Chinese private security companies go global

Chinese private security companies go global

Beijing’s protection industry looks after workers in the most dangerous places

The Big Read

A Chinese worker on a train carrying iron ore across Mauritania © Reuters

yesterday by: Charles Clover in Beijing

On the evening of July 8, the streets of the South Sudanese capital of Juba were raked with gunfire as an uneasy truce between warring political factions broke down. Inside the offices of DeWe Security, a Chinese private security firm, phones started ringing.

Panicked Chinese oil workers employed by the China National Petroleum Corp, the main client of DeWe (pronounced “DeWei”) in South Sudan, were calling an emergency number to say they were in harm’s way and awaiting instructions.

For Kong Wei, head of DeWe’s Juba office and a veteran of the People’s Liberation Army who retired five years ago, it was the start of a 50 hour-marathon without sleep as he and his colleagues executed an evacuation plan. “Bullets and shells flew over our compound all day and night,” says Mr Kong.

The contractors soon realised that their tin-roofed cinder-block building couldn’t stop bullets — just one of the many lessons they would learn. In all, 330 Chinese civilians, stranded at 10 locations across the city, were instructed to hunker down until the airport could reopen. Some moved into shrapnel-proof metal containers. It was only on the fourth day of the fighting, once the government had blasted the rebels out of Juba, that the trapped workers were evacuated to Nairobi, the capital of Kenya.

Details of the operation last year, revealed here for the first time, point to the greater role being played by China’s fledgling private security industry. Its growth has echoes of the prominent and often controversial part played by western contractors such as Blackwater, now known as Academi, and DynCorp in Iraq and Afghanistan after the September 11 2001 attacks. The logic is the same: contractors are convenient and deniable. But they and the military are in reality two sides of the same coin.

“The intermingling between PLA and private security contractors often staffed by ‘former PLA’ is a blurry line,” says Andrew Davenport, chief operating officer of RWR Advisory Group, a risk consultancy. Though private, few doubt the groups are solidly under the control of China’s national security bureaucracy. They represent “a parallel security strategy”, as Mr Davenport puts it.

Foreign policy shift

China has been reluctant to get involved in politics abroad, part of a decades-old doctrine of “non-interference”. That caution is being tested by its rapid economic growth and the boldness of some state-owned companies, which routinely work in environments that western counterparts avoid. Chinese companies service power stations in Iraq and a telecommunications network in Syria; they mine copper in Afghanistan and pump oil in South Sudan. SIA Energy, a Beijing consultancy, estimates that 7m tonnes a year of oil produced by Chinese state companies are routinely shut in worldwide due to violence in the likes of Iraq and South Sudan.

The job of protecting China’s ever-expanding commercial interests and the more than 1m Chinese living abroad has led to shifts in the country’s traditionally cautious foreign policy. Its navy has fended off pirates in the Gulf of Aden since 2012 and rescued civilians trapped in Yemen in 2015. Its combat troops are being deployed under UN peacekeeping mandates in countries where China has investments, such as South Sudan and the Democratic Republic of Congo. And last year Beijing established it’s first foreign military base, in Djibouti.

A marine of the People’s Liberation Army stands guard as Chinese citizens are evacuated from Aden in 2015 © Reuters

The growth in the use of Chinese security contractors is part of this trend as Beijing looks for ways to protect its assets abroad without resorting to an imperialistic foreign policy that could play badly, both at home and abroad.

“The need for security protection overseas is quite significant and the army is clearly not suitable for this job due to the potential problems it might cause for foreign relations,” says Yue Gang, a retired PLA officer.

About 3,200 Chinese employees of private security groups were based abroad last year, says Liu Xinping, deputy director of the China Overseas Security and Defense Research Centre. That compares with 2,600 Chinese troops deployed under UN mandates — China’s only foreign military deployments in conflict zones.

Yet with a few exceptions the security contractors are usually unarmed. DeWe’s Chinese staff did not carry weapons during the fighting in Juba but led teams of armed locals.

7m Tonnes of oil destined for China said to be shut in by violence overseas each year

Beijing is extremely cautious about the industry, partly due to the abuses of the type that have periodically plunged US occupations of Afghanistan and Iraq into crisis. In 2010, supervisors at a Chinese-owned coal mine in Zambia fired into a crowd of workers demanding higher pay, injuring 11 and triggering an anti-China backlash. Two years later, a supervisor was killed at the site during a dispute over wages.

One security company manager, who asked to remain anonymous, says all contracts they sign with Chinese state companies prohibit employees from carrying weapons. “The government doesn’t want Blackwater,” he says.

Preventing ‘diplomatic incidents’

The lessons of America’s wars over the past 15 years, when more US contractors than uniformed US military personnel have died in Iraq, Afghanistan and Pakistan, may be instructive for Beijing.

According to a study by the Watson Institute for International and Public Affairs, 7,071 US contractors have lost their lives in Iraq, Afghanistan and Pakistan since October 2001, slightly more than the 6,860 losses of the US military. “Private security contractors allow politicians to move some of their military activities off the books in terms of oversight and political responsibility,” says John-Clark Levin, a private maritime security expert based in the US.

Like their western counterparts some Chinese contractors are given jobs that would be politically sensitive if handled by government forces. “One advantage of using private security is that it can protect governments from the risk of diplomatic incidents,” says Ben Stewart, general manager of Maritime Asset Security and Training, a UK company that provides anti-piracy guards for ships. Sea marshals working for Hua Xin Zhong An, a Beijing company, are able to use lethal force as a self-defence measure against pirates, according to their contracts, while their Chinese navy escorts can only fire warning shots unless their warship is under direct attack.

On land the Chinese government is even more cautious. Tao Dexi, a contractor with Dingtai Anyuan International Security & Defense, which has operations in Iraq, says none of the staff of the security companies with which he is familiar is allowed to carry a gun.

“Chinese security companies have always carried out security missions via local teams,” he says. “[But] under extreme emergencies, Chinese security staff can borrow guns from the local security staff.”

While viewed initially with distrust in some corners of Beijing, the industry has been embraced by the Chinese leadership. Following the violence in South Sudan last summer President Xi Jinping advocated “improved safety risk evaluation, monitoring and pre-warning, and the handling of emergencies” for companies in dangerous territories. He called for measures to support investment in risky countries.

Two months after his comments, the difference between stationing troops and contractors was further blurred after DeWe announced plans to build two “security camps” in South Sudan and the landlocked Central African Republic. These appear to be the first private security facilities of this type to be used by Chinese companies, heralding a more permanent security presence.

Li Xiaopeng, DeWe’s chief executive, told a Beijing forum on overseas security in October that “our next step is to mass-produce [safety camps] in countries with Chinese investments as well as [those] with instability factors”.

Government backing

Based near Beijing airport, DeWe’s compound has a converted warehouse featuring a mock-up of a Middle East town. The model’s façades are used to practise evasion tactics and hostage rescues.

Hao Gang, a former police official who is DeWe’s general manager for Beijing, says the group’s biggest revenue generator is to provide what he calls “integrated solutions” for Chinese companies going abroad, including training, on-site security and risk assessment.

3,200 Chinese employees of private security groups overseas

The group was founded in 2011 by a number of former military and police officers who had first worked together during the 2008 Beijing Olympics. Since 2013, 86,000 Chinese civilian employees have been trained, says Mr Hao.

“It depends where they are going. If they are going to Paris, we teach them how not to have their passport stolen. If they are going to Kabul, we teach them how to evade kidnappers,” says Mr Hao.

Private security firms were only made legal in China in 2010, by legislation that allowed companies to provide armed services to domestic businesses like banks and factories. Now, DeWe has 352 Chinese employees based abroad, as well as 3,000 locally hired staff working for companies such as China Road and Bridge Corporation building the Nairobi-Mombasa railway, as well as defending CNPC in Sudan.

Chinese security companies are still finding their feet, says Frauke Renz, a researcher who specialises in the private security industry. “The big international contractors are more experienced in those environments,” she says. “If you take Iraq or Nigeria, for instance, most international companies have been operating in those countries for years”.

Yet many Chinese contractors are benefiting from government pressure to use only domestic security firms. CNPC, for example, used to employ Control Risks, a UK company, to guard fields in Iraq, but in 2010 began to employ Guanan, a Chinese company with close links to ZhenHua Oil, China’s fifth-largest oil company.

DeWe’s profile rose dramatically last summer when Chinese Poly-GCL Petroleum Group Holdings hired it to manage security at a $4bn LNG project in Ethiopia — the largest project that the Chinese private security industry has been asked to protect.

 

Some other companies appear to have friends in high places. HXZA, for example, has a near-monopoly on security for Cosco Holding and China Shipping Container Lines, China’s two largest state-owned shipping groups. “They clearly have very solid relations to the state, considering how loyal their customer base is. And they are not that cheap,” says one foreign private contractor. HXZA declined to be interviewed.

A handful of other companies such as Shandong Huawei, Veterans Security Services and Dingtai Anyuan, have similar profiles and recruit from the same pool of veterans, providing guard services abroad and training state company employees. Aside from the language advantage, they are cheaper than their foreign counterparts — a team of 12 Chinese guards costs about $700-$1,000 a day, the same as one British or US guard, say contractors.

The legal basis for permitting Chinese companies to deploy guards abroad is still vague, admits DeWe’s Mr Hao: “We obey all local laws in the countries in which we work.”

The industry is a byproduct of China’s prodigious overseas expansion, which has been taking its companies into ever more dangerous territories, places where ground troops, both foreign and local, are either unwelcome or ineffective.

“Private contractors are sometimes the least bad option for security,” says Edward Allen of ViennEast, a risk consultancy and former security analyst in Iraq, “that is the reason they are there.”

Additional reporting by Sherry Fei Ju

 

New market: Blackwater founder looks to China for business

The boom in private security services for Chinese companies has attracted a number of entrepreneurs including Erik Prince, the founder of Blackwater, the US private military company that achieved notoriety following a series of shootings in Iraq. Erik Prince © Bloomberg

He is executive chairman of Hong Kong-based Frontier Services Group, which specialises in what it describes as ”securing supply chains” in Africa. China International Trust and Investment Corporation, a major Chinese state investment company, owns a 20 per cent stake in the group. Aside from this link to the Chinese government, Mr Prince brings political connections from the US — he is the brother of Betsy DeVos, Donald Trump’s education secretary.

The company raised eyebrows in December when it announced it would establish two “forward operating bases” in China, one in Yunnan Province to service Southeast Asia, and the second in the restive western region of Xinjiang, which abuts central Asia. FSG said the strategy is to take advantage of China’s “One Belt, One Road” programme for trade and investment expansion.

Despite its militaristic terminology FSG insists it will not provide armed guard services and weapons training — which are heavily restricted in China. The company says the bases will provide “training, communications, risk mitigation, risk assessments, information gathering, medical evacuation and joint operations centres that co-ordinate security, logistics and aviation services”.

Mr Prince objects to the suggestion that FSG is a “Chinese Blackwater” and says that while many Chinese companies approach him for armed guard services, “I quickly try to disabuse them of the notion that it would be a good idea or that it would be permitted”.

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