HONG KONG: Chinese regulators are looking to pressure data-rich companies to hand over the management and supervision of their data to third-party firms if they want US stock listings, sources said, adding that Beijing’s private sector As part of an unprecedented investigation on the firms.
Regulators believe that ideally bringing in state-backed third-party information security firms to manage and monitor data on IPO expectations effectively limited their ability to move Chinese onshore data overseas. Can go, said one of the people.
This would help ease Beijing’s growing concerns that a foreign listing could compel such Chinese companies To hand over some of his data to foreign entities and undermine national security, added the person.
The plan is one of several proposals under consideration by Chinese regulators as Beijing tightens its grip on the country’s Internet platforms in recent months, including intensifying its scrutiny of foreign listings.
The action, which has battered stocks and badly affected investor sentiment, has specifically targeted unfair competition and Internet companies handling a vast cache of consumer data that are more laissez-faire. The approach is after years.
A final decision is yet to be taken on the data handover plan of the IPO-bound companies, said sources, who declined to be identified due to the sensitivity of the matter.
Regulatory officials discussed the plan with capital market participants, one of the sources said, as part of steps to strengthen oversight of all Chinese firms listed offshore.
The source said the IPO advisors are hopeful that a formal framework on the issue of data handover could be given in September.
The China Securities Regulatory Commission (CSRC) and the Cyberspace Administration of China (CAC) did not respond to faxed requests for comment.
Chinese regulators recently banned companies’ overseas listing plans, especially in the United States, pending new rules on data protection.
Last month, the CAC proposed draft rules requiring companies with more than one million users to undergo a security review before listing overseas.
increased surveillance
Beijing’s data handover plan comes as US policymakers are raising concerns that Chinese companies are violating US regulations that require public companies to disclose a range of potential risks to their financial performance. is required.
A total of 37 Chinese companies have raised $12.6 billion through US IPOs so far this year, according to DeLogic, nearly double the $6.6 billion raised in the same period last year.
The plan to increase surveillance of Chinese companies listed abroad comes days after Beijing launched a cybersecurity probe into the ride-hailing giant Didi Global Inc After its listing on the US$4.4 billion stock exchange.
Didi is now in talks with state-owned Weston Information Industry Inc. to handle its data management and monitoring activities, Reuters reported earlier this month.
According to the report, as part of the plan being discussed, Westone will be able to access Didi’s servers across the country to track Didi’s data collection, use and transfer – which could prevent the company’s data falling into the hands of a foreign entity. can be effectively prevented.
Didi said at the time that the media reports about handing over control of the data were untrue.
One of the people said the restrictions to be implemented on Didi could become a potential template for other data-rich Chinese companies looking to go public in the United States.
Beijing’s growing sensitivity about the collection and use of onshore data comes as the top legislative body on Friday passed a new law designed to protect online user data privacy. It will implement the policy starting November 1.
In September, China is also set to implement its data protection law, which requires companies processing “critical data” to conduct risk assessments and submit reports to authorities.
The government has seen user data as a key to the country’s financial and social stability in recent years and has urged tech giants including Ant Group, Tencent and JD.com to share consumer credit data to prevent excess lending and fraud. Has pushed, Reuters reported in January.
Ant is also in the process of shutting down its consumer-credit data operations as part of a business reform to revive its public share sale.
Regulators believe that ideally bringing in state-backed third-party information security firms to manage and monitor data on IPO expectations effectively limited their ability to move Chinese onshore data overseas. Can go, said one of the people.
This would help ease Beijing’s growing concerns that a foreign listing could compel such Chinese companies To hand over some of his data to foreign entities and undermine national security, added the person.
The plan is one of several proposals under consideration by Chinese regulators as Beijing tightens its grip on the country’s Internet platforms in recent months, including intensifying its scrutiny of foreign listings.
The action, which has battered stocks and badly affected investor sentiment, has specifically targeted unfair competition and Internet companies handling a vast cache of consumer data that are more laissez-faire. The approach is after years.
A final decision is yet to be taken on the data handover plan of the IPO-bound companies, said sources, who declined to be identified due to the sensitivity of the matter.
Regulatory officials discussed the plan with capital market participants, one of the sources said, as part of steps to strengthen oversight of all Chinese firms listed offshore.
The source said the IPO advisors are hopeful that a formal framework on the issue of data handover could be given in September.
The China Securities Regulatory Commission (CSRC) and the Cyberspace Administration of China (CAC) did not respond to faxed requests for comment.
Chinese regulators recently banned companies’ overseas listing plans, especially in the United States, pending new rules on data protection.
Last month, the CAC proposed draft rules requiring companies with more than one million users to undergo a security review before listing overseas.
increased surveillance
Beijing’s data handover plan comes as US policymakers are raising concerns that Chinese companies are violating US regulations that require public companies to disclose a range of potential risks to their financial performance. is required.
A total of 37 Chinese companies have raised $12.6 billion through US IPOs so far this year, according to DeLogic, nearly double the $6.6 billion raised in the same period last year.
The plan to increase surveillance of Chinese companies listed abroad comes days after Beijing launched a cybersecurity probe into the ride-hailing giant Didi Global Inc After its listing on the US$4.4 billion stock exchange.
Didi is now in talks with state-owned Weston Information Industry Inc. to handle its data management and monitoring activities, Reuters reported earlier this month.
According to the report, as part of the plan being discussed, Westone will be able to access Didi’s servers across the country to track Didi’s data collection, use and transfer – which could prevent the company’s data falling into the hands of a foreign entity. can be effectively prevented.
Didi said at the time that the media reports about handing over control of the data were untrue.
One of the people said the restrictions to be implemented on Didi could become a potential template for other data-rich Chinese companies looking to go public in the United States.
Beijing’s growing sensitivity about the collection and use of onshore data comes as the top legislative body on Friday passed a new law designed to protect online user data privacy. It will implement the policy starting November 1.
In September, China is also set to implement its data protection law, which requires companies processing “critical data” to conduct risk assessments and submit reports to authorities.
The government has seen user data as a key to the country’s financial and social stability in recent years and has urged tech giants including Ant Group, Tencent and JD.com to share consumer credit data to prevent excess lending and fraud. Has pushed, Reuters reported in January.
Ant is also in the process of shutting down its consumer-credit data operations as part of a business reform to revive its public share sale.
.