Shanghai Roadway Breach and Identity Protection in China

The WSJ reported in March that a company in Beijing had been accused of identity theft at a very large scale.

Commercial information provider Dun & Bradstreet Corp. said it suspended the operations of a China-based business pending an investigation into whether it violated local consumer-privacy laws, and it is also looking into whether employees there violated the U.S. Foreign Corrupt Practices Act.

The business involved, Shanghai Roadway D&B Marketing Services Co., is a direct marketer that helps marketers reach customers through its database.

[…]

Dun & Bradsheet’s disclosure follows a report last week by state-controlled China Central Television that alleged the operation improperly collected private data on 150 million consumers. The report couldn’t be independently confirmed. It was broadcast on Thursday as part of China’s observance of World Consumer-Rights Day.

According to Paul McKenzie, managing partner at law firm Morrison & Foerster’s Beijing office, Chinese law provides its citizen with a broad right to privacy, even though “relative to other countries China has a relatively undeveloped privacy law infrastructure.”

According to Chinese criminal law, it is illegal for employees of government institutions or any private agency in a sector specified by the law with access to personal data, such as health care, education or telecommunications, to sell that data to a third party. Depending on the circumstances, the person buying the data could also be criminally liable.

You might think of this as a great sign. Identity information is being protected in China, which should help the market by reducing fraud.

CNN, however, argues a completely different perspective in a report. They say outsiders are uncomfortable with privacy for the Chinese as it makes investment more risky.

Beijing has clamped down on information once publicly available on listed and state-owned companies, hurting the effort of Western investors and companies to gauge whether to invest in — or short-sell — Chinese firms.

[…]

“This is a handicap to people investing in China right now. It is linked to the political atmosphere of this year’s leadership transition period, which has made China more tense, and the gathering of legitimate business information more sensitive” [said Peter Humphrey, managing director of ChinaWhys, an international business risk advisory firm in Beijing]

The move to limit public information on companies comes after the April arrest of 1,700 suspects in a widespread crackdown on the illegal selling of personal information, the Shanghai Daily reported, including an official in Baoding who sold large amounts registered company information.

Interesting angle on the topic of transparency. The question that CNN does not bring up or try to answer is when and how people should trust their identity information to foreign investors and, more importantly, whether they should be able to decide how their identity information is collected and shared. They skirt around the central issue: at what point does “gathering of legitimate business information” become “improperly collected private data”.

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