A new wave of data protection laws in China may be forcing companies to alter their services or leave the country all together.
According to The Economic Times, amid a new data privacy law that outlines exactly how companies can collect and store data, tech firms have been withdrawing from China or scaling back operations on Chinese soil. ZDNet noted online that the Personal Information Protection Law sets rules about how data is used, collected and stored. It also establishes data processing requirements for countries based outside the country, according to the website. It also noted that Chinese officials would inspect data.
"China has installed a very draconian policy governing internet operators, telling them what to do and especially what not to do," Francis Lun, CEO of GEO Securities Limited in Hong Kong, told The Economic Times.
Weighing their options, companies are increasingly deciding that the regulatory landscape is creating too much uncertainty to justify remaining in the country, according to The Economic Times.
"I think the question comes down to why bother (operating as a foreign company in China) with such a limited return, and such heavy liability," Lun told the publication.
Yahoo Inc. was one of the first companies to withdraw from China amid the changes, according to the Associated Press. However, the company’s move was mostly symbolic, with many of the company’s services previously blocked by digital censorship in China.
“In recognition of the increasingly challenging business and legal environment in China, Yahoo’s suite of services will no longer be accessible from mainland China as of Nov. 1,” the company said in a statement cited by the Associated Press.
Google left the country several years ago, and LinkedIn also has made a move to scale back its business operations in China, closing its Chinese site and putting up a jobs board. According to Love Money, there are a number of companies that are working to cut their reliance on Chinese business. Citing a 2020 UBS Evidence Lab report, Love Money noted that 76% of U.S. companies with operations in China were withdrawing from the country or weighing their options for such a move.
Some of the companies mulling their options include Apple, Nike and Zoom and also includes companies not based in the US, including LG and Samsung, according to the website.
The Economic Times reported that Epic Games, which is behind the video game Fortnite, plans to leave the Chinese market this month. The company has partial Chinese ownership, with gaming company Tencent having a 40% stake in the company.
While a number of companies are pulling out of China, at least one country is swimming against the tide. According to the Globe Banner, Elon Musk intends to increase Tesla’s investment in the country. He noted that he believes China is investing resources and utilizing the latest digital technologies across a spectrum of industries, including the automotive segment.