Daxue Talks transcript #19: The Social credit system in China – a national reputation system

Find here the Daxue Talks episode 19. From the talk with Coster, learn what is the news in terms of the social credit system in China for foreigners.

Full transcript below:

I am Nicolas Coster, I’m a French business lawyer. I’ve been in China for 16 years and specialized in foreign direct investment. So, basically, I set up companies in China.

1. What is social crediting in China for individuals and companies?

Nicolas Coster:  What happened today in China is we have already emplaced many small and local social credit systems. What is the big change in China is the Chinese government decided to take all these small credit systems and put them together into one database. So, that means, at the end, the Beijing government will be able to collect, treat and access all the information in China about individuals and companies, and to give a global mark to these individuals and companies.

2. Compare to the past where this social credit was already existing in different administrations and now, what are the big changes that make the press and media talk more about it?

Nicolas Coster: The big changes before when you got this local social credit the impact was very limited to the administration who connected, for example, the registry of companies. All the companies for many years had social credit to say these companies are complying/not complaint with A, B, C, D. Today or next year when you are not compliant with one administration, you will have an impact on all the administration in China. So, that means the local impact will become global.

3. What are the consequences that we can expect as an individual and as a company of this new system in management and life in China?

Nicolas Coster: I think for individuals, the big expect will be he will not be able to cause an alight anymore. When you apply for the visa, as a foreigner, in the future it is probably you will have some point because you have good social credit … with the labor office. So, if you follow the rule then everything will be ok, but if you don’t follow the rules, of course, you will have some impact and you can feel it in your daily life. Maybe, you will not be able.. you will be prevented by the Chinese authorities to take a plane or train because your social credit is not good.

For companies, the big impact will be that before you sign any contract or before you are employees, you will check the social credit of your suppliers and clients. Some over, it can be more transparent for you because the market will be cleaner.

4. How easy is it to get access to your own social credit as an individual or the company?

Nicolas Coster: That is a big question. Today we don’t have clear rules about access. There is no access, for foreigner if you want to see what is your social credit, you can check your Alipay and there is what we call Gemma credit, which is one company credit, and this is only placement you can check it by yourself.

For companies, there is no clear right today to access your social credit. So, we don’t know what will be accessed in the future. This is a big question.

5. How much do we know about corporate data, private data, e-commerce data, and bank data, which are going to be taken into account with a social credit?

Nicolas Coster: We don’t know exactly how they will – I mean each local social credit has its own system of notation of marks. So, the question is – what will be the balance that will create a mark from the tax office and a mark from the company registry. We don’t know how they will make it get a final score, and that’s the issue. Today we don’t have any information.

Any questions? We will find an expert to answer them. Drop your questions in the comments, or send us an email – dx@daxueconsulting.com.com

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