, 2003). As mentioned on page 6, the PSI worldwide is a fast-growing, multi-billion dollar industry, which is taking on tasks and functions that previously were executed by state actors. States increasingly rely on non-state actors to provide security for society. This reliance in the Chinese context is illustrated by Dutton’s research revealing that PSC employees significantly outnumber policemen and other state security personnel in China’s urban areas (Dutton, 2006: 295). As data from the field will show as well, the state and PSI in Shanghai and Hong Kong work together in a network in which the distinctions between state and non-state actors are increasingly blurred (Loader, 2000). In order to make more sense of the complex relationship between the state and the PSI, the term Security Assemblage is applied. Abrahamsen and Williams specify it as Global Security Assemblages, which they define as: “transnational structures and networks in which a range of different actors and normativities interact, cooperate and compete to produce institutions, practices and forms of deterritorialized security governance” (2011: 90). In my view, this means that states are stepping back and incorporating non-state actors in a network that is set up to provide security to the citizens belonging to that state and those around the world. Ideas, norms and practices are spread throughout
this network, from states among each other, states to the PSI, PSI to the states and Private Security Companies amongst each other. Abrahamsen and Williams (2011) really emphasize the global aspect of the changes in the PSI today, and I agree that the ongoing, global processes right now are important to my research. The 2010 change in regulation that made it possible for foreign companies to settle in Shanghai aptly illustrates the helpfulness of Security Assemblages as a tool to help analyze my own data (Catallo, 2015: 124). Since 2010, the Chinese state is increasingly interacting with global, non-state actors in order to provide security. The establishment of an Assemblage in the most populous country on earth is a huge development with consequences for over a billion people and thousands of businesses. People walking around public venues in Shanghai or Hong Kong are increasingly kept in check by private security guards, international businesses hiring PSCs to transport their valuables around Shanghai and Hong Kong, and wealthy Chinese hiring bodyguards to prevent being kidnapped and extorted. In light of these developments and trends, it is helpful to understand this change by using the concept of Security Assemblages, and three main processes linked to it: state disassembly, non-state actors increasing capabilities and finally, reassembly into a Global Security Assemblage. I will explain the three processes and their importance to my research next.
How are these Global Security Assemblages established around the world then? According to Saskia Sassen, there are three processes driving the rise of global structures in general: disassembly of states, expanding capacities of private actors and a global reassembly (Sassen, 2006: 21). Abrahamsen and Williams (2011) use the description of these three steps in their analysis on Global Security Assemblages. The first process is disassembly of the state, which entails the process of a state no longer doing certain functions or tasks. As Sassen importantly notes, the state disassembly is only partial, and the states themselves have been willing and active participants of their own disassembly (Sassen, 2006). The state is increasingly letting other actors provide security for its population, a task which historically has been designated to the state. The most obvious reason for the state’s disassembly is the widespread use of neoliberal governance over the last few decades. Neoliberal governance came up in the late-seventies, common characteristics are outsourcing, privatization, public-private coordination and partnerships (Weiss, 2008: 4; Abrahamsen & Williams, 2009: 3). In Shanghai and Hong Kong, the process of disassembly is ongoing as well, the governments there are partly ceding the task of providing security for the population to the private sector. Especially in Shanghai, the government institutions solely were the official providers for security in the city until quite recently, but today things are very different.
The second process Sassen identifies, is the development of sufficient capabilities for private actors to step in (2006: 21-22). If states proceed with disassembly without other actors having the means to take over some tasks, the third process of reassembly cannot happen. The PSI can garner two main forms of capabilities: material and ideational (Abrahamsen & Williams, 2011: 93). Material capabilities for
the most part speak for themselves, it means equipment, manpower and other tangible items that help PSCs with their operations. Ideational capabilities are intangible; expertise and forms of legitimization are considered to be ideational capabilities (Abrahamsen & Williams, 2011: 93). It is also important to consider that expertise and legitimization are essentially ascribed to actors by others, this ascription will be discussed more when I will talk about power and sovereignty later. Capabilities are definitely relevant to my research. To illustrate, many PSC employees in Shanghai and Hong Kong told me about their company’s uniforms and equipment, but also reputation and a strife for professionalism were common topics of conversation.
The third process that Sassen describes in creating global structures is reassembly. Once the first two processes are in full swing, the state and the private sector are restructured into complex networks (Sassen, 2006: 22). Abrahamsen and Williams (2011) give special attention to the role of the state in this process. They, among others, argue convincingly that even though the state is ceding tasks to non-state actors, they are still playing a key role in the developing network. Their role is not so much weakened, it is more accurate to say that it is different. States have taken up the role of steering instead of rowing, leaving more and more of the actual guarding and some policing to PSCs. Instead, states now are focusing on laying the ground and creating guidelines for the PSCs to operate in (Neocleus, 2007; Hansen & Stepputat, 2006). Take the state’s regulation on the PSI for instance, rather than letting private actors operate in the shadow of the legal framework, states are setting comprehensive boundaries for PSCs to operate in. They encourage self-regulation, standard-setting and consultation in order to attain the most efficient and effective results (Abrahamsen & Williams, 2011: 93-94). There is a nuance to make however, the structure of these boundaries and the practices of enforcing them are influenced by the political system in place, Abrahamsen and Williams say that the boundaries and practices are most developed in advanced liberal democracies (2011: 92). As Dunigan and Petersohn note, most academic research on privatized security has focused on advanced liberal democracies such as the United States and Western European countries or well-known areas of conflict like Iraq and Afghanistan (2015: 1-19). The case of China is interesting in this sense, because it is neither an advanced liberal democracy nor a country with major conflict. So according to Abrahamsen and Williams, the boundaries of the PSI in China, set and enforced by the state, is less structured and regulated. Based on my research and other sources, I agree with this assessment, because this underscores the part of my main argument. That is; the PSI in Shanghai has a set of particular characteristics, the most important one being the autocratic structure of the political system, that requires the PSCs to come up with a special type of strategy in order to survive.
Local Politics and Geostrategic Context
Even though Abrahamsen and Williams insightfully argue that Global Security Assemblages link the global with the national aspects of the privatization of security, I think my research data needs to be
examined from another angle as well. This angle is a more local perspective on the PSI, considering local circumstances and practices. In line with this second angle, Dunigan and Petersohn edited an illuminating book that has two very useful points for my research. First, they define the term security quite narrowly as a public good, which means everybody can take it, and consumption of it does not take away the chance for others to consume it (2015: 7). Dunigan and Petersohn leave out any nonhuman threats against security (ibid, 2015:7), I will do this in my research as well, because the vast majority of my data concerning threats to security consists of human threats such as crime or terrorism. The second point is that Dunigan and Petersohn argue that the existing approaches to the privatization are incomplete, because the PSI is often described as a single, homogenous and neoliberal market (Dunigan & Petersohn, 2015: 2). The prevailing neoliberal idea of a market is a “virtual arena for actors to engage in voluntary economic exchange” without considering the influence on the interaction or the conditions of the exchange (Jackson, 2007: 235). Dunigan and Petersohn use another definition of the market, namely as “a locally specified set of formal and informal rules under which the actors engage in exchange” (Fligstein and Dauter, 2007: 113). This other definition is needed to make the main point, which is that the “market for force”, in fact is a “conglomeration of different types of markets”, which is deeply affected by local politics and geostrategic context (Dunigan & Petersohn, 2015: 2-3). With local politics, Dunigan and Petersohn mean the institutions, rules and regulations with regard to providing security, so both legal and official structures as well as unofficial (illegal) practices. The geostrategic context refers to the place the area of study takes in the world. The fact that China is such a vast country with a huge potential for PSCs to get revenue, but it is also an autocratically run state in which the CCP tightly controls the grip on political power. The separate status of Hong Kong within the People’s Republic is also relevant to the geostrategic context. The markets for force in this research will be referred to as the Private Security Industry, because this term is easier to distinguish and more commonly used in academic literature. In the same book, Catallo writes an interesting case study on the PSI in China, in which she confirms that local politics and geostrategic context are very important (Catallo, 2015: 118-131). She argues that the influence of the Chinese state on its PSI is still so great, that the sector should be viewed as a “hybrid market”. China’s rapid economic growth, its emergence as a world power and its relatively high crime rate have forced the government into the process of disassembly and reassembly (ibid., 2015: 118-131). The view on a conglomeration of Private Security Industries and the term security itself is very useful, because it captures the uniqueness of a PSI in a particular country or area, which lies at the heart of my central argument. The three core questions that Dunigan and Petersohn ask are these:
1. What are the particular characteristics of the market?
2. What caused the markets to evolve into their current forms, and to what extend do these causes vary across different markets?
3. What are the consequences of the different types of markets for the state’s monopoly on force and the provision of security as a public good, and to what extend do these consequences vary across different markets?
These questions resemble my sub-questions in various ways. For instance, in my research, I give special attention to the government’s tools of power in Shanghai, because both prior research and data gathered from the field, point to a distinct handling of these tools by the Chinese state in Shanghai.
Legalistic versus Personal: Guanxi
The literature on Global Security Assemblages, local politics and geostrategic context has guided my views a good deal already, but still, additional academic insights on a Chinese term called guanxi (关 系) are needed to thoroughly analyze the data gathered in the field and make a convincing argument.It is a term mostly used in a Chinese context, and it is commonly defined as “special personal relationships” (Yang, 1994) or “particularistic ties” (Hwang, 1987). These personal connections between people are important in business decisions and their strategies in the context of Chinese business, whereas the Western style of business is more focused on contractual elements and legal perspectives. Yang observes a common discourse that doing business in China requires skill in gift-giving, cultivating personal relationships and acts of reciprocity (Yang, 1989: 32-35). The practices of guanxi in another prominent discourse is linked to corruption, according to Yang this discourse is widely supported in the official Chinese press. Stories on misuse of official positions for personal gains, bribery, nepotism and patronage in these outlets are widespread (Yang, 1989: 35-38). Now, the degree of guanxi’s influence in Chinese business is the topic of much academic and societal debate, influential writers such as Guthrie (1998) argue that the influence of guanxi in Chinese business is declining, because of the rapid economic, institutional and societal changes in mainland China over the last decades. I concede that these huge changes have altered the practices and perceptions on guanxi, but as many of my interviewees have stated, the Private Security Industry in mainland China still has a special status. For many of the interviewees, having a good personal relationship with the right people at government institutions is essential to make the company successful. The PSI has a special status because it is involved in matters of power and sovereignty, making it a sensitive affair in an autocratically governed country as China. I will discuss the concepts of power and sovereignty later in this chapter. The most important thing that guanxi brings forth for my research, is a perspective towards my field data. Central in examining the importance of guanxi, is the attention given to attributes of individual actors. Examples of these attributes are favors, personal trust, reciprocity and indebtedness; these attributes can be important in other (Western) styles of business as well, but they are most often associated with the Chinese concept of guanxi (Gao et al., 2012: 458-459). I will analyze my data from the field by using insights on guanxi, and paying close attention on my respondents’ views on the importance of personal relationships with government officials, acts of reciprocity and indebtedness.
It has become clear that there is ample academic work that helps to shape my view on my research. So far, I have explained the insights and debates of the three main pillars in this theoretical framework: Global Security Assemblages, the importance of local politics and geostrategic context in creating a conglomeration of PSIs and finally, guanxi. These pillars provide multiple analytical perspectives, ranging from the global versus the local, state versus non-state actors and legalistic versus personal. Next, I will discuss two more important concepts and debates, which are related to what is written so far: power, sovereignty.
Power & Sovereignty
This research is focusing on the fuzzy area between state and non-state actors, who are dealing in security. The views on Global Assemblages, conglomeration of PSIs and guanxi all have to do with power. Although it is a very common term, its specific meaning and inner workings are the topics of profound debate. The first writer I would like to discuss is Max Weber, he was captivated by the illusiveness of power and dared academics to respond to this statement: “power has its reasons that reason does not understand” (Weber, 1999: 138). Weber’s words implied that power does not always follow logical principles or rules, making it hard to examine. Fortunately, many scholars have written insightful work on power since then, Michel Foucault and Pierre Bourdieu are two of them. For this research, I will use elements from their work to sharpen my analytical focus with regard to power. Foucault defines power in terms of relations, saying it is: “a multiplicity of force relations” (Foucault, 1980: 92). The relational aspect is key for Foucault, he thinks an actor cannot so much hold any power, but that power stems from the relations between actors (Dore, 2010: 739). Foucault also points out that in the conventional views on power, its negative connotations get the most attention. Power is censoring, restricting, repressing and excluding in this view, but there are positive connotations to power as well (Foucault, 1979: 194). The productive side of power brings forth truth and reality, for both the individual and in a more general sense to society (Foucault, 1980: 92-93). The problem with Foucault’s work on power is that his strongest points are things that power is not, instead of what it is (Dore, 2010: 738-740). The elements of Foucault’s work that are most relevant for my research concern the distinction that power is distinguishable in terms of “normativity” and “force” (ibid., 2010: 737-738). Of the two forms, force is easier to understand, because it entails one actor (threatening) to use violence on one or more other actors in order to influence the behavior of the other actor(s), it clearly has a coercive character. Much of the ‘force’ aspect of power is anchored in legal writing, meaning that the government or other actors can (threaten to) use violence by claiming that another party has broken the law and hurt their interests. Of course the government is the most powerful of these institutions, because it still has the biggest claim on legitimacy from society. People (tepidly) give up some of their freedoms and grant the government to enforce the laws with violence if necessary to increase their security. This form of power will be apparent on many occasions when
analyzing my data from the field; I will write about threats that government institutions are making towards PSCs in order to take on a project that is not profitable for instance.
The normativity of power is more complex, primarily because it is less tangible than the ‘force’ aspect of power. Simply put, there is some sort of standard or ideal that power is related to, but this is very hard to get a comprehensive grasp on (Dore, 2010: 737-738). Bourdieu’s work can help with understanding the normative side of power. He uses the term ‘capital’ to determine the amount of power of various actors in their relationships with others. Bourdieu distinguishes three kinds of capital: economic, cultural and symbolic. Economic capital entails material possession, cultural capital is knowledge, skills and other things that can be taught, and symbolic capital is an actor’s garnered honor or prestige (Thompson, 1991: 14). These forms of capital are intertwined, and different actors have a different set of capital. Reflecting on Bourdieu’s work, Abrahamsen and Williams make an important point, namely that “there is no direct relationship between the possession of a particular form of capital and effective action or power within a given domain or practices” (Abrahamsen & Williams, 2011: 102). This means for instance, an actor can have vast sums of money (economic capital), but this does not necessarily make him equally powerful in every situation. This is an important consideration for my research; to illustrate this, I visited a major PSC in Shanghai that has successful branches all over the world, but the branch in Shanghai is struggling. So being successful elsewhere and having large amounts of capital does not mean it can automatically acquire a lot of local power in the case of my research. The final point I want to make on power is brought to attention by Davies, he names four principles of power: the rule of recognition, sovereignty, community values and natural reason (Davies, 1996). Just as with Foucault and Bourdieu, the first three principals have everything to do with relations and how actors view each other. These first three principles are most important in analyzing my data, because these help me make my central argument in the best way. The rule of recognition is important because both the government institutions and the PSCs in Shanghai and Hong Kong are sizing each other up, and making policy and strategy based on this estimation. Sovereignty will be discussed more in the following section, but the important thing to take away is that the concept in mainland China, and Hong Kong to a lesser extent, is changing, illustrated by the processes of disassembly and reassembly of the security sectors. Lastly, community values take into account the more cultural aspect of power, in case of my research guanxi is connected to this principle, because it concerns both relations of power but also cultural traditions and features.
Closely linked to power is the concept of sovereignty, Max Weber defined the state in the early 20th century as a sovereign entity with “a monopoly on the legitimate use of force within in a territory” (Weber, 1999: 815-822). So sovereignty has to do with an actor’s ‘right’ to act violently, or threaten to do so within a certain bounded area, and this right draws its value from the consent of society. Sovereignty can be split in two forms: legal and practical. Legal sovereignty concerns the amount of
legitimacy with which a governing institution is viewed by other actors, practical or de facto sovereignty entails the right to save or end a life with impunity (Hansen & Stepputat, 2006: 296). This comes back to the two forms of power that Foucault discussed, namely the ‘force’ aspect and the ‘normativity’. The former is mostly linked to legal sovereignty whereas the latter has more to do with practical sovereignty. Weber could hardly have foreseen the major role the PSI would play today with regard to sovereignty. PSCs are making claims to sovereignty in order “to create and/or maintain a social order through violence” (Diphoorn, 2013: 18). As I have said before, states are willing to hand over tasks that they used to do, this is the process of disassembly. The claims of PSCs on sovereignty are part of the reassembly into Global Assemblages (Abrahamsen & Williams, 2011). It is a common claim that the state’s disassembly and the PSI’s claim on sovereignty is a sign of the state’s weakness. But rather than a sign of weakness, many scholars argue that states use privatized security to enhance their own legitimacy and effectively control the population (Abrahamsen & Williams, 2011; Weiss, 2008; Diphoorn, 2013; Neocleus, 2007). An argumentation of state failure does not recognize the process of a “political, social, and cultural climate (in the neoliberal period) that promotes the increase of non-state security solutions” (Goold et al., 2010; Weiss, 2008). The neo-liberal period of the last thirty years is characterized by its focus on markets and processes of deregulation, removing trade barriers and globalization (Dunigan & Petersohn, 2015: 1-4). If an actor as powerful as the state makes claims to sovereignty, it tries to create and maintain a social order by policing the society. Diphoorn notes that there is a rise of interconnections between state and non-state policing, with policing being “the enforcement of the law, prevention and detection of crime" (Diphoorn, 2013: 13; 18). As I will argue in this thesis, it is likely that the Chinese state is using PSCs as a means to an end. The governments in both Hong Kong and Shanghai have decided PSCs can do some forms of providing security, or policing, more effectively and/or efficiently than public security forces. Now that sovereignty and other relevant concepts and perspectives are discussed, I will write about the powers of the government’s institutions in Shanghai and Hong Kong next, and the response of the PSCs, in the form of their strategies and viewpoints, in chapter 4. I have gathered plenty of data on the use of force by PSCs, and perhaps more importantly the view of the state and other actors on this use of force. The use of force and the role of power, sovereignty and guanxi will be thoroughly examined in chapter 5.
Chapter 3: The Government Tool Shed
Sub-questions:
1. What tools of power do the Public Security Institutions, such as the Police, use to influence the PSCs in Shanghai and Hong Kong?
2. What are the government’s common practices influencing the PSCs in Shanghai and Hong Kong? 3. How powerful are these tools and practices?
This chapter will examine the powers of the Public Security institutions in both Shanghai and Hong Kong based on data from the field, supported by existing literature. The government in Shanghai and Hong Kong have powers that cover several angles and which apply on different stages in the operational process of a PSC. I will explain these stages and powers in-depth, and analyze them using insights and arguments from the theoretical framework, particularly those on power and sovereignty (Foucault, 1980; Bourdieu, Thompson, 1991; Davies, 1996). On a cautionary note, the regulatory regime and practices differ for the various types of PSCs. There is a different field of play for guarding companies as compared to companies that do private investigation or fraud prevention, this is an essential part of my argument, because the services the PSCs offer are one of the underlying factors of named in chapter 5. It will also become clear that there are a lot of differences between PSCs operating in Hong Kong and Shanghai, because of the differences in institutions and practices related to the Private Security Industry (PSI).
Government Institutions
Before distinguishing the different tools of power that the government can use, it is important to clarify which government institutions, otherwise known as Public Security institutions, are involved in the Private Security Industry in Shanghai and Hong Kong. In Shanghai, I identified the two most important institutions: the Ministry of Public Security (MPS) and the Public Security Bureau (PSB). The Public Security Bureau is similar to what we would call the police in the West, therefore if I use the word ‘police’ in the context of Shanghai, I mean the PSB. Other institutions involved are the fire department, the Chengguan or city management, the CSPIA (China Security & Protection Industry Association) and the People’s Armed Police (PAP). The first two institutions are important when planning an event, and therefore the security of that event. The CSPIA was founded in 1992 and considers itself a link between the government and the PSCs (CSPIA, 2015). The People’s Armed Police is less involved in PSC affairs than its civilian counterpart, the PBS, but it still has influence over the PSCs. In matters of securing government buildings or high-ranking government- or CCP officials, the PAP is likely to take the lead and carry the most responsibility. In Hong Kong, the situation is different, because of the special status that the Special Administrative Region (SAR) has. The office of Hong Kong police is the main actor in terms of interaction with the PSC operating in the SAR.
Licensing
Before a PSC can start operating officially, a license from a specific government institution is required, this is the case for PSCs in both Shanghai and Hong Kong. Especially for guarding and escorting companies, licenses are very important: they provide legitimacy and enable continuity for the company. Guarding and escorting companies provide manned security, contrary to companies that do private investigation, risk management and fraud prevention (Trevaskes, 2008). In Shanghai, the local branch of the Ministry of Public Security (MPS) grants these companies their licenses. In Hong Kong, it is the office of the Hong Kong police force that grants licenses, according to my interviewees (HK Police Department, 2015). As I have said in the research setting, there is a vast black market of PSCs in the People’s Republic of China, even though recently the Chinese government has started cracking down on this type of PSCs. The licenses in China prescribe the PSCs on what (not) to do, and demands for full cooperation with government institutions. China has also committed itself to international agreements on Private Security, such as the Montreux Document (Catello, 2015; Montreux Document, 2009). The respondents in Shanghai have told me the Private Security sector in mainland China is changing from a loosely regulated market into a more controlled one, as Liu (2005), Dutton (2006) and Trevaskes (2008) have also noticed, but problems remain nonetheless.
A:You mean the security companies in Shanghai? Well I think the bigger companies can increase their wages, but the smaller companies have more trouble. They have to operate on the license of another company, so they have to pay that company part of their income as well. That’s why they probably have less room to increase their wages.
Q: Really, operating other licenses? That’s interesting, how much does a license cost?
A: Yes, some companies use entirely different names! Well, it’s not really about costing much, you just need a good relationship with the police, even if you have enough funds, the police can delay the application of a license. So a company can have all the necessary documents for the application, but the police can just wait as long as they want with giving you the license. And the license applies to the general manger of a company, so he or she stands for the company, as a representative. (interview KY, 2015)
This quote highlights the murky process of obtaining a license, in which guanxi plays a significant role. The guarding companies in Shanghai have to maintain a good relationship with the Public Security Bureau (PSB), otherwise they might find that getting a license every three years becomes really difficult. If the relationship - personal or professional - is bad, the PSB can delay the process of giving out the license or refuse a license to the PSC altogether. In case this happens, the PSC will struggle to get (new) assignments from clients and operate normally, because clients only wish to deal with officially licensed companies. In Shanghai, the main figure in the organization of PSCs in these matters is the general manager, he or she represents the entire company; any license given is registered under the name of the general manager, instead of the company as a whole. In practice, this means that the task of pleasing government officials comes down to these general managers. They have to establish and maintain the necessary professional and personal relationships to ensure the securing of a
license. In these statements, the attributes of guanxi that Gao et al. (2012) describe become apparent, for instance dinners and unofficial meetings are acts of reciprocity, cultivation of personal trust and exchanging favors.
Figure 4: An Individual License of a Hong Kong PSC Employee
Because the government has only recently enacted a comprehensive regulatory framework for the PSI in mainland China, traditions and practices are still developing. Catallo, in her chapter on the PSI in mainland China, writes about the lack of a clear and structured regime of handling PSC licensing, especially when it comes to enforcement (Catallo, 2015: 118-131). Compared to Hong Kong, where both the rules and the enforcement are transparent and comprehensive. The Hong Kong police force requires licensing for individual PSC employees, as well as for the companies as a whole, whereas individual licenses are not required in Shanghai. An informant in Hong Kong told me the regulatory regime in Hong Kong is quite similar to that of its former colonizer, Great Britain. The murky regime of licensing in Shanghai has created interesting processes with regard to PSC strategies, since they have to find the best way to engage with the authorities given the characteristics of the situation there.
Licensing is a very powerful tool indeed, the government effectively decides if a PSC operates within or outside of the legal framework, which has major consequences for the business of PSCs. In Bourdieu’s sense of power as a combination of capital, licensing in Shanghai and Hong Kong are sources of legal, economic and symbolic power (Thompson , 1991: 14).
Recommendations
On top of the rules and practices with regard to licensing, the government in Shanghai also influences the day-to-day operations of PSCs. Public Security institutions in Shanghai, especially the Ministry of Public Safety and the local PSB, have influence over the process of getting clients and projects for the
PSCs. The most important aspect is the recommendations that the Public Security institutions give to potential clients of PSCs and PSCs themselves in Shanghai. My respondents have told me about these recommendations, they say that it is a tool that gives the government a lot of arbitrary power over the PSCs. The recommendations can make PSCs successful by facilitating new projects.
Q: I want to get to the role of the police, because you say that the police is so heavily involved, do they call you for assignments as well?
A: Yes they do, they [the police] often have a place that needs securing, and then they call us and we negotiate with the client.
Q: What is the communication like? On the ground level, at a big event or in a store, do the guards communicate directly with the police officers or do managers from you and the police do most of the communication?
A: We talk ahead of a certain assignment, and if the police have any question or concerns. Our guards are in direct contact with us, they can talk to police officers in the field if they see any, or they can call the police of course. (Interview KY, 2015)
The impact of these recommendations differs quite a lot; for instance, the government has a big role in projects of event security. The event manager in Shanghai quoted above said that Public Security institutions, especially the police, are involved in every step of getting a certain event secured. With Shanghai and Hong Kong both being urban areas as well as cities with international fame and lots of large events throughout the year, event security can be a big potential factor in the business make-up of a PSC there. Big events such as the 2010 Expo, the Formula 1 Grand Prix and the New Year’s countdown are all large-scale events in Shanghai, with many thousands of people attending. The size and scope of these events create considerable risks, illustrated by the dramatic stampede on New Year’s eve 2014 (Luu & Hume, 2015). Another area in which recommendations can be important is executive protection or body guarding. An example of this is providing body guards at a concert; the artists performing need constant protection whenever they are out in public, and some PSCs are trying very hard to get projects securing these celebrities. One PSC arranged the security for Usher, Beyoncé and the Red Hot Chili Peppers when they were in Shanghai. Although these are international stars, their shows have to be given the approval of both the Public Security Bureau and the Fire Department. Before each project, a PSC interested in getting that particular project has to make a plan with all the relevant details of the potential security suite. Prices, risk assessments and guard deployment are all elements that have to be included in the plan. The Public Security Bureau (PSB), along with other Public Security institutions, then make the decision on which PSC to recommend for which project.
As I told you before we have to report everything to the government, if there is a big venue, we have to inform the fire department. Even if we want to move a billboard, you know, advertising, we have to discuss it with Chengguan [City management], I don’t know how to say in English.
(Interview KY, 2015)
The quote refers to a case in which the guards of the PSCs at a venue had moved an advertisement board for security reasons without the permission of the authorities. The Chengguan, or City
Management Bureau, was not happy about this, so it told the PSC management to discuss this kind of steps in the future or face reprimands or even a scale-back in government recommendations for future projects. As with the licensing issues, guanxi and previous business arrangements are important with regard to recommendations. Multiple respondents in Shanghai have said that a good personal relationship with the right Public Security officials is likely to bring new clients and projects in for the PSC. This is in line with the narrative that Yang describes which suggests that cultivating guanxi will lead to commercial success (Yang, 1989; 1994).
Of course recommendations are not everything for clients; prices, services and reputation are also important. But given the large array of powers and the importance of the government in Chinese business in general, clients of PSCs will take an official recommendation very seriously. This kind of recommendations go against some principles of the free market as generally thought of in the West. Free competition is hindered by government interventions such as the recommendations, and the licensing regimes makes free access for new players in the market more difficult, as several interviewees have told me. On the other hand, PSCs deal in security, one of the fundamental necessities of a functioning society (Weber, 1999). The Private Security sector therefore is a special industry to which normal capitalist principles often do not apply.
A last point that is important to make with regard to recommendations is that many events or projects, are actually organized by the government. Examples of such events are the New Year’s countdown on the Bund or in Hong Kong’s harbor, the Lantern parade in Shanghai’s Yu Gardens or the 2010 Expo. In these cases, the government not only makes recommendations, it has the final say in which company gets to do what assignments. Having the government as a client for PSCs instead of other (private) actors is an important consideration with significant effect on the strategies and viewpoints of the PSCs.
Pressure, Threats & Raids
I have a friend who worked at Gap.. you know.. the American clothing company? He was a manager there responsible for the guarding of the stores in Shanghai. He hired this one particular guarding company for a one-year deal. At the end of the year, he let the guarding company know he would look for another PSC next year. Not long after this, the police raided the stores and the office, listing all types of alleged offenses. This way Gap was forced to renew the contract with the existing PSC, because if they still refused they would be in even more trouble. (interview RY: country manager of a private investigation and fraud prevention PSC, 2015).
This revelation aptly illustrates the power of the authorities, and their willingness to use it when an actor does not behave the way they want. In this case it was a client of a PSC, but other interviewees confirmed that pressure, threats and strong-arming is common in mainland China, contrary to practices in Hong Kong. The story told by another informant in the introduction of this thesis is an example of
