We all know that the rising technologies from the past decades have changed our lives. From instant food delivery to OTA and AI in healthcare, it is impacting human life and the way companies operate, in every way possible.
Since 2007, China has been developing the Social Credit System which has been implemented in 2020 in the country (still in development). This scoring system indicates a rating to every individual person based on one’s behaviour. The rating/score is defined by, among others, the use of Big Data from various databases (e.g. police, financial institutions, internet companies) and artificial intelligence. Examples of observed behaviour are what you post on social media, with whom you are hanging out with, whether you’re engaging in volunteer work, but also whether you cross the road during a red traffic light (by 170 million public video cameras that use face recognition). The rating an individual receives determines for example whether you are able to take the train, whether you are able to take a senior position in a company, but also which schools your children are allowed to go to. This obviously highly impacts the life of the Chinese citizens. According to the Chinese government, the goal of this state-controlled society is market conditioning, avoiding specific scandals like the Melamine Scandal, and creating a safe society by reinstalling trust, integrity and traditional values of the Chinese population.
While not only affecting individuals, this system is about to impact companies as well. The Corporate Social Credit System collects an enormous amount of data, monitores, controls, and ranks every registered company in China. Eventually, inappropriate/undesirable behaviour will bear consequences. Thus, this system is meant to make sure every company sticks to the rules. The image below shows that all business units will be affected by this system.
Ratings based on all the collected data, will be published online and thus visible for everyone. A noticeable implementation is the interconnectivity of the Social Credit System and the Corporate Social Credit System. For example, a company’s low reputation can lead to sanctions for the CEO on an individual level and vice versa. Moreover, a company’s ranking can be based on the credit score of a supplier company. These implementations significantly change the way businesses operate.
This system has benefits such as rewarding ‘honest/good’ business by enabling them to take out a higher loan. Furthermore, non-trustworthy companies can be found more easily (e.g. reducing corruption). However, the disadvantages and issues should be very seriously taken into consideration. This system leads to more severe controls, higher administrative burden, restrictions on key-personnel and personnel-in-charge, data security issues, significantly less privacy on both individual and company level.
While this system is now only implemented in China, researchers predict that such a system could be used by other countries as well. How far should we go in the desire for a safe, peaceful and stable society? What do you think about this system?
Sources:
The Chinese Corporate Social Credit System and its Impact on your Chinese Business
https://nhglobalpartners.com/china-social-credit-system-explained/
https://www.wired.co.uk/article/china-social-credit-system-explained
