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Intelligence for Better Decision Making
Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.
The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.
Erudite Risk also includes operations categories so you can monitor the environment for better decision making. Everything is tied together--what happens in risk affects operations and what happens in the market impacts risk profiles.
We categorize key intelligence into one of 30 different operations intelligence categories.
Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.
社交电商步入合规深水区:应对传销与税务风险的实战攻略
Social E-commerce Enters the Compliance Deep Water Zone: Practical Strategies for Addressing Pyramid Schemes and Tax Risks
AnJie Broad Law Firm | Local Language | AcademicThink | Jan. 23, 2026 | Regulation
Social e-commerce in China has grown rapidly over the past decade, driven by models based on social networks and user trust, such as Pinduoduo's group-buying and Yunji’s membership platforms. This growth has created dynamic business forms but has also raised significant compliance concerns, particularly around pyramid selling and tax risks. In response, the State Council has prioritized revising regulations on pyramid selling and direct selling in 2025, signaling intensified enforcement and clearer regulatory standards. Concurrently, new tax regulations have redefined platform responsibilities, transitioning from voluntary assistance to statutory agency roles for tax reporting and collection.
The social e-commerce ecosystem primarily involves platform enterprises, individual promoters, and consumers, with some models including institutional service providers managing promoters. While multi-level marketing elements raise suspicions of pyramid selling, criminal law sets a high threshold for such liability, generally exempting compliant platforms that base compensation on actual sales without coercion or deception. However, administrative regulations have broader criteria and have become a key risk area, with penalties including hefty fines, operational suspensions, and potential license revocation. Legal debates focus on how to define hierarchical layers in the distribution chain and the compliance value of structuring intermediate tiers as independent legal entities, which is not a guaranteed safeguard.
Since 2025, enhanced tax regulations mandate internet platforms to act as statutory agents for tax collection related to flexible-employment income, requiring robust compliance systems. Individual promoters must provide truthful identity and income declarations and choose between platform agency tax declaration or self-declaration, while institutional service providers are required to maintain complete and transparent tax and accounting records to avoid risks.
To navigate the tightening regulatory environment, social e-commerce entities must adopt a comprehensive compliance framework. This includes defining platform roles strictly as compliant e-commerce operators, designing profit models aligned with legal standards for platforms, suppliers, promoters, and service providers, and implementing detailed internal controls over membership rules, compensation, and hierarchical structures. Firms are urged to standardize external marketing and user compliance management, coordinate legal and fiscal processes, and embed compliance into ongoing governance rather than one-off projects.
The industry faces a “double strengthening” regulatory approach with ongoing revision of anti-pyramid selling laws and the introduction of data-driven tax supervision systems. Success in this environment depends on firms’ ability to align business models with legal requirements, embrace transparent operations, actively engage with regulators, and promote self-discipline within the sector. The shift away from uncontrolled growth toward compliance-focused development is positioned not as a restriction but as an opportunity to restore social e-commerce to its core value of efficient consumer empowerment and sustainable market growth.
事关个人所得税!财政部、税务总局、证监会等三部门发布
Concerning Personal Income Tax! Ministry of Finance, State Taxation Administration, and CSRC Jointly Issue Announcement
STCN | Local Language | News | Jan. 23, 2026 | Regulation
On January 21, 2026, the Ministry of Finance, State Taxation Administration, and China Securities Regulatory Commission jointly announced the continuation of tax policies for the pilot domestic issuance of depositary receipts (CDRs) by innovative enterprises. From January 1, 2026, to December 31, 2027, individual investors will be temporarily exempt from personal income tax on price-differential gains from transferring CDRs of innovative enterprises.
During the same period, a differentiated personal income tax policy will apply to dividend income received by individual investors holding CDRs. Tax withholding and payment responsibilities fall on the domestic depositary institution, which must also file detailed reports with the tax authorities. Foreign tax credits may be granted for dividends already taxed abroad, according to relevant laws and bilateral tax treaties.
For corporate investors, price-differential gains and dividend income related to CDRs of innovative enterprises will follow existing enterprise income tax policies for share transfers and dividends. Public securities investment funds are temporarily exempt from enterprise income tax on these gains and dividends. Qualified foreign institutional investors (QFII) and renminbi qualified foreign institutional investors (RQFII) will treat such gains and dividends as income related to the transfer or holding of the underlying shares of the CDRs for enterprise income tax purposes.
The announcement defines "CDR of innovative enterprises" as securities issued domestically by a depositary based on overseas shares, meeting the pilot enterprise criteria set by the State Council and CSRC guidelines. These CDRs represent rights in the underlying overseas securities.
Saint Deem debuts vein-recognition production line
China Daily | English | News | Jan. 23, 2026 | UndeterminedTech Development/Adoption
Chinese biometric technology firm Saint Deem has launched its first dedicated vein-recognition manufacturing line in Huainan, Anhui province. The production line, covering more than 10,000 square meters, is designed to produce up to 2 million vein-recognition modules and authentication devices annually. This marks a step toward large-scale commercialization of vein recognition technology, targeting applications across consumer electronics, payments, vehicles, and smart infrastructure.
Saint Deem's new factory is the first specialized manufacturing line in China focused solely on vein-recognition products, addressing a gap in the country's biometric supply chain. Vein recognition identifies individuals by analyzing patterns of veins beneath the skin, offering a more secure alternative to passwords, fingerprints, and facial recognition, which are increasingly vulnerable to spoofing and AI-generated forgeries. Co-CEO Qian Haomin highlighted the shift from an R&D-driven model to one combining R&D and manufacturing, aiming to establish vein recognition as a trusted, universal key connecting people securely to both digital and physical worlds.
The technology has already been deployed in applications such as palm-vein payment systems, smart locks, public transport, and high-security environments. For example, Chengde Public Transport Group in Hebei province has implemented palm-vein payments to reduce reliance on cards and QR codes. Industry experts noted the potential for consumer markets to drive growth, given the relatively low penetration of smart locks in China despite significant sales.
Experts emphasized the importance of unified technical and security standards to ensure trust and prevent industry fragmentation as vein recognition moves toward mass adoption. Academician Zheng Zhiming and IT standardization expert Zheng Yinfei stressed that vein recognition’s higher-dimensional data provides fundamentally stronger security against evolving digital threats like AI-generated deepfakes, and that establishing evaluation and security benchmarks is critical to protect users and unlock the technology’s full value.
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