Before one plans to “succeed” in China and establish a business or simply buy some goods for sale, he better be prepared to face a local crime. Yes, China is a huge and immense country, and it also has an old criminal culture. It is unlikely that you will have problems if you have come to purchase a small batch of, let’s say, jeans. But if you are headed to settle there for a long time and establish a profitable enterprise or a joint company, it’s only a matter of time when the Chinese mafia guys will grant you attention.
Chinese Mafia or Triads.
The local mafia is the oldest, the most organized and ambiguous one. It is considered that the first Triads (organized units of the Chinese mafia) emerged in the 17th century as a tool of a struggle between the belligerent dynasties – Tsing and Ming. Confucianism played a significant role in the Triad’s collaborative work; thus, the full title is “The Triad.” Criminals supported and advocated the interests and culture of their land, preserving its integrity, although, in the meantime, they infiltrated into other countries. Currently, units are present in Asia and the United States, Taiwan, Japan, and many European countries. Triads prefer solving their criminal matters “noiselessly” without carrying out public performances, executing mass shootings. Still, they occupy a second place among criminal groups globally in the number of crimes committed, and they are second only to Italians. Criminals operate through their national diaspora in foreign countries.
The Triads can incorporate only “purebred” Chinese and exclusively based on the recommendation of members of the clan. Other than that, not much is known about the internal structure of the Chinese mafia groups. Due to the organization’s complete closedness, it is challenging to determine the Chinese’s affiliation to a particular group: they all look very ascetic, tattoos are hidden under clothes. External hierarchical differences between the leaders and the rank-and-file members of the Triads are so blurred that even the “brothers” do not know what their “master” looks like and incapable of extraditing him even under torture. The organization is based on a rigorous discipline, which requires absolutely all members to be completely obedient.
China’s modern Triad.
Modern Triads observe and respect their traditions even to this day. Tattoos and the punishment of the offender remain consistent. Their operation extends to criminal activity and interaction with businesses. Triads are mainly involved in drug and human trafficking. The illegal list of the possibilities of the groups is not limited to one dozen. The authorities try to keep criminal life under control in China, which makes affiliation to criminal gangs punishable by death. Usually, those engaged in serious crimes are executed: gang offenders, traffickers, weapons and heavy drug dealers. But despite this, the Triads remain an integral part of Chinese life. They continue to control the underground, criminal world and rarely emerge on the “surface.” The work done by them has no evidence or 100% indication to Triads. If it is about a murder, then almost everything related to the target is destroyed to the extent that the victim’s house is burned. But despite its cruel punishments – the organization delivers a significant contribution to the economy of the country. All the money received is returned to the bank back home. Like any other group, Triads has a preferred weapon – traditional Chinese flexible weapons and various swords. Utilizing them, they commit attacks and murders quickly and silently. For larger crimes, they use firearms, but most often, it is a cold weapon.
Triads and Business
Mafia imposes large fees on business people for the purchase of provisions and weapons. Their main sponsors are ordinary people who have to give a certain percentage of their sales. With the help of purchased weapons, Triads deliver even the most complex crimes, as well as protect locals from attacks. Triads gathers tax from each entrepreneur but also supports the business. If the businessman has problems he cannot solve independently, he can always report to the chief “boss” who will solve the problem. American scientist and criminologist James Finkenauer considers that the most dangerous business regions are large metropolises such as Beijing and Shanghai. These are the country’s prosperous economic centers; from the viewpoint of financial markets, they have a concentration of business activity and, accordingly, much money, lucrative for the crime.
The Ukrainian businessman and expert on China, Vyacheslav Lysenko, holds a different opinion. According to him, the Southern part of China is more criminal, for example, Guangzhou, which makes 28% of China’s GDP. Guangzhou is China’s largest warehouse, and almost all of the leading trade is principally there. Accordingly, Beijing is the administrative center and Shanghai is the financial one. The difference in behaviour patterns in different parts of China is evident even when it comes to the police. Chinese also believe that the Southern region is more criminal than the Northern.
Professor Finkenauer divides the Chinese mafia into two categories: the black mafia, criminals, and the red mafia, which is law enforcement. Lysenko believes that this form of crime is not different from criminality in other countries; it is like the right and left hand. The question is whether it is massive or not. Mafia operates mostly in criminal areas where businesses are outside the law; accordingly, there is a lot of crime and “red” police.
“We faced cases when we had to face criminality. We immediately contacted the embassy and consulate to bring this problem to the international arena in two ways. The criminality and the government do not like the noise to leave the country’s borders. Therefore, it is a good tool to discourage them because the case might reach the international level if it is not solved. And the criminality understands that if that’s the case, the government might react against them in a very severe manner. The second option can be applied if one has good connections within the country and can rely on them for support. My partner was a former diplomat, and when we were facing a problem, he called his acquaintance a general, and the problem was resolved in 15 minutes. It was as if nothing had happened,” the businessman says.
In cases as such, Dr. Finkenauer recommends contacting the embassy immediately as they should help in situations such as this.
Criminal protection in China.
Closer to the South, Triads usually collects money from businesses associated with criminal activities. For example, if the plant produces tobacco products under the Marlboro brand, which is a counterfeit, an enterprise might be “protected” by the criminality and law enforcement agencies. If you are not Chinese, it won’t be possible for you to start a business without contacting and negotiating with law enforcement about cooperation. At the same time, they will periodically take something from you to demonstrate some activity.
Vyacheslav Lysenko has never been offered criminal protection in China. “But we had run-ins with criminality. Criminality “feels” if there is a power behind you. We started operating in the legal field and began contacting diplomats and the police. Although the police were first to arrive, it seems that they did it just because they had to. They stayed away and did not react. We clearly understood that they would not solve the problem and started contacting the heads of the Communist Party’s political committees. Once they saw that some foreigners are reaching high-ranking people (although in some cases it was an empty bluster), they said, “Okay, we are backing off.” They left and never came back,” the businessman recalls.
He said he would better confront the police than Chinese crime. Because one Chinese is one Chinese, two is two, three is three, but four or five is already a gang. Losing face is unacceptable for them, so they will group, and it would be hard to overcome them. For them, fear of “losing face” in front of their own is more powerful than everything else. At this point, they become “insane” and even slaughter you so that he can rise to another level in the criminal hierarchy. In contrast, the police will only arrest you or rob you and let you go.
Dr. Finkenauer draws parallels with the gangster of the 90s: “Yes, of course, “criminal protection” (a roof) is prevalent in China, but it is different. Often “protection” comes from the police itself, if you own a business you need to pay the police for protection. But the concept and the practice are the same as in the 90s in the Russian speaking areas. But it is not only about the involvement of the police. For example, you run a new business, and you will be approached by members of a criminal group or criminal organization to speak about the business’s nature. And you will be immediately told that something will happen to the business if you do not pay. In some places, the police play this role; in others – criminal organizations.”
And what is more dangerous, facing the criminal protection of police protection? “It is Hobson’s choice. It’s a choice between two bad options; neither of them is likely to work out well,” the criminologist replies.
How to understand the kind of protection your partner company has.
When a business person comes from Europe to China for professional purposes, he does not know what kind of protection his potential Chinese partners might have. Therefore, he might face problems in the future. “Will it become a problem? Yes. Absolutely. It’s one of those things you’d like to know from the start. First, you will want to decide if you want to cooperate with an entity with these connections and activities. Before you walk through that door, you better know what you’re going to find inside, whom you’re dealing with, and what that relationship is going to be,” Dr. Finkenauer said.
“You’ll never know about the protection; they will not tell that as it is carefully concealed. You can only see how the company operates, solves problems and who helps them. But understanding and knowledge of it will give you nothing. If the company works only with criminality, it will be very clearly seen based on the first persons’ acts. Criminologist James Finkenauer cannot say exactly whether many enterprises in China do not have criminal protection. But he assumes that it all depends on the lucrativeness of the business. If the business is successful, effective, and has a lot of money, it will be alluring to people who can make money by providing protection. If it’s small financial transactions, low income, it is less likely somebody would be interested in it.
————————————————-
Dr. James Finckenauer
Distinguished American organized crime expert, author. Professor Emeritus at Rutgers University, former Director of the National Institute of Justice, Washington DC. Dr. Finckenauer is an expert in human trafficking, juvenile and international criminal justice. He has conducted research in China multiple times and authored several books together with Dr. Ko-Lin Chin.
Vyacheslav Lysenko is a Ukrainian businessman, an expert in Ukrainian-Chinese relations in foreign economic activity. Founder of Ukr-China Communication. Co-founder of Young Business Club. Member of the Supervisory Board of CEO Club Ukraine.