The reasons why and the implications of falling foul of Chinese regulations
By Eunice Ku
Apr. 6 – The State Administration of Industry and Commerce (SAIC) is the national governmental organization directly under the State Council that coordinates local Administrations of Industry and Commerce (AICs).
Among the many SAIC and AIC functions and responsibilities, those highly relevant to the foreign investor include:
- Overseeing the registration and supervision of enterprises, including punishing businesses without licenses;
- Managing IPR registration and protection, including investigating and punishing IPR infringement activities and handling IPR disputes;
- Enforcing Anti-Trust Law, including investigating and punishing unfair competition, commercial bribery, smuggling and other illegal economic activities;
- Categorizing enterprises by creditability and publicizing basic registration information;
- Supervising trade in food commodities; and
- Supervising advertising activities.
The “AIC blacklist” is part of an enterprise “credibility supervision information system” shared between AIC bureaus, but not made available to the public.
Specifically, the list categorizes enterprises into four categories (A, B, C, D) based on their creditability. If your name is listed in a key position of a company in categories B to D of this list, this may inhibit or prevent you from participating in a key position in new FIEs in the future.
Furthermore, while the directly relevant AIC policy does not state consequences for individuals beyond the legal representative, it is worth noting that during company establishment, the names of all people in key positions of an enterprise are registered with the AIC. Many people do not even know that their name is on the blacklist before applying to register a new FIE.
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