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Data protection in China: Implications in Marketing

W4 | W4 / April 23, 2024
Data protection in China: Implications in Marketing

The digital marketing landscape in China presents unique challenges for foreign companies, particularly regarding the stringent data protection laws the country has introduced in recent years. With the advent of the Cybersecurity Law in June 2017 and other key legislations such as the Personal Information Protection Law (PIPL) and the Data Security Law (DSL), it has become essential for companies active or intending to enter the Chinese market to thoroughly understand and comply with these regulations. 

These laws not only impact how companies process and store data but also how they interact with their customers and execute their marketing strategies.

In this comprehensive article, we will examine the key aspects of data protection within the Chinese marketing context. We will shed light on the specific requirements imposed by Chinese data protection laws, how they affect marketing strategies, and how foreign companies can effectively navigate these challenges. Our goal is to foster a deep understanding of the requirements and opportunities in China, thereby laying the groundwork for successful marketing initiatives in one of the world's most dynamic markets.

Chinese Data Protection Laws Overview

In a bid to safeguard its national security, protect citizen privacy, and ensure data integrity, China has established a robust data protection regime. This framework, anchored by three key laws – the Cybersecurity Law (CSL), the Personal Information Protection Law (PIPL), and the Data Security Law (DSL) – goes beyond mere legal hurdles. It serves as a roadmap for foreign companies, particularly those in the digital marketing domain, to navigate the Chinese market successfully. Understanding and complying with these regulations is crucial for developing compliant marketing strategies that build trust with Chinese consumers and pave the way for long-term success.

The  Cybersecurity Law (CSL)

The Cybersecurity Law (CSL), introduced in June 2017, establishes the framework for handling digital data in China. It specifically targets companies providing IT products and services for critical infrastructures, requiring them to undergo rigorous state security reviews and, in certain cases, disclose source codes. Particularly relevant for marketing activities is the provision for local data storage, which mandates the storage and processing of personal data within China to safeguard national security and public order.

The Personal Information Protection Law (PIPL)

Enacted in November 2021, the Personal Information Protection Law (PIPL) marks a significant step for China in data privacy. Similar to the European GDPR, the PIPL prioritizes user consent and control over their personal information. Companies operating in China must obtain explicit user consent before collecting, using, or disclosing any personal data. This law focuses on protecting individual privacy by regulating the collection, use, storage, and transfer of personal information. By complying with the PIPL, companies demonstrate respect for user privacy and build trust with Chinese consumers.

The Data Security Law (DSL)

Effective since September 2021, the Data Security Law (DSL) complements the PIPL by addressing data security. This law establishes comprehensive security measures for data processing across its entire lifecycle, from collection to storage and disposal. The DSL places a particular focus on safeguarding "critical data," which could be information deemed vital to China's national security or economic interests. It's important to note that the DSL has a broader scope than the PIPL, applying to all data processing activities within China, not just personal information. Understanding and adhering to the DSL is crucial for foreign companies to ensure the secure handling of all data they encounter in the Chinese market.

Local Data Storage Requirements and its Implications for China Marketing

Data generated by Chinese citizens within China is expected to be kept within the country, although there are exceptions. Generally, data cannot be moved out of China if:

  1. It involves personal data without consent or goes against the individual's interests,
  2. It concerns critical infrastructure and could harm public interest or national security,
  3. It falls under other categories excluded from transfer by public security authorities.

Furthermore, before any data transfer, users must be informed about the type, extent, purpose, and recipient of the data, and they must agree to it. If minors are involved, consent from their guardians is necessary.

While data storage ideally occurs in China, exceptions may arise for business purposes. In such cases, a security assessment should precede any transfer. Regardless, obtaining user consent beforehand and ensuring data does not violate the listed exclusion criteria is crucial.

Influence on the marketing strategy

China's strict data protection laws throw a curveball at foreign companies, impacting both their marketing strategies and IT infrastructure. Companies must re-evaluate their data management practices to ensure everything aligns with these regulations. This might involve rethinking marketing tools and approaches.

Here's why:

  • Data Storage Requirements: Storing data within China might be necessary, which can impact your IT infrastructure decisions.
  • Compliance with Regulations: Marketing technologies and practices need to comply with data protection regulations, potentially limiting some international software solutions.

Transparency and consent

Another key aspect of marketing under China's Personal Information Protection Law (PIPL) is the need for transparency and explicit consent. The PIPL emphasizes that companies must make it clear how and why they collect and process data. This translates directly to the need for precise privacy policies and active consent mechanisms integrated into all digital marketing channels.

Although compliance with the PIPL presents a challenge, it's also an opportunity to build trust with consumers. Companies that can demonstrate they take customer data seriously and protect it according to the PIPL can positively differentiate themselves and strengthen their market position in China. The PIPL's strict data protection requirements can thus serve as an impetus for innovation in digital marketing by promoting the development of new, secure, and consumer-friendly marketing technologies.

Strategic Marketing under Chinese Data Protection Regulations

China's data protection regulations have transformed marketing from a legal afterthought into a strategic cornerstone.  

Marketing teams must not only ensure compliance with data collection, storage, and consent requirements, but also adapt their strategies to China's unique digital ecosystem – with its preferred platforms, communication styles, and consumer expectations.  This, combined with the rapidly evolving legal landscape, necessitates constant monitoring and agile planning. 

However, navigating these complexities can be highly rewarding, as companies that build trust with Chinese consumers through responsible data practices can foster long-term brand loyalty and solidify their market position.

Learn more about how our dedicated APAC team can help you navigate the Chinese  Marketing landscape!

Data protection compliance for WeChat Marketing

WeChat, one of the leading communication and social media platforms in China, has special requirements for data protection management, especially when it comes to marketing activities. 

For companies using WeChat for marketing purposes, it is crucial to ensure compliance with data protection regulations. This includes securely managing user data, obtaining consent for data processing and providing transparent privacy statements that explain to users exactly how their data will be used.

Integration of WeChat into marketing strategies

At W4, we developed a special WeChat module that is integrated with the WeChat API. This module ensures that data is collected and stored on local servers in China in compliance with data protection regulations. It also enables the automation of marketing processes, such as sending push notifications and targeting potential customers, while always ensuring compliance with local data protection laws.

Contact us for more information!

Case Study: Apple Data Center in China

Apple, as one of the world's leading companies, exemplifies the complex decisions that international companies have to make in China in order to be successful there. With the construction of a data center in Guiyang and another in Inner Mongolia, Apple has made significant efforts to serve the Chinese market. These decisions shed light on the profound privacy and censorship issues companies face when operating in China.

As part of the cybersecurity law introduced in 2017, Apple handed over control of the storage of its Chinese customers' personal data to a state-owned Chinese company. This move was necessary to continue operations in China, but meant that the Chinese government could potentially have access to the emails, photos, documents, contacts and locations of millions of Apple users in China.

Apple has abandoned the encryption technology it uses in other parts of the world because the Chinese government would not allow it. Instead, the digital keys that unlock the information are stored within the data centers, significantly weakening the protection of the data. These concessions show the complexity of the demands placed on companies operating in China, especially when operating in sensitive industries such as technology and communications.

This case study highlights the challenges and trade-offs associated with operating in a market that is heavily regulated by the government and where censorship and surveillance are pervasive. For marketers, this highlights the need to incorporate marketing privacy and ethical considerations into their strategies, especially when operating in authoritarian regimes.

The W4 Solution

In order to carry out successful WeChat marketing campaigns, W4 has developed a special module based on the requirements of modern marketing automation software. This module connects to the API of the WeChat app, which is extremely important for the Chinese market. 

This ensures that the data of Chinese users is collected in compliance with data protection regulations and stored in accordance with the law (on local servers)). The analysis software also enables the fully automated identification, approach, and qualification of (potential) leads. Our We-Tomation works with the user IDs of the users and sends automated push notifications to the WeChat app.

Our agency offers comprehensive marketing services in China to effectively position your brand and reach your target market.  As part of our services, we also offer specialized privacy consulting to ensure that all campaigns are not only effective but also compliant with local marketing privacy laws. We develop bespoke strategies, consider cultural nuances and utilize digital channels to communicate your message in a targeted manner. From social media campaigns to local SEO optimization and lead generation, we maximize your presence in the Chinese market. With our expertise, we can help you gain a successful foothold in a dynamic and growing market.

Tags: China Marketing

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Sarah Wilhelm
Sarah Wilhelm
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