Cybersecurity Laws Businesses in China Need to Care About

Cybersecurity law is a regulation that allow companies to follow certain measures for protecting information systems and personal or sensitive data that is stored on it. The purpose of protecting this information is to minimalize or eradicate any security breach or vulnerability.

China’s Cybersecurity Law was passed initially in 2016 dictating how businesses and other companies should approach and protect user security and privacy within organizations. The law involves strict controls with all online activities, websites that collect personal information and network assets. It also keeps a strong check at online companies, notifying them about any potential security breaches and implementing incident response plans in case of any emergency.

China’s New Cybersecurity Law

Recently, with the new Cybersecurity Law, the Chinese government took over full access and rights of all data and IP held by foreign business companies. While this law could bring more control of the B2B Marketplace to the local government, it could be a threat to many foreign companies and their personal data. Experts call this regulation as ‘No Place To Hide’ because after its implementation none of the encryption mechanisms will provide foreign investors with a way out to protect their data.

How will the Cybersecurity Law Affect Foreign Businesses in China?

With the growing China B2B marketplace, there has been a massive increase in foreign investors and overseas companies investing and carrying out businesses in China. The data takeover, however, will affect many businesses and their security policies. Find out two ways how the cybersecurity law can harm overseas businesses and what they should do to protect themselves:

1.    The U.S Export Law Conflict

The law firstly can be a major threat to US companies working in China. With the U.S export control laws, no business or organization is allowed to disclose certain high-tech info to any person/company outside of the United States or to any individual without an export license. These laws will now directly have a conflict with the new Cybersecurity law, which requires complete government access to all information. Foreign companies failing to provide any information can face serious jail time in China whereas disclosing their high-tech data will violate the U.S export control laws. This can lead to severe troubles with many foreign businesses working in China.

2.    Violating Trade Secrets

The other way China’s new Cybersecurity law can be dreadful for many foreign companies is through violating their trade secret. To keep up a trade secret claim, you must be able to provide complete information about the secret, its holder and whether it was wrongfully used. In situations, when you work in China, you will have to give away full access to your business and trade secrets violating business agreements that you complied to in the first place.

Just like B2B trade leads sites attract foreign businesses; these new laws can pose a serious threat to investors and overseas companies. They will not only breach credible data but also reduce the company’s ability to protest against the government’s demand for data access and control.