- Blacklistings are one of the main tools of China’s Social Credit System (SCS). More than 25 different blacklists have been implemented during the past 10 years, all of them covering different regulatory areas, such as legal obligations, tax and market supervision, but also product quality, labor rights, production safety and many other areas.
- Legal obligations, tax and the market supervision blacklist by the State Administration of Market Supervision (SAMR) are blacklists with a comparably high number of affected companies. Other blacklists such as the blacklist for product quality probably affect fewer companies.
- The majority of SCS blacklists are targeted at companies, some also cover individuals, mostly, however, in their professional roles.
- Industry-specific data from the real estate sector suggests that more than 30% of all companies registered in China might be either blacklisted or have other negative records on China’s Social Credit System databases.
- While aggregated statistics on blacklistings are not systematically published by Chinese government authorities, any blacklisting for a legal entity will always be published online and is being made accessible for the general public. Consequently, a company cannot keep the information on a blacklisting secret but all government authorities, potential clients, business partners or suppliers can access the information and take them as a basis for their individual decision making.
- Naturally, compliance data collected and published by Chinese government authorities will not cover the full spectrum of relevant requirements for supplier due diligence from a European and German perspective. Still, SCS data provides significant opportunities for foreign-invested companies to assess their suppliers’ performance and to continuously monitor their compliance level.
Sinolytics is a European research-based consultancy entirely focused on China on their strategic orientation and concrete business activities in the People’s Republic.