Category Archives: News

Wat overheden niet lukt, doet de groene energiesector in China en Europa allang

COP26 voorzitter Alok Sharma vocht zaterdag tegen de tranen. Na dagen van slopende en vaak emotionele onderhandelingen voelde hij zich genoodzaakt om de verandering die India op het allerlaatste moment voorstelde te accepteren: De slottekst waar alle 197 deelnemende landen zich aan committeren bevat nu een belofte om het gebruik van steenkool ‘terug te schroeven’. Voorafgaand aan de top in Glasgow had Sharma nu juist het volledig elimineren van steenkoolgebruik als belangrijke prioriteit benoemd. Het is slechts één van de voorbeelden van het gebrek aan ambitie en leiderschap dat prevaleerde tijdens COP26.

Verrassend proactief waren de V.S. en China, ‘s werelds grootste uitstoters van broeikasgassen, die een onderling akkoord uitbrachten om de uitstoot van methaan en het gebruik van steenkool nog dit decennium grondig aan te pakken. Joe Biden en Xi zijn momenteel via Zoom in gesprek om concrete invulling te geven aan de afspraken. Klimaatwatchers zijn echter bang dat de afgesproken maatregelen te vaag blijven. Als dit akkoord tot weinig ambitieuze implementatie leidt, heeft dat desastreuze gevolgen voor de rest van de wereld. Zelfs onze relatief progressieve Europese Unie zal dan niet meer voortrekkersrol op zich willen nemen uit angst voor verplaatsing van onze – toch al noodlijdende – maakeconomie en bijbehorende banen.

De deal tussen de Verenigde Staten en China kwam uit de lucht vallen. Althans, zo leek het voor de rest van de wereld. Frans Timmermans vertelde voor de camera’s dat hij ‘al dagen op de hoogte’ was en het akkoord van harte ondersteunt. Maar Europa was niet aan tafel uitgenodigd voor de meer dan 30-tal gesprekken die in de afgelopen 10 maanden over het akkoord tussen China en de V.S. hebben plaatsgevonden. En daar hebben we een enorme kans laten liggen om de andere grootmachten te dwingen tot ambitie. Laten we er nu dan ook alles aan doen om alsnog een ‘seat at the table’ te krijgen als het gaat om implementatie van de plannen.

Daarbij zal de rol van de groene energiesector cruciaal blijken. Want de moeizame internationale onderhandelingen lopen ver achter bij de praktijk. Waar overheden decennia lang dezelfde onderhandelingen voeren om uiteindelijk waterige akkoorden te bereiken over hoog-over doelstellingen, en waarbij Europa nu wordt buitengesloten door de V.S. en China, werken bedrijven in Europa en China al die jaren al gestaag door om innovatieve oplossingen voor de energietransitie te ontwikkelen. Al decennia lang overbruggen werknemers van energiebedrijven aan beide kanten van de oceaan samen culturele, sociale, geografische en economische geschillen om groene groei te bewerkstelligen.

Succesverhalen zijn er: Zo installeerde het Nederlandse SPT Offshore vorig jaar met een Chinese ontwikkelaar de funderingen voor een 300MW windpark in de Zuid-Chinese zee. Het Franse Air Liquide leverde de technologie voor het grootste hydrogen station ter wereld dat staat in – Beijing. Deze projecten zijn ontstaan door het jarenlang opbouwen van menselijke relaties en vertrouwen. Ondanks onzekere clausules in handelsakkoorden en zorgen om markttoegang en patentbescherming weten deze bedrijven de groene business case te vinden. Deze business case bestaat ondanks – en niet bij gratie van – ingewikkelde politieke onderhandelingen.

Internationaal beleid heeft zeker nog een functie in het creëren van een gelijk speelveld op socio-economisch niveau. De landen die het hardst getroffen worden door klimaatverandering moeten hiervoor gecompenseerd worden. Maar ook dat gaat makkelijker als de huidige grootvervuilers daadwerkelijk geld kunnen verdienen aan groene energie. Waarom zaten de groene energiebedrijven niet aan tafel in Glasgow?

Een pragmatische aanpak die succesvolle private initiatieven volgt en schaalbaar maakt is de sleutel tot concrete oplossingen. Europese en Chinese werknemers kijken al voorbij politieke en culturele geschillen. Laat onze overheden daar van leren. Creëer een wereldwijde business case vanuit bilaterale successen, en maak bilaterale afspraken om handelsbelemmeringen op te heffen. Laat de internationale afspraken de redelijke praktijk volgen. En betrek de groene economie nou eens écht richting COP27.

 

Auteurs:

Stefanie Ros, partner en directeur, Dr2 Consultants Shanghai (woonachtig in New York)

Li-Xiong Chu, senior adviseur, Dr2 Consultants Shanghai (woonachtig in Shanghai)

Tiffany Zhang, adviseur, Dr2 Consultants Shanghai (woonachtig in Shanghai)

 

Achtergrond:

De auteurs werken voor Dr2 Consultants (NL: Dröge & van Drimmelen), een internationaal public affairs bureau met kantoren in Shanghai, New York, Brussel, Kopenhagen en Den Haag dat bedrijven en overheden samenbrengt om de weg naar een duurzame en toekomstbestendige internationale economie te versnellen.

Voorafgaand aan de klimaattop in Glasgow interviewde het wereldwijde Dr2 Consultants netwerk experts die actief zijn op de energietransitie tussen de EU en China. Eén van de vier hoofdconclusies van het onderzoek is dat internationaal beleid de huidige realiteit onvoldoende weerspiegelt, omdat internationale samenwerking in de energietransitie voornamelijk wordt geleid door de private sector en zowel pragmatischer als innovatiever is dan de afspraken die gemaakt worden op fora als COP26.

 

https://dr2.nl/trendrapport-2021-energietransitie-public-affairs/

 

Contact:

Stefanie Ros, s.ros@dr2consultants.eu, +1 646 691 8935

A global business case for the energy transition through public affairs

For its annual trend report, this year the Dr2 Consultants network conducted interviews with experts to examine public affairs in the energy transition between China and the EU. For the publication, a short video has been made that can be viewed here.

The general conclusion is clear: Governments need to create a global business case so that civil society can truly reap the benefits of international cooperation. Public affairs is an important tool in this.

Trends

Contrary to the current course of international policy, our research found that creating a level playing field does not start with high-level multilateral agreements. The pragmatic approach of the private sector in China and the EU has resulted in successful bilateral cooperation, which can serve as a model for better international policy.

Four trends were discovered in the interviews:

First, governments can learn from each other. Finding the right combination between policy strengths from China and the EU may accelerate the international energy transition. Important in this is that the private sector has a prominent place for input in government-to-government discussions. Zhonghua Xu from TotalEnergies Asia confirms from practical experience that Chinese people are big risk-takers, (….) eager to test ideas on a large scale into the market. On the other hand, Europe is really good in taking initiative. So working together, we can achieve the carbon-neutral mark.

Second, international policy does not reflect current reality. Flora Kan of the EU-China Energy Cooperation Platform describes that international cooperation in the energy transition is predominantly led by the private sector and is often more pragmatic and innovative. Companies that have boots on the ground in multiple countries already engage in cooperation which bridges differences and addresses the local issues at hand. Whereas multilateral discussions over binding agreements are very time-consuming, and we are only nine years away from the 2030 targets.

Third, civil society needs governments to create a global business case. The foundation of successful international collaboration, especially in the energy transition, is trust. Without tackling unequal competition and socio-economic differences this trust will be difficult to build up. Only a global level playing field can ensure that no one stays left behind and that companies can compete on an equal level. Highlighted by Ulco Vermeulen at Gasunie; we can’t do much about natural conditions, but we can do something about the global market. If you can organize together, everyone benefits.

And fourth, public affairs is bridging the world! Innovation cannot thrive without the people facilitating international cooperation. Simon Lemin of TÜVSÜD China mentions that private companies need to get involved in international organizations so that they can steer policy and standards. As mentioned by Christof van Agt of the International Energy Forum, people-to-people diplomacy is excruciatingly important to ensure the transmission of ideas and inspiration and to overcome cultural differences.  

The “Annual Trend Report 2021, The Energy Transition in China and the EU” can be downloaded for free here: Dr2 Trend Report 2021 – The Energy Transition in China and the EU

Frans van Drimmelen, founder and CEO of Dr2 Consultants: “Every year, our international team researches an important development in the field of public affairs. This time we have chosen to focus on the energy transition, as we see that civil society is eager for deeper cooperation with governments to achieve workable solutions. Dr2 hopes to contribute to increased and more efficient international policy dialogues through the content of this report.”

The Annual Trend Report 2021 includes interviews with high-level representatives from amongst others the International Energy Forum (IEF), EU-China Energy Cooperation Platform (ECECP), TotalEnergies, European Union Chamber of Commerce in China (EUCCC), TÜV SÜD, Gasunie, Dutch National Hydrogen Platform, and the Province of South Holland.

About the Dr2 Consultants network

Dr2 Consultants is a strategic consultancy network that operates at the intersection of corporate communication and public affairs, with offices in The Hague (Dröge & van Drimmelen), Brussels, Copenhagen, New York and Shanghai. We advise public and private institutions all over the world on how to acquire social and political support for their issues. All offices within the Dr2 network facilitate public-private cooperation in the energy transition and related areas; clean energy, CCU, (food-)waste management, etc.

If you would like to know more, please contact us at shanghai@dr2consultants.eu.

Scammers are Winning: € 41.3 ($ 47.8) Billion lost in Scams, up 15%

The number of reported scams increased from 139 million in 2019 to 266 million in 2020. The amount lost grew from € 36 ($ 41.7) to € 41 billion ($ 47.8).

With the COVID-19 pandemic, the scam industry has boomed worldwide. In ’s 3rd Global State of Scams Report, for which we at Dr2 Consultants Shanghai also contributed, 42 countries were analyzed on the number of people scammed and the amount of money lost.

Although definitions and reporting methods used by different countries for scams differ strongly, nearly all countries have reported large increases in the number of reported scams. Also, it seems that with the “zero-interest” economy, many proved to be willing victims to “investment opportunities”. These particular scams are also called ‘pig butchering and can run for longer periods of time such as 3, 6 or even 12 months.

In order to combat scams effectively, many countries have resorted to more aggressive awareness campaigns.  But as the themes of the scam usually change (e.g. pet scams, COVID grants), citizens worldwide still seem to fall for them, despite these earlier warnings. The World Economic Forum estimates that a mere 0.05% of all cybercriminals are eventually prosecuted. This makes online scamming, which is even more underreported than “big cybercrimes”, a very lucrative business.

The full report will be presented at the Global Online Scam Summit and can be downloaded from ScamAdviser.com. Or you can contact us through shanghai@dr2consultants.eu for more details.

Dr2 White-paper: ‘Time to enter Chinese cosmetics market WITHOUT ANIMAL TESTING’

In the past few months, China has been updating its cosmetics regulations, which brings great opportunities for foreign brands that have been blocked by previous complicated regulations. Dr2 Consultants Shanghai presents the key takeaways in this white paper for cosmetic brands who would like to enter the Chinese market without animal testing.

What you should know before entering the Chinese market

  1. How are cosmetics products classified in China?
  2. What are the dossiers necessary for cosmetic registration/recordation?
  3. What are the requirements of cosmetics labeling?
  4. How to avoid animal testing?
  • Option 1: Cross-border e-commerce
  • Option 2: Do the filling in China
  • Option 3: Animal testing exemptions

 

Interested? Contact shanghai@dr2consultants.eu for a free copy!

Helping China’s food waste problem

Through the rapid growth and urbanization rate, the amounts of waste are increasingly growing in China. First steps in the classification and sorting of municipal solid waste have been initiated in recent years. This has provided more insights into the troubling situation regarding food waste. Different research indicated that Chinese cities waste 17 to 18 million tonnes of food annually which is enough to feed 30 – 50 million people for a year.

To illustrate, in Shanghai food waste has increased by 27.5% in recent years, which is mainly generated by the catering sector. And even though Shanghai is the first urban city to implement strict sorting policies, there are challenges to overcome. Firstly, insufficient treatment capacity, it is estimated that Shanghai produces more than 9.000 tonnes of food waste daily but the treatment capacity can only handle 5.000 tonnes. Secondly, because of the insufficient quality composition of sorted food waste, using it for composting for example becomes more difficult.

As the priority for China is to become more self-sufficient, dealing with the food waste problem in a sustainable way is key to decrease the immense amounts of food imports for example. A transition to prevention will become increasingly important. The coming years will see more investments in experimenting with new valorization techniques. Finding more efficient and effective ways for the collection & sorting systems, finding new ways to reuse outputs from the existing treatment facilities back into the food chain but also creating new solutions that can deal with the urban-rural context.

Together with colleagues from our headquarters in the Netherlands, Dröge & van Drimmelen, our partners, New Economy, and Acclime, we are working together with the Netherlands Enterprise Agency and the Consulate General of the Kingdom of the Netherlands in Shanghai, conducting a market study for business opportunities of Dutch enterprises within the Yangtze River Delta. The study is currently being finalized and scheduled to be published in July 2021.

Please contact us at shanghai@dr2consultants.eu if you are interested in knowing more or if you are in relevant food waste fields and would like to be updated and involved in future events regarding combating food waste in China.

Dr2 White-paper: ‘The Rise of Live Commerce in China, how will the West follow?’

Digital developments go with the speed of light in China. In this whitepaper, Dr2 Consultants Shanghai outlines the do’s and don’ts for retailers that want to jump on board with the latest trend in e-commerce: Live commerce.

live-commerce

What is live commerce?

Live Commerce = E-commerce + Live Streaming

The live-streaming industry has developed very quickly in China over recent years. It has influenced the further professionalization of the e-commerce industry with;

– new innovations,
– instant consumer engagement,
– platform integrations, and
– changing regulations.

This paper brings insight on the opportunities live-streaming can create in an integrated e-commerce strategy.

Interested? Contact shanghai@dr2consultants.eu for a free copy!

 

 

 

 

 

E-Commerce in a Green World

 

Author: Bernard Scheffens

In Today’s world, with COVID-19 raging through the world, the digital demand for goods and services has exploded. No surprises. E-Commerce was already growing strong, with digital ordering, delivery at home, easy does it!

However, in beginning of 2018, the Government in China already foresaw a couple of issues here: what to do with the packaging waste? How to produce more sustainable packaging products to reduce waste, prevent using natural resources as trees, as you need them for producing paper->carbon board etc.

The problem is huge. In 2018 over 130 million packages are distributed on a daily basis in China, of which roughly 50% is carbon board. It has risen significantly since… and numbers in Hong Kong have grown as well.

Initiatives to tackle this has been undertaken. Companies signed up for an effort to do something, Government at State and Provincial level were involved. Simultaneously, using ‘circular economy ready’ packaging was woven into the effort, although not much available yet to implement.

See: design by Dröge & Van Drimmelen/Dr2, Netherlands/Shanghai, 2018

The slide demonstrates the items involved to organize a process to the benefit of all players: governments, e-commerce companies, package-manufacturers, transport companies etc. It shows that things can be done.

Each of the parties have their own interest. The Government wants to have an overview how this will result in less waste, less or no use of natural resources. E-Commerce companies are interested to find ways to reduce their cost. Package manufacturers are keen to understand to stay in business as number of packages to be used will be reduced, but the price of a package will go up. Transport companies will be tasked to return the package, how will that be done?

Role of Government: this requires a level playing field that only Government can provide, by law, regulations, enforcement and to impose this to all players in this branch. It will prevent that companies will only be interested in their own role, with a risk that several different systems will be established, creating an indispensable industry. At the same time, they can be provided data to monitor the process.

E-Commerce companies of course want a competitive advantage if they can use cheaper way of packaging. Just a theoretical example: Suppose a standard carbon board package will cost 10 HKD. A more sustainable package may cost 100 HKD. But if it can be used 20 times, the package would cost only 5 HKD. These efforts need a closer look of course, to build a sustainable business case with all cost involved. But early signs tell us, it is worth the effort and can be done.

The transport companies need a solution where to return the package. Once the owner of the package can be identified (data management), the package can be returned and re-used by those who invested in the package.

Want to know more about the happenings of circular economy? How to integrate your business with the circular economy? Please do not hesitate to contact us! Our email address is: shanghai@dr2consultants.eu!

‘Revenge travel’ in China boosts economic recovery

Tourist sites across China were packed to bursting in the beginning of this month as millions of locals and citizens celebrated the 71st anniversary of Golden Week, the eight-day public holiday marking the mid-autumn festival and China’s national day.

Economic spending is a key indicator of the success of economic recovery against Covid-19. China’s retail and restaurant sales reached 1.6 trillion yuan (US$235.5 billion) over the ‘golden week’ holiday, with daily sales up 4.9 per cent compared to last year. The holiday shows China’s success in reopening the economy after a hard-fought victory over the virus. Furthermore, the holiday drew in huge crowds; the Ministry of Culture and Tourism claims tourism revenue for the year totaled 76.7 billion yuan, 70% of last year’s.

“China’s tourism market is expected to see a wave of growth led by people’s desire to ‘revenge travel,’ said the state-owned Workers’ Daily ahead of Golden Week. The term, which has been used widely in Chinese media recently, reflected the government’s hope that people would travel or consume more than they usually do during the weeklong holiday because of pent-up demand from being cooped up.

China’s Ministry of Culture and Tourism estimated 600 million domestic tourists or about 40% of the total national population have traveled amid the coronavirus. While the number may have shrunk compared to the nearly 800 million tourists last year, it is still a stunning figure in an era where global travel is not expected to rebound for several years.

China’s National Day commemorates the establishment of the people’s Republic of China on October 1, 1949, by the Chinese Communist Party after winning the Chinese civil war. Nowadays China’s National Day is surrounded by consecutive days of nation-wide holidays also known as ‘Golden Week’. The name is given to the week because it falls at the beginning of Autumn, when most regions in China boast some of the best weather of the whole year.

While the rest of the world continues to struggle with the deadly coronavirus pandemic and are discouraging unnecessary travel, pictures from Chinese social media show thousands of tourists freely traveling domestically during the week – the latest sign that life in China is almost back to normal eight months after the first outbreak leads to severe quarantines. This is a far cry from the first few months of 2020 where, during the Chinese Lunar New Year, the biggest Chinese traveling season of the year was cut short to prevent the further spread of the virus.

The number of tourists at top attractions across the country jumped by 159% in the second quarter of the year compared to the first, at the height of the pandemic. Meanwhile, the number of rural tourists in July and August was nearly back to normal at 90% of last year’s.

Hotel bookings are 50% higher compared to last year, and airline reservations are on a par with 2019, helped by discounts for hotels and flights. People have been observed to be complaining online about the lack of tickets and rooms for hotels that sometimes make it difficult to move.

Transactions on WeChat Pay, the digital payment service operated by Chinese internet giant Tencent Holdings, grew 83 percent at tourist sites and 71 percent at hotels during the first three days of the holiday, according to a report by WeChat on Sunday. Meanwhile, the number of WeChat Pay transactions at shopping malls increased by 30%.

With the coronavirus currently still raging in the West and in other parts of Asia, for this Golden Week Chinese have had few options for overseas holidays, with many opting to travel domestically instead. Tourists who would normally have done so otherwise have said they are not willing to undertake the lengthy quarantine times required on both ends of their travel. Thailand, Japan, Vietnam, some of the most popular destinations among travelers, closed its airports to international commercial flights and have yet to fully reopen.

China has reported fewer locally transmitted coronavirus cases since August causing local governments to ease restrictions on daily life, and allowing tourism sites to operate at 75% capacity. To encourage tourism in local attractions, more than 500 scenic locations across the country were giving free admission or discounts to visitors. Armed with hand wash, face shields, masks, temperature checks, and social distancing, citizens traveled all across the country to celebrate with friends and family.

The rebound in China’s tourism is shadowed by the country’s widening wealth gap as a result of the pandemic. Due to a lack of financial aid, China’s poorest populations are struggling more than their richer peers. The poorest families, who earned less than 50,000 yuan in the first three months of the year, are among the groups that saw the biggest reduction in living standards.

Despite this, China is still determined to accomplish the tasks for winning the battle against poverty this year. Chinese President Xi Jinping has underscored the perseverance and determination of the nation to win the battle against poverty.

He calls for enhancing the development capacity of the low-income population in underdeveloped and rural areas via education, encouraging low-income populations with the capacity to achieve prosperity through hard-work and facilitating the gradual realization of common prosperity.

For more details, please do not hesitate to contact us at: shanghai@dr2consultants.eu

Sustainable Development Goals strengthen public affairs

The Hague, 24 September 2020 – This is evident from the “Annual Trend Report 2020, Sustainable Development Goals” that Jan Peter Balkenende received from Marieke van der Werf and Frans van Drimmelen – both partners at consultancy firm Dröge & van Drimmelen. The report was presented to Balkenende due to his chairmanship of the Dutch Sustainable Growth Coalition, a coalition of eight leading companies committed to sustainable growth and the SDGs.

For the annual trend report, Dröge & van Drimmelen investigated which trends are prominent at the intersection of public affairs and the SDGs. Discussions were held with fifteen representatives of leading organizations from all over the world and the conclusion is clear: the SDGs and public affairs are becoming increasingly intertwined. Many organizations choose to make the SDGs part of their public affairs strategy. The SDGs offer companies, governments, knowledge institutions and NGOs a common international language to communicate about their social involvement. On the other hand, organizations use public affairs to get the SDGs higher on the political agenda. It is with some regret that the Netherlands is one of the few European countries that lacks a national SDG strategy.

Click here to download the Dr2 ‘Annual Trend Report 2020 SDGs’

Trends

The report includes interviews with representatives from amongst others Philips, Mærsk, Port of Rotterdam, NOGEPA, Consulate Shanghai and SDG Netherlands. Four trends were discovered in the interviews:

First, the SDGs do not only create a better world, but also create stronger organizations. As Mirjam van Praag, chairman of the board of the VU University Amsterdam points out the following in her interview for the report: companies, governments, NGOs and knowledge institutions realize that economic growth must go hand in hand with sustainable growth. Organizations that include the SDGs in their mission or strategy generally generate more impact on social goals as well as image, employee engagement, public-private partnerships, appreciation and ultimately continuity and profit.

  • Jan Peter Balkenende “I am a huge supporter of the SDGs, due to their content, goals and effect to connect everyone. The SDGs relate to everything and everyone in this world. To realize them you need common knowledge, common language and common action. Public affairs and communication make this possible. It is about vision, strategy development, making things transparent and conveying an honest story. There are great opportunities for the SDGs. And everyone plays a role in this: governments, companies, social organizations, knowledge institutions and citizens. My compliments for asking attention for this in the Trend Report”

Second, a framework-setting role for the government is important. As Herman Mulder of SDG Netherlands points out, it is crucial that the government provides a simulation framework. Various organizations argue for a national SDG strategy and more incentives for sustainable business.

Third, the SDGs strengthen a public affairs strategy. They provide guidance for communication and reporting. Arendo Schreurs, Director-General of NOGEPA, indicates that the SDGs can be used to represent the environmental performance (and challenges). Anders Würtzen, VP Global Head of Public Affairs at Maersk indicates that the SDGs shape the narrative of an organization.

  • Marieke van der Werf, partner at Dröge & van Drimmelen: “Every year we write a trend report on an important development in the field of public affairs. Given the increasing interest in corporate social responsibility, we have chosen to highlight the role of the SDGs this year. As a socially involved agency, we are pleased to see that the importance of the SDGs in this context is widely recognized and is increasing in importance”

And fourth, we’re moving forward! According to the words of Jan Willem-Scheijgrond, chairman of the UN Global Compact Network in The Netherlands, among others: “we are moving from awareness to implementation”. At Philips he sees how the SDGs are increasingly becoming part of the core business. Others also see a shift from the SDGs as a communication vehicle to the heart of the company.

 

About Jan Peter Balkenende

In addition to being chairman of the Dutch Sustainable Growth Coalition – a coalition of eight companies committed to sustainable growth, Jan Peter Balkenende is currently a partner at Ernst & Young and professor of Governance, Institutions and Internationalization at Erasmus University. Balkenende was Prime Minister of the Netherlands from 2002-2010.

About Dröge & van Drimmelen

Dröge & van Drimmelen is a strategic consultancy that is active at the intersection of public affairs and corporate communication. With offices in The Hague, Brussels, Denmark, New York and Shanghai we advise governments, companies, knowledge institutions and NGOs all over the world on how to acquire social and political support for their issues. We are very involved in the SDGs. For example, through our sister company Dr2 New Economy, we are actively committed to accelerating the transition to a circular economy that uses renewable energy.

China’s new data protection legislation: Are there lessons to be learned from Europe?

As an indispensable factor in modern communication, the use of data by public and private organizations has spread to all aspects of social life. In Europe, the General Data Protection Regulation (GDPR) has provided what is widely considered as the world’s toughest framework to protect people’s privacy. On May 25, the first anniversary of the GDPR, China’s Standing Committee announced that its next major project focusing on national security and social governance would be to implement the national personal information protection law (also known as the Personal Information Security Specification) and China’s Cyber Security law.

A brief history of data security law in China

As early as 2003, the expert proposal draft of the Personal Information Protection Law was started and submitted to relevant authorities in 2005. “Due to the importance and urgency of legislation on personal information protection,” Hanhua Zhou, head of the research team and a researcher at the Institute of Law at the Chinese Academy of Social Sciences, said he believed drafting the law would “not take too long”. For now, the law is still in the works as China’s legislators are trying to keep up with rapidly evolving online business models.

In the recent years, data protection has become more of a prominent issue in China’s booming online economy: According to CCTV, the Beijing district court alone has confirmed the disclosure of more than 160 million pieces of citizens’ personal information between 2010 and 2016. An investigation report on APP Personal Information Leakage released by the China Consumers’ Association in September 2018 also showed that 80% of respondents had been exposed to personal information leakage.

In March 2017, at the “two sessions” of the National People’s Congress, Xiaoling Wu, deputy director of the financial business management department, the director of the National People’s Congress, the President of the People’s Bank of China Xue-dong Zhou, and 45 members of the Standing Committee of the National People’s Congress submitted a bill ” To develop the personal information protection law of the People’s Republic of China as soon as possible”. The bill included a first draft of the Personal Information Protection Specification as an annex.

The Personal Information Protection law falls into category I of the legislative plan released in March 2019, which means that the implementation of the law has the highest priority, and that it could be introduced very rapidly by the end of 2020.

In the meantime, the 10th session of the standing committee of the 13th National People’s Congress held on June 28-30 2019 deliberated the draft of the Data Security law for the first time. On July 3, the full text of the draft was released to solicit public comments. On August 16 that year, the public consultation on the draft of China’s first data security law ended. Also the Data Security law is expected to be implemented by the end of 2020.

A brief history of data security law in Europe

The EU’s General Data Protection Regulation (GDPR) which came into effect on May 25, 2018, is the most significant change in the field of data privacy protection globally in the past 20 years. The act applies to any party who is an EU citizen or legal person who collects the data, provides the data (the user from whom the data is collected), and processes the data (such as a third party data processing

agency). The implementation of GDPR is a huge challenge to data utilization and online business operation in the current age of data. It has led to major Chinese enterprises such as Tencent, Xiaomi, and other leading domestic technology companies to announce their withdrawal from the European market.

Enterprises are supervised in customer information protection by GDPR mainly as follows:

1. Failure by the relevant organizations to fulfill their obligations will expose them to the risk of serious administrative fines from active regulators in EU countries (such as the “Autoriteit Persoonsgegevens” in the Netherlands). Fines can be as high as 20 million euros or about 4 percent of a company’s global turnover, whichever is higher.

2. Operators of websites must explain to their customer in advance that it will automatically record the customer’s search and shopping records and obtain the user’s consent; otherwise, it will be punished as “not telling the user to record the behavior”.

3. Companies can no longer use vague, hard-to-understand language or lengthy privacy policies to obtain permission to use data from users.

4. The “right to be forgotten” is enshrined in text, with the individual user having the right to ask responsible parties to remove their records about their data.

 

 

When GDPR first came into effect in 2018, the penalties imposed by government regulators were modest. By 2019, GDPR fines were rising, more organizations were receiving fines and regulators were stepping up their efforts. According to the statistics, GDPR fines totaled a record 417.5 million euros in 2019, almost 1,000 times the amount imposed in 2018. This year alone, 750 companies received GDPR fines, with an average fine of 500,000 euros, equivalent to 3.89 million yuan.

 

 

It can be seen that the fines on GDPR have become stricter as regulators in various countries are paying more attention. In terms of the reasons for the fines, more than one third of the fines are due to improper legal basis for data processing, while another third of the fines are due to insufficient technical and management measures to ensure information security, such as data leakage incidents.

The top ten fine incidents in GDPR are as follows:

It can be seen that the fines on GDPR become stricter as regulators in various countries paid more attention. The law defines the right of individuals to own data in the digital world, protects the privacy of netizens, and reduces the security risks of data and the problems related to personal privacy.

Prospects for the Personal Information Protection law in China

In terms of personal information protection legislation in China, most legislators express the need for a balance between netizens’ protection and promotion and economic development. As China has a large number of internet users and a booming e-commerce economy, merely copying the GDPR may not be feasible. China’s political sentiment is that the goal is to develop the most appropriate, the most complete and the most suitable rule of law for the future network situation of its country. Legislators call upon online companies to “strengthen self-discipline in the basic spirit of protecting personal privacy, to abide by basic moral norms and network order, and to enhance the social responsibility of network enterprise citizens”.

While China’s Cybersecurity Law summarizes fundamental principles of personal information, the Personal Information Specification provides detailed guidance for compliance in information processing. China’s new specification will most likely function as a guideline for legislators making related laws. Experts expect that implementation of the framework will probably contain most of the personal data protection elements featured in the GDPR, though it might show more tolerance.

Like the GDPR, the Specification includes guidance on user consent, data protection, data access, the obligation of disclosure, and the evaluation of data security, but overall it is more permissive. For

instance, the GDPR has provided six lawful bases that allow data controllers to process personal data, such as user consent, legal obligation, and vital interests, but the specification only lists four circumstances where data controllers are not allowed to process personal data.

It remains to be seen how strict China’s data protection law will prove to be in practice. Dr2’s experts will continue to monitor legislative and political developments. If you would like to be kept informed on the latest news surrounding data protection in China and the consequences it can have for your business, please don’t hesitate to contact us at shanghai@dr2consultants.eu.

Source(s):

[1] https://baike.baidu.com/item/ personal information protection law / 8343360

[2] https://m.china.caixin.com/m/2020-08-17/101593429.html

[3] http://www.gov.cn/xinwen/2020-06/20/content_5520865.html

[4] http://www.gov.cn/xinwen/2020-05/14/content_5511677.html.

[5] https://www.infoq.cn/article/pCqvqVaD46m4NAWcoLIC

[6] http://finance.sina.com.cn/review/20090310/08535953619.shtml? from=wap