“While it’s not entirely clear if they must, companies are finding it easier and less risky to localise data within China as much as possible instead of sending data across borders. They were supposed to be completed by the end of March, but for many companies they are still not finished. The reviews - the first of their kind - apply to any group sending abroad “important data” or the “sensitive personal information” of more than 10,000 Chinese people over a two-year period. The growing push to localise data also comes as China’s internet regulator, the Cyberspace Administration of China, has started to conduct data security assessments to control the flow of outbound data.
At EY, the costly second IT system has led to a fee dispute between the China arm and headquarters. The company has not figured out what to do about phones, he added.įour staff at big four accounting firms KPMG and EY said their groups had started reorganising IT systems in China around the time Beijing rolled out several data security and cyber laws in 2021. “We’ve got two IDs now basically,” said the consultant, adding that the data issue “goes to the heart of why it’s hard to do business in China”. Staff were banned from taking their China-issued laptops out of the country and the company is creating Chinese servers and second email addresses ending in “.cn” for local team members. Now they are equally concerned about sensitive data leaving China for fear of violating Beijing’s rules.Īn executive at a US consultancy said his company started reorganising systems months ago, creating a costly “for China” version of nearly every digital tool. In the past, western companies were concerned about taking electronic devices into the country over fears that China could access their data. The revised law and the raids “have businesses scrambling to understand their current compliance footing”, he said. Mr Roberts said the wording in the updated anti-espionage law unveiled in April introduced the possibility of criminal sanctions and being policed by the country’s state security agency for sharing information deemed sensitive.
#CHINA COUNTER ESPIONAGE LAW SERIES#
A series of raids and sanctions on US consultancies such as Bain & Company and Mintz Group, along with semiconductor giant Micron Technology, have put more pressure on companies operating in China. On July 1, Beijing put into effect an expanded anti-espionage law to strengthen national security. it’s named the anti-espionage law and espionage naturally gets people a bit worried,” said Alex Roberts, a data compliance expert at law firm Linklaters in Shanghai. US consulting firms including McKinsey, Boston Consulting Group and Oliver Wyman are splitting their IT systems, according to a half-dozen staff at the companies.
#CHINA COUNTER ESPIONAGE LAW FULL#
The drive for full localisation of data in China and separation of information technology systems from the rest of the world is happening as Beijing strengthens its control and regulation of data.īeijing put into effect an expanded anti-espionage law to strengthen national security on July 1. Beijing | Hong Kong | Global companies are accelerating their push to decouple China data in response to the country’s increasingly stringent data and anti-espionage laws, as relations between Washington and Beijing deteriorate.
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