Shanghai's Two Cross-Border Data Service Centers See Demand Grow as Firms Hasten Overseas Expansion

Demand for compliance services at Shanghai's two cross-border data service centers in Lingang Special Area and the Hongqiao International Central Business District has increased alongside the acceleration of domestic companies expanding overseas.

The center in Lingang, a key testing ground for economic and trade policies within the Shanghai Free Trade Zone, has handled 330 consultation requests and completed data export compliance filings for 32 firms across 34 scenarios, covering the auto, biopharmaceuticals, mutual funds, and other areas since it was set up two years ago, Xu Xuexuan, a worker at the center, told Yicai during a visit.

The number of biopharma inquiries has jumped in recent years, driven by the accelerating global push of Chinese innovative drugs and increasing scrutiny from the European Union and US regulators over products' domestic data compliance, the worker noted.

The Lingang center has implemented two flagship use cases. The first involves carbon data cross-border services, in which compliance assessments allow companies to provide green manufacturing data to overseas buyers, meeting market access requirements in Europe and North America, while the second covers pharmacovigilance, helping an Italian multinational pharmaceutical firm manage domestic patient adverse drug reaction data under a compliant framework.

Auto and electrical machinery companies make up over 60 percent of clients requiring cross-border data compliance at CarbonNewture, the carbon data service provider for the first use case, followed by those from the photovoltaic and light industries, including furniture, televisions, gloves, and textiles firms, said Chief Executive Huang Yanxiang. Green manufacturing data from these sectors can gain regulatory recognition abroad once certified, enabling market access and enhancing products' green premium and competitiveness, Huang noted.

The Hongqiao business district has established a standardized data cross-border channel for companies, covering data export security assessments, standard contractual clause filings, certification consulting for cross-border personal information transfers, and low-latency, stable cross-border connectivity, Zhu Yinghua, director of the district's Promotion and Public Services Center, said to Yicai.

For example, a foreign auto research and development firm in the district must synchronize research data with its German headquarters every day, while Chinese electric vehicle makers, including Li Auto, Nio, and BYD, all having bases in Hongqiao, are progressively building out compliant cross-border practices for their connected car data as they expand overseas, Zhu pointed out.

Companies should accurately classify data, use scenario-based guidance to complete compliance filings, strengthen security protections such as data desensitization and encrypted transmission, and closely align strategies with policy developments to achieve security and efficiency in cross-border data management, said Wu Haifei, chief engineer at Shanghai Intelligent Connected Vehicle Technology Center, a third-party service provider for multiple centers, including the two in Lingang and Hongqiao.

The Lingang and Hongqiao centers have transformed companies' compliance journey from one of scattered self-certification to a trusted, one-stop endorsement model, significantly lowering compliance costs, said Fang Shishi, director of the Shanghai Academy of Social Sciences' Internet Governance Research Center. The rollout of a mutual recognition list for cross-border data compliance and a green channel for overseas legal remedies should be sped up to further stabilize companies' global operations, she noted.