Your best bet is to keep your head down and follow common practices.
It is also important to read sources like https://www.chinalawblog.com if you want to survive in China long term.
However, I was never talking about this case in particular. I was talking about the assumption that if you just follow the law as written you'll be fine.
You have no individual rights while in China, and the law is intentionally vague and arbitrarily enforced. This isn't an accident--the system is designed so that anyone can be prosecuted if the government decides it's necessary. If you keep your head down and do what everyone else is doing, statistically you'll probably be fine. However, as a foreigner living in China, whether you break the law isn't up to you.
If a company decides they didn't like the product or service you provide and accuses you of selling defective goods, you can be criminally charged and convicted. If a Chinese citizen overcharges you and you don't want to pay, you can be criminally charged and convicted.
For high paid high tech workers this isn’t much of a problem, we got proper work permits, I think.
Work without authorization, get caught, get arrested and deported. Happens every day in countries all over the world. I don't see anything even remotely remarkable about this case.