China’s Information Safety Regulation Push Involves the Sensible Automobile Market; Automobile Keys, Domestically Generated Data Should Be Saved In-Nation
A new expansion of China’s data protection regulations will affect the country’s smart car market. Existing legislation requires citizens’ personal data to remain on servers within the country’s borders, but the CCP has clarified the conditions that require the same for the digital keys for smart vehicles.
All locally generated vehicle data must also remain in China, with exports to other countries requiring government approval. Over-the-air software updates for smart cars must also be submitted to the Ministry of Industry and Information Technology prior to delivery.
Chinese smart cars are subject to additional regulations after spying on concerns
The move came when the Chinese government launched a comprehensive regulatory campaign against technology companies in the name of data protection. However, smart cars underwent special testing in the country earlier this year after concerns about cameras in most models resulted in bans on use at military bases and certain types of government property.
Tesla is currently the only fully foreign-owned automaker with a presence in China, but its electric cars are the best-selling in the country and have created frantic competition from domestic companies like Baidu and Xiaomi. The Chinese government had already requested that Tesla store all data it collects from the country’s drivers locally after it banned its cars from military bases in April. Tesla agreed to the application and plans to set up data centers in the country.
The new regulations also require smart car manufacturers to implement a self-check system for data protection and safety reasons that automatically reports potential problems, and those with assisted or autonomous driving functions must be clear about the possible boundaries and responsibilities between the driver and the control system indicate . The new regulations also encourage use of the country’s BeiDou satellite navigation system, the third generation of which was completed last year.
The update of the data protection declaration did not contain any specific contractual penalties. The legislative package under which this generally falls, the Data Protection Act, is due to come into force in September. The penalties allowed under this new law include fines of up to the equivalent of $ 1.5 million per case and business license revocation.
Data protection efforts are focused on foreign access to Chinese customer information
Numerous other foreign automakers sell vehicles in China, but have no manufacturing or other operations there. Some of them, including Ford and BMW, have already pledged to set up local data centers in the country to serve Chinese smart car customers. Others, notably GM and Toyota, have yet to announce their plans for dealing with the country’s new privacy requirements.
While the Chinese government allows these categories of protected user data on a case-by-case basis, it is very likely that smart car manufacturers will have to decrypt all relevant data and allow the government to view it. Automakers are generally not well positioned to deal with the Chinese government’s terms but are looking for the best way to adapt as China is set to become the world’s leading market for smart cars by 2025. That interest is also being driven by smart cars in the U.S. it’s something of a sales flop, with Tesla currently being the only manufacturer doing really well in the electric vehicle space. In 2020, around 231,000 electric cars were sold in the country, compared to an estimated 28 million internet-connected smart cars expected to be on the roads of China in 2025.
The Chinese government’s crusade against tech companies has so far been mostly confined to its domestic companies, with an emphasis on preventing social media platforms from accumulating too much power and preventing some from going public in western countries. The latter was a major reason for halting data transfers out of the country, with the government citing concerns about national security and the possible use of personal data for espionage purposes.
However, even in its most recent flash of technical regulation, the government has maintained at least a semblance of public welfare concerns, particularly around privacy issues. It also has a keen interest in scenarios that are potentially anti-competitive. In early August, the State Administration for Market Regulation (SAMR) launched an investigation into the chipmakers that smart cars rely on on suspicion that the manufacturers were driving up prices. The problem stems from a chip shortage in December that caused some smart automakers and distributors to stockpile whenever they are available. Although China is a center of technology production, 90% of the special sophisticated chips needed for smart cars are imported into the country.