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The Foreign Company’s Guide to Navigating China’s New Cybersecurity Law

The new Cybersecurity Law of China (CSL) took effect June 1 although implementation of some provisions has been delayed. Many foreign companies are concerned about the effects the CSL will have on their ability to do business in Hong Kong and mainland China. The first draft of the CSL was the 2015 National Security Law, in which the government outlined goals for protecting its “cyber sovereignty” and cyber security. The law was deliberately vague allowing room for the development of more specific regulations as needed. This leaves many businesses and analysts trying to understand the actual implications of the CSL.

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Grace Period for Foreign Businesses

To give foreign businesses time to make adjustments, the government has enacted a 19-month grace period before requiring their compliance. The interpretation of the new CSL is still under debate. The implications for foreign companies can be far reaching and expensive. For most companies, data collection, storage, and maintenance will require costly restructuring of existing IT infrastructure. Some businesses are considering building new facilities to meet data localization requirements. Others are seeking assistance from companies native to mainland China.

Interpreting the new law should be approached with caution, as penalties may be stiff. Failing to adhere, can incur penalties of up to 10 times a business’s out-of-compliance gains. But the alternative – not doing business in China at all – could be far worse.

Mainland Experts

For any foreign company doing business in China can be challenging. The assistance of a mainland partner can be invaluable. An insider’s experience and knowledge can help prevent costly and time-consuming mistakes. When navigating the frequently changing rules and regulations, ensuring CSL compliance, or obtaining and ICP Registration Number, the right partner, can make all the difference. CDS fosters a strong working relationship with regulatory officials even providing a dedicated office for their use at our headquarters in Beijing.

CDS Global Cloud is a subsidiary of Capital Online Data Services headquartered in Beijing and the only publically traded network and data center provider in mainland China. Established in 2005 Capital Online Data Services has over 50 data centers in mainland China and peers with all major carriers in China. No one provides better communications coverage in China than CDS.

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