Will the IT team be able to survive while Web3 heads south to ‘make a fortune’?

Can the IT team survive while Web3 goes down to 'make a fortune'?

Introduction

Singapore and Hong Kong are not unfamiliar to Sa Jie, and even very familiar, each having my relatives and mentors. In this wave of Web3.0 operations, the two sides have some differences. It seems lively for a while, but when you calm down and look at it, marketing is overseas, sales are overseas, old money and new money are overseas, but programmers are still “left behind” in the mainland. After receiving N customers and potential customers overseas, I have abstracted some common problems and would like to briefly share them with everyone here.

01 Why? Mainland IT teams are cost-effective

Population and talent dividends are two different things. Indeed, IT talent is abundant in mainland China. The characteristics of domestic programmers are “willing to work overtime”, “obedient”, and “cost-effective”. Currently, cities with a concentration of science and engineering colleges and the Greater Bay Area have more technical men, with an average of 211 and 985 masters per capita. Some have “graduated” from big companies in the Internet wave, and some have been persuaded by classmates to start businesses as a group. In short, our reserves of scientific and technological talents are impressive.

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With the rise of Web3.0 and AI, a new wave of entrepreneurship is surging. Many Chinese people have come to Singapore or started new careers in Hong Kong with the strong support of the Hong Kong government for the digital economy. However, we have found that only a few key individuals in the team have really gone to Singapore and Hong Kong. A large number of friends who are engaged in technology still choose to live and work in the mainland for various reasons.

In addition to programmers in Beijing who are very concerned about “five insurances and one fund” (probably for the sake of 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, paying salaries with various cryptocurrencies is illegal, and we remind everyone to use legal tender. But it seems that everyone’s mentality is relatively calm, and more and more people are privately inquiring about whether they can receive coins.

02 Challenges for the technical team staying behind: compliance

Although we call it a “technical team,” in fact, very few directly establish wholly foreign-owned enterprises in the mainland. Currently, only one company has established a WOFE in the mainland, and basically, they are in a state of “doing private work” and “breaking things down into pieces”.

Setting up a legal wholly foreign-owned company and enjoying the benefits of industrial parks in second-tier cities is also a good choice. Web3.0 projects with compliant overseas business can be directly copied.

If it is “doing private work,” there are indeed many legal risks involved, especially since the “Amendment XII to the Criminal Law (Draft)” expands the previously exclusive state-owned companies and internal personnel crimes of breach of trust to general companies and enterprises. This means that the personal behavior of “doing private work” may constitute the offense of illegal operation of the same type of business under Article 165 of the Criminal Law. The offense of illegal operation of the same type of business refers to the behavior of directors and managers of companies and enterprises who use their positions to operate their own businesses or businesses of the same type as the companies or enterprises they serve, obtaining illegal benefits in large amounts. Therefore, if the “private work” that an individual does is of the same type of business as the company or enterprise he originally served and seeks illegal benefits through this, then it falls under the situation of the offense of illegal operation of the same type of business. Although this provision requires that it must be directors or managers of companies or enterprises, the term “managers” has some room for interpretation, so I urge all technical experts to pay attention to the risks.

If it is broken down into smaller parts and assisting overseas Web3 companies in a personal capacity, one should pay attention to the risks involved: whether you are working on the underlying technology or the end-to-end “turnkey project”. In the former case, you may have limited understanding of the actions of overseas companies, resulting in smaller risks. However, it is advisable to keep evidence of your lack of full knowledge for future reference (sometimes there may be risks of aiding and abetting crimes). If it is a turnkey project, you should have a thorough understanding of the project you are working on and should not leave any backdoors. Currently, in cases where backdoors are found, which may result in financial losses for users, there are more cases being treated as complicity in fraud.

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. You don’t necessarily have to uproot yourself and your family to move to a “tiny place” (even though Singapore has relatives and many friends in the industry, but it’s really too small. I spent seven days there and visited the National Museum for seven days, and I was going crazy). Hong Kong is slightly larger and overall good, except that the low atmospheric pressure and lack of sunlight throughout the year can be challenging for people from the north.

In addition to the Greater Bay Area, you can also choose cities in mainland China such as Dalian, Nanjing, Shanghai, Beijing, etc. As the saying goes, look for places where technical colleges and universities are concentrated.

From a criminal law perspective, according to the Basic Law of Hong Kong, the application of mainland criminal law is excluded, making Hong Kong superior to Singapore in this respect. Just remember the conclusion, Sa Jie won’t explain in detail. Of course, when choosing a country or region to settle in, you also need to consider the policy and rule of law environment of your own country and the local area. In terms of resolving commercial legal disputes, both Singapore and Hong Kong are internationally renowned for their international arbitration. Our colleagues at the law firm often travel between the two places to resolve disputes. Regardless of where the company is located, remember to write the dispute resolution location in Hong Kong or Singapore in the contract. The entire dispute resolution process is confidential and fast, but the downside is that it is expensive (considering the cost of living and housing prices in both places, they are indeed expensive).

04 Data Export Issues

With more and more Chinese people going overseas to expand their business, many people still want to leverage China’s technological and personnel advantages. There are always friends asking if they can use the credit information of mainland Chinese people overseas. These are sensitive information, so everyone needs to be cautious and not rush into entrepreneurship.

Make money from foreigners overseas. Don’t always think about taking resources and personal information from China, and then go to places without legal constraints overseas to spend money. This kind of thinking is shrewd but not wise. Major countries around the world attach great importance to data security, and different legal jurisdictions may have different levels of protection for privacy and stricter requirements for the use of data in the platform economy. It is quite risky to rely solely on exploiting legal loopholes in a foreign country for innovation. The invasion of Web3.0 into the original financial system, especially the national currency issuance rights, is evident, and international organizations have also indirectly denied non-sovereign currencies.

Regarding the methods provided by friends to make use of the “Chinese market”, as long as they are legitimate, we are willing to support them. For example, if the servers are located in China and serve Chinese enterprises and individuals, charge fees, pay taxes, and take away profits, there is no problem. However, if the data needs to be transmitted overseas, it must undergo strict scrutiny. Conversely, if the servers are located overseas and serve global clients including China, then we need to consider the laws of the country where the servers are located. That is why we ask our clients where they want to deploy servers and conduct business in which countries. By packaging these questions and abstracting legal issues, we can send them to our colleagues in offices around the world, collect the answers within a specified period of time, and facilitate client selection and decision-making.

The conclusion is that data export is heavily scrutinized in mainstream countries, and it is not something that can be casually used without permission. Safie’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 is the case, then this problem has no solution.

Final Thoughts

Mainland China is undergoing a vigorous digital transformation. In fact, many technical teams can establish their own companies and serve the digital transformation of state-owned enterprises, government-owned enterprises, and private enterprises in mainland China. At the same time, they can also engage in compliant operations and provide technological services to overseas companies. There is no need to confine oneself to a single obsession or ideology. The mainland market has great potential. We need to seize opportunities and comply with regulations.

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