Notes from the IAPP Asia Managing Director, 28 April 2017

Nǐ hǎo!

Last week, my travels took me to China. The pace of change continues to be astonishing. I visited three of the largest companies in China and my eyes were wide with the developments that are occurring. A couple weeks back, I talked about the development of the digital society in India. China is already there. No one seems to pay cash for anything these days – it is all done on their smartphone, with the top e-wallet provider having around 450 million monthly users. A recent study found that 92 percent of people in China’s biggest cities use apps like Alipay or WeChat as their primary payment method. Even the city bikes can be hired using the QR code and payment app. As an aside, it’s heartening to see bicycles making a comeback in China.

Furthermore, these e-commerce giants are embedding online services in their apps such as ride-hailing, utility payments, phone top-up services, movie and train ticket buying, as well as an impressive array of financial services on Alipay, such as Yu’e Bao, its money market fund. It also has its own credit system called Sesame Credit, which incorporates users’ purchasing and spending habits into calculating credit scores.                                                                                                      

These tech titans have improved lives of Chinese citizens tremendously in the last decade. Interestingly, they are also investing in the India mobile payment market as well as in other South East Asian countries and forays into Europe. Highly regulated Singapore starts to look like a laggard.

With the new cybersecurity laws about to come into force in China, tech companies are likely under increasing scrutiny with regard to data protection and security, particularly if they are considered to be “critical information infrastructure.”

That said, on 11 April 2017, the Cybersecurity Administration of China (CAC) released the draft Security Assessment Measures for Cross-Border Transfer of Personal Information and Important Data (“Draft Measures”). While it was hoped that such guidelines would offer some clarity on the interpretation of broad definitions and concepts in the law, the draft measures appear to expand the scope of China’s data localization and security review requirements to a wider range of companies than originally thought.

Until next time. Zài jiàn.