U.S. Investors Find Favor in Chinese Security

Chinese security and surveillance firms incorporating in U.S. to attract American capitalists

One such banquet was held at the Great Hall of the People in Beijing, where Li himself - of Project Golden Shield - addressed the crowd.

Based in Shenzhen, a high-tech manufacturing center in southeastern China, China Security & Surveillance purchased a ''shell'' Delaware company two years ago with no operations but a listing on the American over-the-counter bulletin board market. It turned the Delaware company into its corporate parent.

China Public Security, also based in Shenzhen, incorporated in Florida.

China Security & Surveillance is involved in some of the most controversial areas of public security. Yap said during the conference call with Wall Street analysts and hedge fund managers that one of the company's growth areas involved surveillance systems for Internet cafes. The Chinese government has been trying to clamp down on users of these cafes, contending that the crackdown is needed to discourage pornography and prostitution.

Critics say the surveillance is aimed at catching democracy advocates, adherents of the Falun Gong spiritual movement and others whom the Communist Party regards as threatening.

Yap said investment firms from Europe, the United States and Asia are so enthused about the surveillance market in China that he typically leads a full-day tour each week to some of the company's factories and installations. At China Public Security, Michael Lin, the vice president for investor relations, said he also struggles to keep up with Western investor interest.

At an aging Shenzhen police station, where the scuffed and peeling yellow walls look as though they have not been painted in decades, a $100,000 bank of new video screens behind the duty officer's desk shows scenes from nearby streets. At a larger police station in another neighborhood, China Security & Surveillance has installed a $1 million system.

Many of the surveillance cameras are still assembled on long tables under fluorescent lights at a modest factory. But the company has used $20 million of the cash it raised in the United States to acquire a large industrial park with six just-completed factory buildings and six dormitories.

In Shenzhen, white poles resembling streetlights now line the roads every block or two. In a nondescript building linked to nearby street cameras, a desktop computer displayed streaming video images from outside and drew a green square around each face to check it against a ''blacklist.'' Since China lacks national or even regional databases of criminal photos, Yap said municipal or neighborhood officials enter their own blacklists.

To show off his systems, Yap strode across a nearby plaza flanked by apartment towers and a low-rise shopping area, pointing out tiny, unobtrusive domes and tubes attached to various poles.

''See, there's a camera on the lamp pole, and another one over there and another one here,'' he said. ''Big Brother is watching you.''