Saturday, December 17, 2011

Crimes against business in China | East Asia Forum

Author: Rod Broadhurst, ANU

Few crime victim surveys have been conducted with Chinese populations, but a recently released study, Business and the Risk of Crime in China, analyses the results of the first large scale victimisation survey of 5,117 businesses in Hong Kong, Shanghai, Shenzhen and Xi?an.

This snapshot shows that the level of crime reported by Chinese businesses was lower than other emerging economies such as Brazil, Russia, Nigeria and India, and considerably lower than Western and Eastern Europe. However, incidents of bribery and extortion were more frequent in China than in Western Europe and Australia, but less frequent than in Eastern Europe. Respondents from China were much more likely to report to police than elsewhere, although the levels of reporting of fraud were comparable.

China?s transition from a command to a market economy has been supported by authoritarian policing that has helped contain most crimes against business except fraud. An annual loss to crime of US$20.4 million, most of which was due to fraud by either employees (US$7.5 million) or outsiders (US$7.6 million) was estimated for the sample as a whole. About US$6.4 billion was estimated to have been lost to crime across all the four cities. Larger businesses were most at risk especially to higher risks of victimisation for non-conventional crime. Smaller businesses had a higher prevalence of fraud by outsiders.

Over one-quarter (26.2 per cent) of businesses reported at least one incident of crime over the past year, but higher risks of non-conventional crimes (that is, fraud, bribery, and intellectual property [IP] offences) than common crime (that is, robbery assault, and theft) were found. Across the four cities, the rate of non-conventional crime (22.6 per cent) was 3.4 times that of common crime (6.7 per cent) and businesses in Shenzhen were at higher risk of non-conventional crime (27.9 per cent) than those in Xi?an (25.3 per cent) and Hong Kong and Shanghai (19.5 per cent). Just over 6 per cent of respondents mentioned incidents of bribery, but there were fewer in Hong Kong than the other cities. IP theft was reported by about 6 per cent but was more of a problem in Shenzhen (9.1 per cent) and Xi?an (7.6 per cent) than in Shanghai (6.5 per cent) and Hong Kong (2.7 per cent).

Crime in China has risen sharply over the last 40 years and is associated with a state of anomie or ?loss of social norms? that the sociologist Durkheim theorised was the result of rapid and significant societal change. Economic crime, especially fraud also rose at a much faster rate than common or street crime, supporting the hypothesis that a growth in property crime is also associated with modernisation. In times of rapid change, a lag between socio-economic transformation and institutional adaptations to these transformations (?institutional anomie?) can occur as the crime wave that engulfed the former USSR demonstrated. This institutional lag can be reduced when the economic and social transition is planned and managed by a strong authoritarian state like China. Although China may have been more capable of controlling institutional anomie, its failure to establish independent oversight and checks and balances has facilitated corruption. Corruption was more frequently reported on the mainland than in Hong Kong, and especially in Xi?an where state-owned businesses and traditional Communist Party control remain strong.

Although public police have been able to contain common or street crime they have not yet transformed into policing agencies with a capacity to focus on crime against business, which is both highly attractive to a new type of criminal and harmful to society. Identifying the ?new enemies of the state? has become harder than in the past when the simple categories ??class enemies, ?rightists?, feudal remnants and the like could be readily distinguished and demonised. Economic criminals, it seems, are hard to distinguish from valued entrepreneurs, business leaders and officials who gamble with venture capitalists and fall for fanciful and fraudulent innovators.

In addition to the impact of modernisation and urbanisation, the growth in economic activities and consumerism also increases the opportunity for property crime. The opening up of the Chinese economy has produced both an increase in consumer goods (more opportunities for common crime) and an increase in business and commercial activities (more opportunities for non-conventional crime). Related to increased opportunity is the absence of competent guardianship and target attractiveness ? the key drivers of risk of victimisation for business. Chinese businesses thus suffer similar risks as found elsewhere and could benefit from many of the measures recommended by situational crime prevention approaches. The demise of campaign-style policing and the shift to a prevention focus rather than reliance on crude deterrence and brutalising punishments should also help release police resources for greater specialisation in complex crime such as fraud and corruption.

Roderic Broadhurst is a professor in, and Deputy Director of, the Australian Research Council Centre for Excellence in Policing and Security, in the Department of Regulation, Justice and Diplomacy, College of Asia and the Pacific at the ANU. He is co-author (with John Bacon-Shone, Brigitte Bouhours, Thierry Bouhours, assisted by Lee Kingwa) of Business and the Risk of Crime in China, ANU E Press, Canberra, 2011.

Source: http://www.eastasiaforum.org/2011/12/16/crimes-against-business-in-china/

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