16 December 2018

US, China and Europe have different data laws — that could be a big headache for companies in 2019

Yen Nee Lee

Governments in the U.S., Europe and China handle and regulate data very differently — that's a major challenge that businesses have to navigate in 2019, according to consultancy Control Risks.

China sees data as something to be controlled, Europe prioritizes privacy, while the U.S. takes a more liberal stance toward data, said Richard Fenning, CEO of Control Risks.

That means businesses would have a harder time collecting, storing and transferring data across those three major economies, according to the consultancy.

Governments in the U.S., Europe and China handle and regulate data very differently — that's a major challenge that businesses have to navigate in 2019, according to consultancy Control Risks.


In China, data is seen as an economic — and potentially political — advantage that has to be guarded and contained within the country, explained Richard Fenning, the chief executive of Control Risks. In Europe, privacy is of utmost importance and must be protected, which resulted in the implementation of a new law called the General Data Protection Regulation or GDPR, he added.

The U.S., meanwhile, has traditionally seen data as something to be commercialized but that approach has come into question after the data breach fallout from the Facebook and Cambridge Analytica scandal, said the CEO.

"So you have these ... data trading blocks: GDPR in Europe, China pursuing its own very ambitious, long-range technology kind of economic strategy, and the U.S. adjusting to the fact that what it regarded as a completely open playing field for the U.S. tech giants is suddenly looking a lot smaller," Fenning told CNBC's "Squawk Box"on Tuesday.

Such different approaches mean that businesses would have a harder time collecting, storing and transferring data within and between those three major economies, Control Risks said in a report outlining the top challenges that firms would likely encounter next year.

Complicating the global backdrop is a rise in cyber security threats, which businesses must handle while navigating the different regulatory environment in the three major economies, the consultancy added.

Trade risk

In addition to inconsistent data regulation globally, another major risk that companies face going into 2019 is a worsening conflict between the U.S. and China, the consultancy said.

For now, the two countries have reached an agreement to hold back additional tariffs until March 1. Control Risks predicts a hardening of stance between the two in the coming year as the U.S. seeks to contain China's rise. For businesses, that means a new global order which they have to get used to, according to the report.

"There are wider forces at work in the United States who want to see a fundamental realignment of the trade balance between the two countries. And it's not just about steel and aluminum and agricultural goods, it's now about the whole future of technology and who's going to be the economic vanguard of a whole new generation of technology-driven economy," said Fenning.

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