Summary of Key Points
Zhong Zhaozhao, the founder of Nongfu Mountain Spring, has repeatedly criticized certain e-commerce platforms. Firstly, he argues that these platforms use opaque algorithms to extract commissions, squeezing the profits of physical merchants. Secondly, although the core business of these platforms is not research and development (R&D), they enjoy the low tax rate of 15% reserved for high-tech enterprises (compared to the 25% for ordinary enterprises), which he believes constitutes a form of indirect public financial subsidy for platform expansion. However, the author of the article points out that the high-tech tax incentive system itself is a globally recognized good policy designed to encourage corporate R&D and innovation. The problem lies with some platforms exploiting loopholes in the system (i.e., those that are merely “pseudo-high-tech”). The author calls for improvements in the implementation details and supervision to ensure that the benefits of the policy actually flow to companies engaged in genuine high-tech activities.
Detailed Analysis
1. What Exactly Does Zhong Zhaozhao Criticize?
Zhong Zhaozhao's main concerns are twofold:
- Commission Extraction Squeezing Out Physical Businesses: E-commerce platforms use algorithms to set commission structures that are not transparent, resulting in a gradual erosion of merchants' profits and making it increasingly difficult for them to operate.
- Misalignment in Tax Incentives: The state offers a 15% tax rate to high-tech enterprises with the intention of supporting genuine R&D activities (such as in chip and AI technologies). However, some platforms, whose core business involves commission collection and traffic sales, receive this tax benefit despite minimal investment in R&D. He argues that this 10-percentage-point difference in tax rates (25% vs 15%) effectively uses taxes paid by the public to subsidize platform expansion, which is unfair to companies that are truly engaged in high-tech development.
2. Are High-Tech Tax Incentives a “Bad Policy” or a “Good System”?
The author clarifies that this is a globally recognized good policy with the following rationale:
- Rationality of the Policy: R&D is a high-risk, low-return endeavor, and companies are reluctant to invest heavily in it. By providing tax incentives, the state encourages them to invest in innovation—such as developing new drugs or equipment—benefiting society as a whole.
- Global Practice: Data from the Organization for Economic Co-operation and Development (OECD) shows that 33 member countries offer tax reductions for R&D, with the actual R&D tax rate being more than half lower than the general tax rate (14% vs 21.5%). This is not a unique Chinese practice but a common strategy used by modern nations to foster innovation.
3. The Root of the Problem: Loopholes in Implementation
The “injustice” Zhong Zhaozhao mentions is actually due to loopholes in the implementation:
- Proliferation of Pseudo-High-Tech Enterprises: Some companies mislabel their non-R&D activities as high-tech (for example, describing e-commerce commissions as “technical services”) or stop R&D after obtaining the necessary qualifications. The fact that over 6,600 such pseudo-high-tech enterprises were identified nationwide in 2025 indicates that there is nothing wrong with the system itself; the issue lies with those who exploit it.
- Differentiating Between Good and Bad Practices: Just as a good exam policy cannot be blamed for cheating, the problem lies with the cheaters, not the policy itself.
4. How to Make the Policy More Targeted?
The author proposes several constructive solutions:
- Separation of Business Types: High-tech businesses engaged in genuine R&D (such as cloud computing and AI models) should continue to enjoy tax incentives, while non-R&D activities like commission collection and advertising should be taxed at the regular rate.
- Dynamic Supervision: High-tech qualifications should not be granted once and for all; companies should be regularly assessed based on their R&D investment and outcomes, with incentives revoked if they fail to meet the standards.
- Strict Criteria: More detailed criteria for determining R&D investment and technological achievements should be established to ensure that only truly high-tech companies receive the benefits, while those that exploit loopholes are excluded.
5. The Value of This Debate
The purpose of this debate is not to simply criticize or defend the system but to promote its evolution:
- Entrepreneurs' criticism can drive improvements in regulation and evaluation processes.
- The public should understand that the policy itself is beneficial, and the problem lies in its implementation. Individual cases should not lead to the rejection of the entire policy.
The ultimate goal is to ensure that tax incentives are directed towards genuine innovation rather than becoming a tool for arbitrage—this is the outcome we all wish to see.