China’s updated cybersecurity laws have introduced major changes that affect how foreign businesses manage data. These laws give the government more control over sensitive information, requiring companies to adapt their data practices.
Data storage rules
A key change is the requirement to store specific types of data, such as personal information, within China. This means that companies handling Chinese data must set up local servers, which can be expensive and complicated. In addition to the cost, companies must ensure that these servers meet Chinese data security standards, adding another layer of complexity.
Restrictions on cross-border data transfers
Businesses now need government approval before sending sensitive data out of China. These security reviews can delay or block data transfers, which disrupts communication between offices in different countries. Companies must plan for these potential delays and adjust their operations accordingly, as failing to follow the proper procedures can result in fines or even restrictions on future data transfers.
Increased security measures
Chinese cybersecurity laws also require companies to follow stricter security standards. This includes regular audits and using strong protections, such as data encryption. These changes demand extra resources, which can be difficult for smaller businesses. Failure to meet these standards can result in fines, loss of business licenses, or other penalties, putting further pressure on companies to invest in robust security systems.
The impact on foreign businesses
Foreign companies that want to operate in China need to follow these laws to avoid fines and penalties. Staying compliant with the rules not only ensures smooth operations but also protects sensitive data from potential security threats. These changes make it crucial for businesses to stay informed and adjust their data management processes.
Foreign companies need to closely monitor these changes, stay compliant, and invest in secure data-handling practices to continue doing business in China without disruption.