Singapore and Hong Kong are not unfamiliar to Sa Jie, and even very familiar, with my relatives and mentors in both places. In this wave of Web3.0 operations, there are some differences between the two sides. It seems lively for a while, but when you calm down and take a closer look, marketing is overseas, sales are overseas, old money and new money are overseas, but the programmers are still “left behind” in the mainland. After receiving N customers and potential customers from overseas, I have abstracted some common problems and will briefly discuss them here.
01, Why? IT teams in the mainland are cost-effective
Population dividend and talent dividend are two different things. Indeed, IT talents in mainland China are very abundant. The characteristics of domestic programmers are “willing to work overtime,” “obedient,” and “cost-effective.” Currently, cities with a concentration of science and engineering universities and a large bay area have more technical males, with an average of 211 and 985 master’s degrees per capita. Some have “graduated” from large companies in the Internet boom, and some have been persuaded by classmates to start a business. In short, our reserves of scientific and technological talents are impressive.
With the rise of Web3.0 and AI, a new wave of entrepreneurship is surging. Many Chinese people who call themselves “Jews of the encrypted world” have come to Southeast Asia to start new businesses in Singapore, or have taken advantage of the Hong Kong government’s strong support for the digital economy to start new businesses in HK. However, we have found that the ones who actually go to Singapore and Hong Kong are still those few key figures, the more active members within the team. Many friends who are doing technology for various reasons still choose to stay in the mainland for their living and work.
In addition to programmers in Beijing who are very concerned about “five insurances and one fund” (probably for their children’s education points), programmers in other first-tier and second-tier cities are more open-minded and generally willing to accept token payments. Of course, it is illegal to pay salaries with various virtual currencies, so we remind everyone to use legal tender for salaries. But it seems that everyone’s mentality is relatively stable, and there are more and more people privately inquiring about whether they can accept cryptocurrency.
02, Compliance is a challenge for domestic technical teams
Although we call it a “technical team,” in fact, very few of us directly set up wholly foreign-owned enterprises in the mainland. Currently, there is only one WOFE set up in the mainland, and basically, we are all in a state of “doing private work” and “fragmenting.”
Establishing a legal wholly foreign-owned company and enjoying the treatment of industrial parks in second-tier cities is actually a good choice. Web3.0 projects with compliant overseas business can directly copy their practices.
If it is “doing private work,” there are indeed many legal risks involved, especially the “Amendment to the Criminal Law (Draft) ” has expanded the original crimes of breach of trust that were exclusive to state-owned companies and internal personnel of enterprises to general companies and enterprises. This means that the personal behavior of “doing private work” may constitute the crime of illegal operation of the same business as stated in Article 165 of the Criminal Law. The so-called crime of illegal operation of the same business refers to the behavior of directors and managers of companies or enterprises who use their position convenience to operate their own business or others’ businesses of the same kind as the company or enterprise they serve and gain illegal profits in large amounts. Therefore, if the personal “private work” is of the same kind of business as the company or enterprise they originally worked for, and they seek illegal profits through this, it falls under the crime of illegal operation of the same business. Although the requirement of this provision is that it must be directors or managers of companies or enterprises, the term “managers” has certain room for interpretation, so I would like to remind all technical experts to pay attention to the risks involved.
If it is to break down into individual tasks and assist overseas Web3 companies in a personal capacity, you need to be aware of your own risks: whether you are working on the underlying technology or have a full understanding of the “turnkey project”, the former has less subjective understanding of the actions of overseas companies and therefore carries less risk. Please keep evidence of your lack of full understanding for future reference (sometimes there may be a risk of aiding and abetting a crime). If it is a turnkey project, you need to have a full understanding of the projects you are working on and not leave any backdoors. Currently, in cases where backdoors are found, there are more cases being treated as accomplices in fraud, which may result in economic losses for users.
03. Choosing Singapore or Hong Kong?
To be honest, the Greater Bay Area is a good choice, with a favorable legal environment and a strong business atmosphere. It is not necessary to uproot and move to a “tiny place” with your family in tow (although there are relatives and many friends in the industry in Singapore, but it’s really too small. I spent seven days there and visited the National Museum for seven days, I was going crazy). Hong Kong is slightly larger and overall not bad, but the low atmospheric pressure and lack of sunshine all year round can be quite challenging for people from northern regions.
In addition to the Greater Bay Area, mainland China also offers options such as Dalian, Nanjing, Shanghai, Beijing, etc. As the saying goes, it is best to choose places where there are a concentration of technical institutes.
From the perspective of criminal law, according to the Basic Law of Hong Kong, the application of mainland China’s criminal law is excluded, so in this regard, Hong Kong is better than Singapore. Just remember the conclusion, Sajie won’t explain in detail. Of course, when choosing a country or region to settle in, one should also consider the policy and legal environment of the home country and the local area. In terms of resolving commercial legal disputes, international arbitration in Singapore and Hong Kong are world-renowned. Our colleagues in the law firm often go back and forth between the two places to resolve disputes. Regardless of where the company is located, remember to write the place of dispute resolution as Hong Kong or Singapore in the contract, the entire dispute resolution process is kept confidential and fast, the downside is that it is expensive (just think about the prices of goods and housing in both places, they are indeed expensive).
04. Data Outbound Issues
With more and more Chinese people expanding their business overseas, many people still want to leverage China’s technological and personnel advantages. There are always friends who ask if it is possible to use the credit information of mainland Chinese citizens overseas. These are sensitive information, so everyone needs to be aware and not start a business impulsively.
Make money from foreigners overseas. Don’t always think about taking resources and personal information from China, and then go to places overseas where there are no legal constraints to spend money. This kind of thinking is shrewd but not wise. Major countries around the world attach great importance to data security, and there may be different levels of protection of privacy in different legal jurisdictions, as well as strict requirements for the use of data in platform economies. It is indeed very risky to rely solely on oneself to innovate using legal loopholes in a foreign country. The invasion of Web3.0 on the original financial system, especially the sovereignty of currency issuance, is obvious, and international organizations have also indirectly denied non-sovereign currencies.
Regarding the methods provided by friends in the current situation to take advantage of the “Chinese market”, as long as it is legitimate, we are willing to support it. For example, if the server is located in China and serves Chinese enterprises and individuals, charges taxes, and takes profits, there is no problem. However, if data needs to be transferred overseas, it will be subject to strict scrutiny. Conversely, if the server is located overseas and serves global customers including China, then it depends on the laws of the country where the server is located. This is why we always ask customers where they want to deploy servers and which countries they want to do business in, so that we can package the problem and abstract the legal issues to send them to our colleagues in offices around the world. Within a specified time, we will collect unified answers for the convenience of customers to screen and make decisions.
The conclusion is that data leaving the country is heavily scrutinized in mainstream countries and cannot be used casually. Sajie’s solution is to consider privacy computing, but according to tech experts, current privacy computing technology can still be traced back to specific individuals. If that’s the case, this problem has no solution.
In mainland China, there is a vigorous digital transformation. In fact, many technology teams can establish their own companies and provide digital transformation services to state-owned enterprises, government-owned enterprises, and private enterprises in mainland China. At the same time, they can also operate overseas companies to procure technical services and export them in compliance with regulations. There is no need to confine oneself to a single obsession or ideology. The mainland market has great potential. We need to do both: seize opportunities and comply with regulations.