Starting Nov 1, the digital landscape in China changed. The country’s Personal Information Protection Law (PIPL) has elevated the humble data protection officer to an in-demand employee with a salary increase to reflect the change in status.
The legislation is similar to — but not the same as — Europe’s General Data Protection Regulation (GDPR), as it defines the limits on what companies can do with consumer data.
Chinese websites must now obtain explicit consent from internet users before collecting their personal information. Every business that collects any personal data information must comply.
Like the GDPR, this law is extraterritorial, as it applies to companies outside of China who collect any data from Chinese consumers. PIPL also applies to data processing outside of the People’s Republic of China, where it concerns the processing of personal data of any Chinese resident for the purposes of providing goods, services or even analysing or evaluating their behaviour.
That mouthful is enough to choke any customer-facing business operating in China. Consider that special offer you received from BreadTalk because they have access to your contact details from a previous store visit or promotion. BreadTalk in Beijing’s Oriental Plaza does the same, but now it can no longer send its customers these follow-up promotions.
There are no significant limits of what data you can collect as long as it is consistent with the product or service being provided. For example, requiring a customer to provide health details when purchasing a drone online is clearly irrelevant to the purchase.
Sounds far-fetched? Think of how often you have been asked to provide a mobile number when making a oneoff over-the-counter purchase. The data collection is not relevant for the activity.
How can you use consumer data? This is the key issue that impacts current marketing practices. Informed customer consent is required for followup marketing activities. The customer must give explicit consent to any further contact using their data details.
In the past, it was common to run a competition with the sole aim of collecting business card details, or customer contact details so the data could be used for follow-up marketing. It is the key reason for having a booth at a trade expo.
That method is no longer permitted under PIPL because informed customer consent is required for follow-up marketing activities.
This also has an impact on crossborder commerce. Any service provided to clients in China must comply with PIPL conditions. Data scraping is not permitted. Collecting WeChat contacts as a basis of a marketing campaign is not permitted without explicit consent. This undermines the marketing model most frequently used by foreign companies at trade expos in China.
From Nov 1, these marketing and client acquisition techniques will need adjusting. Companies outside of China targeting Chinese customers must develop compliant processes. The penalties are draconian, with personal fines of up to US$156,000 ($210,452) or prison for data protection officers who fail to do their jobs.
At the very least, companies must incorporate specific, separate consents upon customer intake. This can be done via separate pop-up windows or one interface with multiple checkthe-box buttons.
Technical outlook for the Shanghai market
The Shanghai Index has crashed below the upper edge of the long-term trading band value near 3,580 and is sliding down trendline C, using it as a support feature. This continued retreat shows the downtrend defined by trend line C has not ended.
The index created a temporary support level near 3,520. This support was established by the low points created in September and October. This weak temporary support level also acted as a support feature in June and July.
It is not a strong support feature so rebounds were treated as temporary rather than as the beginning of a new uptrend. The further fall below temporary support confirms the importance of trend line C as a support feature and the importance of historical support near 3,450.
The bears are in control. The fall below the temporary support near 3,520 is using the value of the downtrend line C as a new support feature. This line is sloping down, so the value of support gets progressively lower as each day passes. Using this sloping support feature the index could reach the next major historical support level near 3,450 as soon as the next 10 days. This date is calculated by noting the point at which trend line C crosses the horizontal support level at 3,450. In this situation the 3,450 level would act as a strong support feature and stop the fall in the market.
There is a low probability that the market rebound from the temporary support level near 3520 will develop into a new strong uptrend rally. However, the 3,520 level may develop into a strong support feature and confine the index activity to the narrow trading range between 3,520 and 3,580. The index also traded broadly in this range in June to July.
Caution is required because this previous trading range suddenly collapsed on July 26 with a rapid fall. A repeat of this behaviour is the danger in the current index development.
The index has now developed a confirmed downtrend. A new trend is signalled because the long-term group of moving averages compress and change direction. This behaviour shows that investors have changed their minds and are joining the new trend development.
The short-term Guppy Multiple Moving Average (GMMA) is widely separated showing a strong trend. The short-term GMMA is completely below the lower edge of the longterm GMMA.
Investors watch for the markets to successfully test support near 3,450 and believe they will consider entering the market as buyers.
Daryl Guppy is an international financial technical analysis expert and special consultant to Axicorp. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a national board member of the Australia China Business Council. The writer owns China stock and index ETFs
Photo: Bloomberg
