Wednesday, 28 August 2019


This is quite simply insane! I just can't believe my eyes. These two stories appeared minutes ago in the Financial Times. I do not need to go into the madness of this - but it is yet another demonstration of how "the Chinese system" of centralised capitalism is breaking down by the minute! Enjoy this surrealistic treat!

Tom Hancock in Hong Kong 6 HOURS AGO Print this page47 Foreign companies operating in China are unprepared for tougher sanctions under a corporate “social credit” system imposed by Beijing, a European business group has warned. Chinese regulators from tax officials to customs agents are increasingly rating companies according to compliance with regulations, and sharing “blacklists” of corporations found to have violated rules. Beijing plans to combine those ratings into a single database that could be operational by next year, the EU chamber of commerce in China said in a report.  “The corporate social credit system could mean life or death for individual companies,” said Jörg Wuttke, the chamber’s president. “The overwhelming absence of preparation by the European business community is deeply concerning.”  Beijing has recently encouraged regulators to jointly sanction companies as it attempts to improve enforcement. For example, a company blacklisted by China’s drug regulator could see an application to operate a securities company rejected by financial officials. Government documents show that a variety of Chinese regulators, covering areas from work safety to ecommerce and cyber security, are compiling ratings of companies against up to 300 specific rules, the chamber said.  Sanctions that can be imposed by regulators depending on compliance include fines, targeted audits, restricted issuance of government approvals and exclusion from preferential policies and public procurement contracts, it added.  The system primarily aims to improve the enforcement of existing regulations, and in many cases foreign companies could benefit as they often have better compliance in areas such as pollution, the chamber added.  “European companies that have until now been routinely shut down alongside non-compliant competitors on heavily polluted days should be able to continue production while polluters will see their scores plummet,” it said.  But in some cases a company could be blacklisted for the actions of a local supplier. In at least one case, a foreign company was informed that its partner’s rating by customs authorities would affect its rating, the chamber said.  The chamber also highlighted a plan by China’s market regulator, announced last month, to create a list of “heavily distrusted entities” that could be sanctioned for violating sometimes broad criteria such as “endangering national security”. The measure could give Beijing more leverage over companies perceived to have violated China’s stance on politically sensitive issues, said Mr Wuttke. “It has the toolbox in the future to being us into line politically,” he said.  While Beijing has since 2015 assigned new companies a unique code for recording credit scores, and has enlisted tech companies to create a central database of ratings, some analysts say such a system will be slow to emerge.  “The social credit system is still in its infancy and is unlikely to develop into the fully functional, unified, centrally run system many envision by 2020,” said Michael Cunningham of corporate consultancy Control Risks.  But the threat of being blacklisted “increases the compliance cost for multinationals in China,” he said, adding that “companies should first strengthen their compliance regimes”. Some analysts cautioned that the distrusted entities list was not clearly related to the social credit scheme, which does not currently impose any new burdens on companies  “The regulatory component of social credit aims to improve enforcement by keeping and sharing records of violations of laws . . . but doesn’t really impose new requirements for business,” said Jeremy Daum, an expert on the system at Yale University.


Qianer Liu in Shenzhen and Louise Lucas in Hong Kong 4 HOURS AGO Print this page4 Tencent has long had a potent tool for muzzling critics: shut down their accounts. But in recent months the Chinese social media group has changed tack, slapping multi-million-renminbi defamation lawsuits on three bloggers who wrote about the company on its ubiquitous WeChat app. “It’s very weird,” said Jianfei Yan, who was faced with a Rmb1m ($140,000) defamation lawsuit from Tencent in March after writing an article about the dominance of the “super powerful” WeChat platform and its potential for data breaches. “If Tencent questioned my comments, they could [have stopped] me publishing them on WeChat . . . but they just directly appealed to the court and sued me.” Tencent declined to comment on the cases. But in a document submitted in May after a court hearing against Jihua Ma, another of the bloggers, it said it opted against deleting the offending articles on WeChat because doing so “would further cause damage to Tencent’s reputation”. The Shenzhen-based company has never shied away from suing corporate rivals. Last year it engaged ByteDance in a flurry of suits and countersuits, including some over defamation. But the move to sue the three individuals demonstrates a new front in the battle to eliminate reputational damage in an increasingly competitive marketplace — and a new chapter in the censorship of online dissent in China. Xuyang Sun, the third blogger, was sued by Tencent for Rmb5m earlier this year after he pointed out that the company’s efforts to reduce children’s time spent gaming could be circumvented. “I think they just pick the soft persimmon,” he said, arguing that his critique was milder than similar attacks levelled by the state-owned People’s Daily newspaper. Chasing critics through the courts rather than simply shutting them down sends a forceful message to multiple audiences, said one Hong Kong-based defamation lawyer — whether it is to other bloggers looking to write critically about the organisation, or even to employees who might be tempted to leak information about it. “It’s a trend I think we are going to see more of,” he added. Other companies have taken similar steps in the past. Tencent-backed Meituan Dianping sued blogger Yu Bin for Rmb10m in March 2017 after he published a post on his personal Sohu account and other internet platforms asserting that the food delivery company was delaying its plans for an initial public offering. The case was closed after Mr Yu paid Rmb110,000 and issued an apology. For defendants, defamation suits can have big repercussions. While Tencent’s lawsuits against its critics have so far all been civil cases, precluding jail sentences, the large sums demanded as compensation can be financially crippling. “These amounts are enormous,” said Minan Zhang, a law professor from Sun Yat-sen University in southern China, noting that typically in cases of alleged reputational damage, compensation awarded by courts runs to less than Rmb10,000. Two of theTencent cases have been lodged with the Internet Court of Guangzhou, while the third was at Shenzhen Nanshan District Court. Blogger Jihua Ma said he is now in talks with the company in an attempt to settle his Rmb10m suit out of court. All three cases are still pending.

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