China’s data privacy crackdown: What luxury marketers needs to know
Personal data and privacy protection are next in line in China’s regulators’ efforts to rein in big tech’s power and regulate the country’s growing digital ecosystem.
China’s Personal Information Protection Law (PIPL) is currently under a second review but is expected to be law by the end of the year. It addresses how organisations and individuals collect, store and transfer data. It also stipulates that Chinese consumers should give informed consent before personal information is collected, should be informed of why it is collected and how it is used, and be entitled to rescind consent at any stage.
For luxury brands, consumer consent will now become essential in order to collect Chinese data, inside and outside the borders of the People’s Republic. That marks a significant shift from the powerful and largely unregulated tech ecosystem that currently exists, experts say.
“In China, we have much more availability to track a singular person across dozens and dozens of touchpoints than what we do out West,” says Toto Haba, SVP of marketing and communications at Benefit Cosmetics. Alibaba and Tencent have created large ecosystems that span e-commerce, messaging, gaming, maps applications and more, enabling brands to very precisely target their marketing communications, says Haba. “If [data collection] becomes more restricted, the impact is that we can rely less on that sort of very hyper-targeted marketing.”
So what does it mean in practice? “If you don’t have consent, you can’t really process data,” says Yan Luo, a regulatory and public policy lawyer at Covington. The PIPL shares many affinities with the EU general data protection regulation (GDPR), but unlike its European counterpart, companies cannot cite legitimate interest as a legal basis for collecting and processing data. The PIPL has a much greater emphasis on individual consent. Potential fines for breaching the law are heavy: up to RMB 50 million ($7.77 million), or 5 per cent of annual revenue.
“The key message emphasises that the collection of personal information should be legal, necessary and to the minimum extent,” says Leonard Li, partner at consulting firm Oliver Wyman. Other provisions limit transfer of data outside of China, use of individual localisation tracking, reliance on third-party data for marketing purposes and the creation of algorithmically curated content.
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