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When we want to do business with a foreign company, it is important to check exactly which entrepreneur we are dealing with. Every company receives a Unified Social Credit Code number. Based on the data from the USCC, an accurate report can be made about our potential counterparty. The company's activities are heavily monitored in China, so it is easy to find data of interest and check the reliability of companies.
China's Unified Social Credit Code - what is it?
The Unified Social Credit Code is an 18-character number given to companies and organisations registered in Mainland China. It consists of numbers and letters and is created according to a specific scheme. The code is a form of confirmation that the manufacturer has been verified by the Chinese government and is operating a legitimate business. Interestingly, it is also given to schools, hospitals, charities and even ordinary people. In English, it has several different names: Unifed Social Credit Identifire, Unifed Social Credit Code or Unifed Social Credit Indicator.
It consists of: Company registration number, organisation code and registration certificate number. It is issued by the State Administration for Industry and Commerce (AIC), but issuing authorities may vary from organisation to organisation. Companies registered in Hong Kong, Macau and Taiwan do not have this number as they belong to other jurisdictions.
Each letter and number means something different, they are not random. Using it, we can find out the scope of the activity performed, taxation and administrative penalties. This is extremely useful when looking for an honest contractor. The USCC code specifies:
- registration authority;
- the type of entity being registered (e.g. private company, public company, etc.);
- the code of the region in which the company is registered;
- organisation code;
- check digit (confirms correctness of code).
Unified Social Credit Identifier and imports from China
The business licence number must be in the contract with the Chinese supplier. When signing, we must make sure that it is written there (the number together with the Chinese company name). This is the responsibility of Chinese entrepreneurs, as it is necessary in order to legally operate their business. Besides, the Chinese name of the company must also appear in the document. The contract must be drawn up in Chinese and English. It must also be signed in the correct manner. Only documents drafted in this way have binding force. A contract with the importer is necessary when we seek a refund if the goods ordered do not meet our quality requirements.
The Unified Social Credit System is a tool that the Chinese government uses to control the market. It ensures that companies operate in accordance with the applicable law. Companies that have a high Social Trust score have passed verification and operate in the market in accordance with all standards. Companies can receive awards for promoting a good attitude. Inclusion on the red list certifies the company's compliance with standards. On the other hand, if a company has a low USCC, it will be subjected to restrictions that severely limit the scope of the company's activities. Frequent auditing of the factory, exclusion from tenders or the charging of additional fees are just a few examples of the penalties that dishonest entrepreneurs may face. The last resort is to blacklist the company, which will gradually lead to bankruptcy.
What is China's USCC?
In 2014, the first stages of work on the development of the Social Trust System began, and in 2020 work on the key elements of the system was completed. Participation is currently voluntary, but will be mandatory for all residents once the work is completed. Between 2021 and 2025, the next phase of development, which is an essential part of the Fourteenth Five-Year Plan, has commenced. Work continues on refining the algorithm that will monitor the population.
Ratings are calculated on the basis of five factors:
- credit history - The system checks whether the citizen pays his or her bills on time, for example;
- ability to meet obligations;
- personal data - e.g. education and employment;
- habits and preferences - Among other things, the time spent online is measured; if someone spends too much time scrolling they may be considered lazy; purchases are analysed and a user profile is created based on this;
- relations with others - behaviour on social media is analysed; those that praise the regime give more points; however, if someone posts with negative content about us, this results in a lower score.
Those with a high score on the Social Trust System will enjoy more privileges and rewards. Among other things, they can rent a car without a deposit, get into the VIP area at the airport or even get better job offers. Those with a low score face many restrictions, for example, an employer will not want to hire them because of their low score. They will not be allowed to travel abroad or will have difficulties moving around the country.
Summary
It should be borne in mind that the system has been set up mainly for the monitoring of companies by the Chinese authorities. It is intended to increase confidence in the products of Chinese factories. The USCC number is necessary for doing business in Mainland China. It can be found on the contractor's business licence or on the Foreign Trade Register Certificate, Chinese receipt or Chinese ISO9001 number.
The impact of the USCC outcome on citizens cannot be forgotten either. The official aim is to create an ideal state with a loyal society to compete with the Western market. Rewarding chosen behaviour and punishing bad behaviour is supposed to promote the correct attitude. There was a suggestion to make the results of all citizens public. This would be an incentive for those with low scores to improve their behaviour. The system is also intended to help fight crime and improve the country's economic zone.
