Competitive Intelligence

Chinese Private Investigators Toe Fuzzy Legal and Ethical Lines

I read a piece in the Miami Herald a week or so ago about private investigators and their roles in CI practice in China lately. It’s interesting to compare China with the United States in the past 25 years – but I’m not sure how easy it will prove to be to predict the future of CI in China as the field evolves. In the meantime, here’s an excerpt:

Out of China's chaotic race to capitalism, an army of private detectives has emerged to find abundant work tracing bogus goods, tailing swindlers and capturing philandering spouses on videotape.

By some estimates, 700 to 1,000 small investigations companies now ply their trade, employing tens of thousands of paid informants, stalkers, disguise artists, cameramen and part-time snoops.

Like much business in China, the industry exists in a legal twilight zone. Banned by the central government in 1993, private-detective agencies became semi-legal again after a 2002 court ruling. Even so, there's no central registry, no federal licensing and only fuzzy legal interpretation about how gumshoes may operate.

"My understanding is that anything that is not specifically banned is legal," said Kang Yongchun, the deputy director of the Kedun Detective Office (www.kedun-detective.com) in Shenyang, an industrial city about 400 miles northeast of Beijing.

Another excerpt points out why this matters to competitive intelligence practice in China:

When 150 private detectives, lawyers and other experts gathered in late December in Hangzhou to discuss the outlook for private investigations, much of the talk centered on "competitive intelligence," such as tracing counterfeit goods and identifying thefts of industrial know-how.

U.S. and European security consulting companies are present in China, but they largely stick to insurance fraud and safeguarding foreign products from counterfeiting.

"Most of the work we do is brand protection," said Ewen Turner, the Shanghai-based managing director for northern China for Pinkerton Consulting and Investigations, the 154-year-old security firm headquartered in New York.

Turner said private investigation in China "is still very much a fledgling industry" and local private eyes run the gamut "from legitimate firms to one-man offices to professional informants who go around city-to-city sniffing around markets."

"There are people whose sole purpose is to go follow trucks around," the managing director said.

It's interesting to note how China has been trying adopt more sophisticated CI techniques in recent years however - I've been there twice in the past two years on lecture tours to talk about the legitimized adoption of legal/ethical CI practices over shadier industrial espionage activities that more frequently marked past intelligence forays by Chinese industry – and, in many cases, still does.

- Arik