The Chinese Social Credit System contains three lists: A (positive) red list, a watch list and a (negative) black list. They already have an impact on companies operating in China. Those on the red list enjoy advantages such as the fast processing of administrative procedures or easier access to credit. Companies whose operations are considered abnormal by the authorities are placed on the watch list. They are restricted or excluded from government procurement, engineering tenders, the transfer of state land and honorary titles. If their misdemeanors are not corrected in time, the consequences can be more serious – they end up on the blacklist. They are then subject to particularly strict controls for five years and can be punished by several authorities at the same time. This procedure is relevant to the fight against brand and product piracy in China.
Companies are included in the watch list in the following four cases: (1) Failure to publish the annual report within the prescribed period. (2) If relevant company information is not published within the prescribed period. (3) When the actual business situation of the company is concealed or published company information is falsified. (4) When it is not possible for the authorities to contact the company through its registered office.
If Chinese citizens, legal persons or organizations discover that the published information is not true, they can report this to the Industry and Trade Administration. This is a new starting point for combating counterfeiters, who often hide behind a false address or can no longer be found at a registered address. We try to fight Chinese counterfeiters with the help of the Social Credit System. Counterfeiters who are or have been on the watch list have low credibility and poor chances in IP processes.