Foreign Personal Security Risk Firms to be Allowed in China Next Year

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Nov. 11 – China is expected to open up its risk management industry next year following an anticipated rubber stamping at the Spring 2009 National People’s Congress, permitting the establishment of both local and foreign invested personal security firms that can provide services such as bodyguards, protection, escort and crisis resolution to operate across the mainland.

Companies providing basic level services will require a capitalization to RMB1 million, while those wanting to carry forearms and provide armored vehicles require RMB10 million. The latter will also need to be majority owned by a Chinese partner. The revised law has not yet catered for provisions over testing for bodyguards and firearm bearing personnel recruitment capabilities although this is likely to be determined prior to the law being enacted.

China’s security sector currently employs over 2.5 million, many of them affiliates with the Public Security Bureau. That figure is expected to balloon, and comes at a time when personal risk and protection is increasingly in demand as enterprises in China start to feel the economic pinch and wish to downsize or even close down factories. The situation in China when that happens can get ugly. Official figures this year indicate over 300 people were kidnapped in China as a result of business disputes, and the real figure is expected to be far higher.

The new laws are to be signed into effect on February 25. Companies wishing to enter this market may contact Richard Hoffmann, the legal services senior associate at Dezan Shira & Associates. The firm’s clients in this field have included Navigant Consulting, Kroll, and Hill Associates amongst others.