Mandatory Signature of Standard Contract for Overseas Transfer of Member Information
Applies to Companies Transferring Personal Data of Up to 100,000 People Abroad
[Asia Economy Reporter Kim Junran] China has strengthened data security regulations for small businesses.
According to Reuters on the 24th, China's internet regulatory agency, the Cyberspace Administration of China (CAC), announced that small businesses must sign a standard contract when transferring member and customer information overseas.
CAC explained that from June 1, the regulation will apply to companies with fewer than 1 million members or those that have sent personal information of up to 100,000 individuals overseas since January of last year.
Accordingly, these companies must conduct an assessment and report whether there is a risk of illegal use of the information by the recipient before sending member information abroad. They are also obligated to submit the standard contract to the CAC in their jurisdiction.
Previously, in July 2021, CAC announced in the revised Internet Security Review Measures that Chinese internet companies with over 1 million members seeking to list on overseas stock exchanges such as in the United States must undergo a pre-review to ensure there are no factors threatening national security.
Given China's population of 1.4 billion, the threshold of 1 million members is extremely low, covering almost all companies considering overseas listings. Therefore, it has been interpreted that overseas listings of Chinese tech companies have effectively shifted to a licensing system.
Meanwhile, CAC has been strictly cracking down on violations related to the collection and use of personal information by internet companies, enacting the Data Security Law in September 2021 and the Personal Information Protection Law in November 2021.
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