Don't call me private eye
written by journalists of The Economist

Beijing Investigators stay under cover

Yang hai, a former policeman, believes China's entering into the World Trade Organization will do wonders for his private detective agency. More foreigners doing business with China will mean more demands for a host of services that China law enforcement agencies usually will no provide, among them background checks on prospective business partners, and investigations of insurance claims and trademark theft.

But despite being a member of the World Association of Detectives (as a certificate displayed in his office declares), Mr. Yang is anxious to avoid the use of the word "detective" in connection with his business. A government directive issued in 1993, though patchily enforced, bans any "private detective agency----like non-governmental organization". In China, only the state has the power to investigate criminal activity. Instead, Mr. Yang runs what he cautiously calls an investigation service for foreign and Chinese

businesses. Chinese who buy life insurance in America, then make fraudulent claims on their return to China, are among the targets of his inquiries.

Mr. Yang's ten years working as a policeman should have equipped him well to stay on the right side of Chinese blurry laws. They certainly helped him get established nine years ago. When he took sick leave from the force and set up an investigation service agency under the wing of a Beijing law firm, which provided him with his first case. A year later, his police supervisor, worried about Mr. Yang's prolonged moonlighting, told him to return to work or resign. " You need a lot of resolve to quit a government job," said Mr. Yang. But the market beckoned. He resigned and set up the Steele Business Investigation Center, with the help of two other ex-cops.

Mr. Yang is one of the few in this fast expanding business in China willing to identify themselves publicly. His company even has its own website. Most others prefer to advertise in local newspapers, often targeting useful potential clienteles: women whose partners have been unfaithful. China economic reforms have created a growing middle class, many of whose male members travel frequently on business. Their mobility gives them greater opportunities for affairs.

A new provision of China marriage law adopted last year allows women to proceed against their husbands if an affair leads to their divorce. Advertisements abound for lawyers' offices "specializing in marital investigations". The official Chinese media often portray these as shady operations. They may have a point that they learn about the law on the job, admitted by one investigator who handles marital cases. He describes himself as a private entrepreneur who, among other things, dabbled in petty smuggling before setting up his agency last year. He asked not to be named.

The industry received a boost in December when the Supreme People Court ruled that legally obtained clandestine recordings made by private citizens would henceforth be admissible in court in civil cases. Legal experts believe this should apply to evidence gathered by private detectives by filming, photographing and recording their targets in public places or, with permission from a chief occupant, in private residences. "This has made room for the development of private detective agencies," said He Jiahong, of People University in Beijing, who estimated that several hundred such companies have been established over the past decade.

Foreign companies have also been making inroads into the Chinese market, offering investigations into copyright and trademark violations and due diligence checks. But they avoid registering themselves as private investigators, using instead such labels as business research" or "consultants". But the government tunes a blind eye, aware of the necessity of giving foreign companies in China means to protect their commercial interests. It's not reasonable to put a complete stop to private investigations," says Mr. He. "The state can't take care of all these things."

The state, as always, is fearful of ceding its jealously guarded privileges to ordinary citizens. Few expect the government to give explicit sanction to private investigators any time soon. To do so could empower citizens to find out more than the government wants them to know. Much commercial wrongdoing (and marital infidelity) involves government and Communist Party officials. In criminal cases, giving ordinary citizens the power to gather evidence would considerably weaken the part's sway over the country's legal apparatus. Mr. Yang, running his investigation services has strong advice to any Chinese gumshoe who dares call himself a private detective: it would delay official recognition of the business for years.