Chinese private security companies are seeing an opportunity as the U.S. withdraws troops from Iraq and Afghanistan. But plenty of complications await them.
A security vacuum is developing around Chinese workers overseas. The recent kidnapping of 29 Chinese workers in Sudan (where another worker was shot dead during the abduction) and 25 workers in Egypt has sparked a strong reaction in China. As a result, Beijing is looking to bolster consular services and protection for Chinese citizens working and travelling overseas. On the corporate side, private analysts are urging companies to do a better job of training employees before they are sent abroad. Yet with at least 847,000 Chinese citizen workers and 16,000 companies scattered around the globe, some of them in active conflict zones such as Sudan, Iraq, and Afghanistan, key projects and their workers are likely to require more than just an expanded consular staff to keep them safe.
It’s with an eye on this growing danger that new Chinese private security providers see a business opportunity. Shandong Huawei Security Group appears to be a leader among Chinese security providers, which thus far have predominantly focused on the country’s robust internal market for bodyguard and protective services. Huawei provides internal services, but in October 2010, opened an “Overseas Service Center” in Beijing. The company’s statement on the center’s opening explicitly cites the withdrawal of U.S. troops from Iraq, and the potential for a security vacuum to result, as key drivers of its decision to target the Iraq market.
Chinese investors are rapidly increasing their presence in Iraq. China National Petroleum Corporation (CNPC), for example, is helping to develop oil projects that will likely substantially eclipse its flagship Sudan operations in size, while Chinese construction companies are also likely to play a central role in rebuilding and improving the country’s civil and energy-related infrastructure, destroyed by years of war and neglect.
Shandong Huawei and other emerging Chinese security providers will also likely target the Afghan market. The U.S. government’s latest geological survey showed massive mineral potential in Afghanistan, with reserves of lithium, copper, cobalt, iron ore, and other minerals potentially worth as much as $1 trillion. Chinese mining and construction companies are likely to move aggressively into Afghanistan, following the example of state-owned Metallurgical Corporation of China, which is developing the massive Aynak copper deposit.
The Aynak project has benefitted from the close proximity of troops from the U.S. Army’s 10th Mountain Division, but as Washington strives to pull U.S. forces out of Afghanistan by 2014, Chinese miners will increasingly be on their own for security. As the growing number of Chinese companies and workers in Iraq and Afghanistan are forced to adapt to an environment without large U.S. military forces effectively providing a shield for their operations, the heightened security risks from insurgent attacks, banditry, and other physical threats are likely to drive them to seek new armed security providers – precisely the business opportunity that Shandong Huawei and its peers seek.
Filling the Void
The first known attempt to create a foreign-focused private security firm in China came in 2004, when a Ningbo businessman created a bodyguard firm alleged to have drawn staff from China’s special forces community and the paramilitary People’s Armed Police (PAP). In contrast, Shandong Huawei’s venture into the Iraq security market appears to be both larger-scale and focused. On its website, the company says it recruits its personnel from among retirees of special police and military units and the PAP. Huawei also specifically notes that its employees include men who have served tours in Iraq, likely former PAP who guarded China’s Ambassador to Iraq.
As far as we know, there are no other Chinese security firms publicly declaring a desire to protect Chinese businesses working abroad. Nonetheless, if Shandong Huawei’s efforts to generate business in Iraq succeed, it’s likely that more Chinese firms will target the overseas market, particularly since the domestic private security market is becoming increasingly crowded.
Photo Credit: Tomas Roggero
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ACT
@ Richard:
i would actually like to make the argument for American decline here. While American policy makers such as Robert Kegan* make excellent arguments based on the notion of economic power, international influence and military might, they often miss the most important factor that supports all these things, namely education.
Michael A Cohen (Rotting from the Inside-Out) and Gideon Rachman (Think Again: American Decline) both make arguments on the website “foreign policy” based on education, politics and the state of national infrastructure. Effectively, they assert that because of its ever more divisive politics, its poor primary education and its shoddy public care services that America will, very quickly, no longer be able to able to play the role of “world police” that it has so enjoyed for the past 20 years since the fall of the Soviet Union. I will go further and argue that, more than just decline, America will implode. Here’s why:
first off, it’s not just the system of education that’s damaged, but also the work ethic. For the past forty years or so, ever since the lunar landings and the end of the Vietnam War, Americans have largely been content to sit back on their laurels and enjoy what could best be described as the “fruits of life”. As a result, my generation, the generation that was born between 1983 and 1998, has known nothing but entitlement; we live in an age where teachers are content to make bell curves so that they can hide their poor performance, and students only complain when given a few hours homework, rather than rising to the challenge. Much the same is with their parents, of whom the thing i most often hear is their verbal assault on teachers for attempting to instill even a modicum of discipline into the new generation. This is a sorry state, and the whole of the United States will pay for it in the next two decades as this generation enters and then exits the higher education system of the United States, which–thankfully–is still perhaps the best in the world; they will enter the workforce entirely unprepared, and unwilling to do the work required of them. As i hear from my father, a CIO in at an information technology company, web-surfing amongst employees has become a rampant and intolerable problem. As a result of this poor-quality education, poor work ethic and a general sense of “me, me, me”, America’s capacity for innovation, already drastically reduced according to Rachman and Cohen, will plummet.
Furthermore, the majority of the best students at the best of America’s schools, such as MIT and Harvard are of Chinese, Japanese or East Asian origin; funded by their noveau-riche parents, they are the products of what is perhaps the best primary education system in the world, one that America could–and should, in my mind–emulate. Students are given realistic expectations and are entirely responsible for their own grades; they are expected to excel in the sciences and their native language, and are also ecouraged to explore other cultures besides their own. Furthermore, their parents did not let them slack off into all hours of the night: rather, their parents asked them to do MORE, not LESS homework, realizing that the world cannot–and should not–help them. Furthermore, these students are not staying in the United States: disgusted by a arrogant and thoroughly humiliating immigration system, they have chosen to return to their home nations where their technical know-how is best put to use. For them, the United States is not a model to be emulated, but rather a thing to be surpassed.
Judging by the state of American politics, this decision is right and proper; in the forty years since the Kennedy presidency, i would argue that not one American President has even hinted at the possibility that Americans might have to sacrifice comfort, leisure or any sort of entitlement in order to benefit not just themselves, but also the nation as a whole; rather, they have all–without exception–trumpeted the nationalist and militarist line. Fear, not goodwill and betterment, is the name of the game. And no example is better than the recent gridlock that took place in congress; in the so-called “super committee”, a team of 6 republicans and 6 democrats were unable to put aside their differences for even a moment in order to decide on a budget proposal. To clarify, they were unable to put aside corporate and personal interest to give the American people not what they want, but what they most need. It says something, perhaps, that for every legislator in congress, there is an army of anywhere between 300 and 3000 special interest lobbyists attempting to shove the interests of their corporation and the Military Industrial Complex down their throats; America is not the land of the free, but rather the land of corporate freedom to abuse. And how it shows; the military has a budget of some 500-700 billion dollars, most of it wasted on projects that are inefficient or will not work. The best examples of this are the F-35, which is now massively over-budget and–allegedly–flies like a brick with a minimal payload, as well as the F-22 Raptor which was apparently outperformed by the YF-23 Black Widow II for less money, but was still selected anyway. Furthermore, America spends the most on education and healthcare, yet it has some of the lowest scores in English, Science and Math in the OECD nations; a broken arm can cost you dozens of thousands of dollars and potentially your entire livelihood.
Among other things, the United States has the world’s largest prison population as well as the highest rates of obesity; thanks to lax gun-control laws, it also has the world’s highest rate of homicide amongst the 1st world nations. It also has the world’s largest debt, at a significant percentage of its GDP.
All these conditions can, and–i suspect–lead to the economic and academic collapse within the next two decades; the future “leaders” of the United States, unable to comprehend viewpoints other than their own, beset by a tide of misbegotten nationalism and manipulated entirely by corporations whose only motive is profit at the expense of the people whom they prey upon. For evidence of this kind of corruption, one only need look at the recent SOPA, PIPA and ACTA legislation and trade agreements; draconian policies one and all that circumvent the rights of their subject people, branding the innocent as criminals and giving corporations the power to force the government to legislate their version of morality onto the American People where effective laws for combating digital piracy already exist.
But enough digression; before long, i suspect, we will reap the rewards of our military adventurism and our lack of comittment to public betterment and education; America will, in the next 20 years be forced by declining economic conditions to shut down the majority of its military bases overseas, leaving many of its allies vulnerable to assault. This will, i predict, come with a rapid decline in technological innovation, both in the military and civilian departments, culminating circa 2030 in a direct assault by some opponent on the American homeland; on their own soil, an underfunded and technologically outmatched American military and populace, burdened by a government whose legislators cannot see beyond party lines, will be unable to resist a far superior opponent and will–as it has done to other opponents–be submitted to permanent military occupation and disarmament.
*(http://www.tnr.com/print/article/politics/magazine/99521/america-world-power-declinism)
ACT
*edit*
All these conditions can, and–i suspect will–lead to the economic and academic collapse within the next two decades; the future “leaders” of the United States, unable to comprehend viewpoints other than their own, beset by a tide of misbegotten nationalism and manipulated entirely by corporations, will be unable to compromise with their opponents and, locked in by shortsighted personal gain, will bring the United States to ruin
Richard
@Act
Thank you.First of all,I do not agree with you that US educational system is below par with other countries in Est asia,it is a myth propagated by many in East asians,being from East Asia,with having intereacted with students from other east Asian countries like Japan,Korea,China,Taiwan,Singapore,I am convinced that US still retains the best education in the world,especially at under-gradute and post-graduate level.
This is directly reflected by the creactivitym of Americans which no one would dispute.
The main problem with USA is the result of its liberal democracy system which has gone beyond control,and therfore no longer a strong point for the country;the rich poor gap problem,and its inability to manage its twin deficits,as a result of over spending.
Yes,USA is indecline and probably would not be able to retain its sole super power position,but US educational system is not the problem,it is the problem of its politicians.
Erico Yu
Wow, this is what I was really writing for an independent study in last December, the security of Chinese investment in Afghanistan.
Steve
“Chinese security providers, which thus far have predominantly focused on the country’s robust internal market for bodyguard and protective services”
I find this statement odd in that since China is a police state why the need for bodyguards? I was in three Chinese cities last year in all three cities I witnessed armored cars making deliveries to banks. All three cars were accompanied by 4 guards, young tough looking men decked out in helmets and ballistic vests and automatic shotguns. In the US when a money delivery is made to a bank its usually guarded by an older man with a pistol that has probably not been fired in years.
Does China have a problem with bank robberies?
John Chan
@Steve,
It is part of the job creation program for the veterans; USA should copy China’s program to solve the unemployment problem among their veterans, before they join the occupying movement and overthrow the governments in the US.
a_canadian_observer
@Steve: They heavily geared up because it’s MONEY. If it’s a child dying on the street, they wouldn’t care.
@John Chan: See my comment to Steve? We in the west wouldn’t copy your model.
John Chan
@a_canadian_observer,
Linking irrelevant events as a base to bad mouth bashing relentlessly reflects poorly the quality of a Canadian observer on this site. Instead of meaningful contribution, trolling meaninglessly is a sign of lack of capacity to think outside of box on the international stage, no wonder Canada is becoming nobody in the international stage.
Steve
@John Chan:
Thanks for the information. However creating jobs just to keep someone busy is usually not a good use of resources. In the US veterans are given preference when applying for government jobs and many private companies seek them out because they usually come with a good work ethic and advanced training. I like my father and brother, sister and many relatives are veterans and have never been unemployed and the many veterans I know through my work and socially are doing fine.
a_canadian_observer
@John Chan: You call “a child dying on a street cof china while nobody cares” an irrelevant event? No wonder why china is at the bottom of a barrel in terms of morality. BTW, I stand by my previous comment. And regarding where Canada, with only 35 million people, stands on the world, I’ll let the results of studies (and the fact that chinese people are flocking to Canada) speak for her.
applesauce
@a_canadian_observer
get off your high horse, a child get hurt, while sad, is indeed irrelevant to veterans getting jobs. and don’t even pretend thing like that dont happen anywhere else.
http://www.telegraph.co.uk/news/newstopics/howaboutthat/9077380/Commuters-ignore-schoolboy-who-collapsed-at-train-station.html
John Chan
@a_canadian_observer,
You have been told many worse cases happened in Canada too, why didn’t you say Canada is at the bottom of a barrel in terms of morality?
The perpetrator was punished for his crime. If you want to show morality and compassion, there are plenty of poor girls in China and the developing world who need your help and money, go and do your bit, it is way more meaningful than bad mouthing China baselessly that will destroy the world peace and prosperity.
(Luke 6.37-38, 41-42)
“Do not judge others, so that God will not judge you, for God will judge you in the same way you judge others, and he will apply to you the same rules you apply to others. Why, then do you look at the speck in your brother’s eye and pay no attention to the log in you own eye? How dare you say to your brother, ‘Please, let me take that speck out of your eye,’ when you have a log in your own eye? You hypocrite! First take the log out of your own eye, and then you will be able to see clearly to take the speck out of your brother’s eye.”
Please read the above Gospel to cleanse your soul.
s. alain
That is the problem of analyses within a specific index. Many analysts and China watchers confuse capitalism and democracy and that is represenattive of the depth of thinking of certain US ‘elites’ as if they had the crystal ball in the sphere of objective reality. China, like the US is looking out for its interests and this is an extension of it while performing and filling in the vacumn created by the withdrawal (coming) of US troops and their proxies. If these PSCs’ perform well, they will get the upper hand in continuing business opportunities to further expand the radius of control and cooperation for the future. Keep in mind that the China will reach where the US is now in this ‘economic depression’ but the spread can be contained by harmonious relationships with newfound friends.
reason1978
I found this article very interesting. It will be interesting to see if the Chinese government restricts who (foreign countries and companies) can hire China based PMCs. I would also be curious if the rise of PMCs would lead to a “drain” on their military, especially their special operation forces; this might be good news for their average soldier if it leads to a pay raise! Last, it would be very interesting (and I think likely) to see if the Chinese government becomes their largest customer; after all, western governments hire PMCs all the time (which as a former soldier and a concerned citizen (USA) I think is sad and disturbing).
Robert Sessler
China has been, is and will continue to be on a global search for raw materials. Wherever they can establish a foothold to exploit raw materials and protect their National interests they will do so. Chinese Security companies not only secure Chinese citizens, but they also provide a platform from which to place experienced Chinese military personnel in foreign countries who accomplish a number of different tasks related to Chinese National Security interests.
How often do we forget that China is NOT a democracy!
John Chan
@Robert Sessler,
Black Water leads the way of brutality and lawless in the PMCs. How often are we misled to believe that USA is not a democratic society, and it never intends to be one. USA is a polyarchy. No wonder Black Water is an USA company.
a_canadian_observer
@John Chan: You know about Black Water because US is a democracy, so everything can be scrutinized. On the contrary, everything in china is kept secrtet and hidden, and from time to time things got leaked out.
John Chan
@a_canadian_observer,
USA is not a democratic society, and it never intends to be one. USA is a polyarchy. Having an election mechanism does not mean it is a democracy.
Your ignorance of China events does not mean everything in China is kept secret and hidden. Every sensitive information needs hard work to dig it out, it is same all over the all, regardless the political system. Sitting on the couch and bad mouthing China endless is not going to help you know anything about China.
a_canadian_observer
@John Chan: If you said so, let’s start with the SARS outbreak then. Tell us how china handled it.
Richard
China now seize the business opportunities offered by more stable enviroment after uncle Sam spent up to trillion of dollars on military expenditure.
Hopefully China government now see the importance of maintaining the current world order!
ACT
this is actually pretty interesting. Now that China is beginning to invest in its local PMCs, what does this bode for the Chinese Military Industrial Complex? the difference between US and Chinese Military manufacturers, i feel, is that US manufacturers focus on making the most high tech and flashy product (that doesn’t necessarily work), while Chinese military manufacturers focus on things that are somewhat lower tech, but actually live up to expectations…. how will this change, i wonder?
thoughts, anyone?
JoE
In due time the US and friends will make military sci-fi a reality. It’s just going to take massive amounts of money and sadly, lives to iron out the wrinkles.
Can’t really see any other country willing to spend a massive chuck of their GDP to play keep up when partnership and espionage are cheaper. Up-side to this, the US and allies will have a head start and the experience to continue technological progression.
Richard
China has not develop an military industrial complex(MIC) as US has done,this is not to say that they are not interested to do so,but theb fact remains that China MIC is on very small scale and not comparable.
Of course some old factories doing air force,navy and army jobs have further developed with expansion,but they are not there yet.
reason1978
China has not developed a MIC? Really? While it might not be a MIC in the same way that the United States has a MIC, the MIC and the actual military in China have a huge impact on China’s policies, punching far above their weight class. Unlike the United States, but similar (if to a somewhat lesser degree) to many other countries (Egypt, Iran), the military in China owns the means of production and development.
Richard
Actually if you study the behaviour of PLA,you can see an obvious gap between the communist party and the PLA,their policies are very different.It is important to note that since Deng,all the top leaders of Chinese government are without army background,they are just civilians appointed to the military commitee.So long as China GDP maintains its current growth,it is OK,the crash would come when economy under-performs.
applesauce
in china, the military is hawkish and the civilian government is very conciliatory. In the US the civilian government is very hawkish and the military is all about the need to communicate. Then does the US have a disconnect in its government? and there hasnt been one case of the PLA acting independently, some recent examples, the J-20 launching was expect for weeks prior if one were paying attention, the asat test was tried 3 times before the success, there is no way the Chinese government did not approve that and no way the US government did not detect the failed tests.
reason1978
I was not saying that the USA doesn’t have a MIC, just that China also has a MIC. I agree that the US military does have an impact on our policy, but in China and many other country’s the military has additional influence due to the large percentage of the economy (military and non-military) that they control due to ownership.
Richard
@reason1978
The main problem in China is not the economic power held by PLA,as so called MIC is not of comparable scale,it is the history of how power is being distributed in China.
One has to remember since 1949 when Mao declared the formation of PRC,all its leaders came with military background(PLA),it changed by President Jiang who has a completely civilian background,since then China has gone on with the greatest economic miracle in history of humankind,hence so far no problem between military and civilian leaderships.
But once China returns to normal growth path,then the military might challenge the civilian leadership as I believe that PLA leadership is still very much maoism oriented.