CHINA’S SOCIAL CREDIT POSES RISING RISK TO CEOS | WHAT REALLY HAPPENED

CHINA’S SOCIAL CREDIT POSES RISING RISK TO CEOS

China’s “social credit” system is another worry for executives, as tensions spike over the arrest of a Huawei executive at U.S. behest. The government’s plan to blacklist people and companies for misbehaviour is widely misunderstood. But its implications for business should raise eyebrows. By holding executives accountable for their company’s misdeeds, it blurs the already fuzzy Chinese line between corporate and personal interests.

The social credit system poses additional risks to foreign companies. Take the tiff between U.S. airlines and China’s civil aviation agency earlier this year over their labeling of Taiwan as a “country” in ticket-booking systems; Beijing considers the island a breakaway province. If a court had fined the airlines and they refused to budge, it’s conceivable their China-based managers might have been placed on a do-not-fly list, or seen their children kicked out of private school.

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