In mid-2025, NONGFU SPRING founder Zhong Shanshan appeared on a CCTV program, delivering sharp criticism of e-commerce platforms. This was not his first such statement, as he had previously voiced similar concerns on multiple occasions since 2024. His pointed questions about how platforms use opaque algorithms for commissions, squeeze physical retail profits, and still qualify for high-tech enterprise tax breaks cut to the heart of a core issue in digital economy governance: where exactly is the "fairness boundary" for tax incentives? Should these benefits precisely target genuine innovation, rather than serving as a tool for business model arbitrage? How should we address and manage the "externalities" of technological development, such as impacts on physical commerce and changes to labor relations? These questions move beyond a simple binary debate about platforms, touching on the central challenges of governance in the digital age.
However, it must be acknowledged that Zhong's forceful style may inadvertently deepen public misunderstanding of a well-intentioned policy. This is precisely why this article is written—to recognize existing problems while clarifying the system's value, correcting misconceptions, and guiding the discussion forward. Zhong argues that the state's 15% reduced tax rate for high-tech enterprises is meant to support "hard tech" companies engaged in continuous research and development. Yet, some e-commerce platforms rely on commissions rather than R&D, creating a mismatch between their qualifications and actual business practices. In his view, the 10% tax rate difference represents a public subsidy for platform expansion, funded by society at large.
Zhong's provocative statements could easily lead the public to conflate the issue of "some platforms abusing policy" with a rejection of the "high-tech enterprise tax incentive system" itself. This is a significant concern: miscommunication may deepen public misunderstanding of a beneficial program. It must be clarified that incentivizing R&D through tax breaks is not a unique Chinese policy but a common practice among major economies worldwide. OECD data shows that among 38 member countries, those offering R&D tax relief grew from 19 in 2000 to 33 in 2025. In 2025, across 55 surveyed jurisdictions, the effective average tax rate (EATR) for R&D activities after incentives was only 14%, far below the standard rate of 21.5%. Over 50 countries or regions have implemented similar R&D tax incentive policies.
The policy's intent aligns with the principle of "tax neutrality," which holds that tax systems should not distort normal market operations. R&D tax incentives specifically address market failures—basic research involves high costs, risks, long cycles, and "spillover" benefits, making companies reluctant to invest based on market forces alone. Government intervention through tax incentives restores fairness beyond mere neutrality, providing reasonable compensation to enterprises that bear the costs of social innovation. This does not undermine tax neutrality but rather implements it at a higher level. Therefore, the high-tech enterprise tax incentive system is a well-directed, effective, and globally sound strategy that aligns with modern governance logic.
Companies receiving these benefits show significantly higher R&D investment intensity than the national average, demonstrating that policy advantages have translated into genuine innovation. No one should lose confidence in the system itself due to isolated enforcement issues. The "tax unfairness" Zhong criticizes targets not the system itself but whether some platforms are complying with and appropriately applying the policy. Since 2025, over 6,600 "fake high-tech" enterprises have been investigated nationwide, precisely illustrating that the problem lies in "execution deviations" and "loophole exploitation," not in the policy's design. These are two completely different issues that must not be conflated.
We should steer the discussion toward more constructive directions: How can we refine policy implementation rules? How can we strengthen the review and dynamic oversight of platform qualifications for "high-tech" status? How can we explore a "bifurcation approach," where genuine technology businesses like cloud computing and AI models receive incentives, while pure e-commerce retail and advertising commission services face standard rates? How can we ensure policy benefits truly flow to "hard tech" enterprises, promoting fairer, higher-quality development? A healthy public debate should not be about taking sides in black-and-white terms but about constructive negotiation. The hope is that, while upholding the sound "high-tech enterprise tax incentive" system, we can channel policy benefits toward real innovation through more precise criteria and stricter oversight, turning entrepreneurial criticism into a catalyst for institutional evolution rather than a trigger for social division. This is the most valuable outcome of this debate.
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