In the news: Foreign tech companies in data dilemma, CCTV targets foreign carmakers, P&G gets handed record fine

Foreign tech companies asked to hand over software source codes

New bank security rules in China require foreign tech companies to turn over proprietary software source codes and encryption keys that protect sensitive data, use Chinese encryption keys and submit to intense testing. Banks faced a deadline this Sunday to submit plans to officials on how they will convert their internal technology into what China considers secure and controllable systems. As China continues to rely less on foreign technology and promote Chinese businesses, global tech companies can either: a) turn over the information for market access, b) form joint ventures with local firms, c) create compliant products or services specifically for the Chinese market, or d) just leave. An analysis by King & Wood Mallesons explains what banks need to do to comply, which involves formulating a strategy, conducting due diligence on vendors and revising their supplier/service agreements.

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CCTV reprimands foreign automakers

China's state broadcaster accused foreign carmakers of overcharging customers in its Consumer Day TV programme on March 15. Previous targets include Apple, which was forced to apologise in 2013 for its warranty policies, and Japanese camera maker Nikon. This year, CCTV accused service centres affiliated with Nissan, Volkswagen and Mercedes-Benz's China joint ventures of overcharging for what should have been simple repairs. Jaguar Land Rover was separately blamed for poor service related to transmission repairs. Targets of this “controversial” broadcast are mostly multinationals and rarely SOEs (even those that monopolise their respective markets). Multinationals are getting increasingly nervous about this annual broadcast. The past year saw many cases related to, and fines imposed on, the auto industry – perhaps it was only natural this year's programme focused on carmakers.

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Crest toothpaste slapped with record fine

Procter & Gamble was the latest multinational company to receive a fine for what the Chinese regulators said was false advertising. The Shanghai AIC imposed a Rmb6 million (US$958,000) penalty, the largest of its kind in the country to date. It said the Crest brand overstated claims about its toothpaste and digitally altered images used in advertising to make teeth look whiter. Analysts say, however, the penalty won't affect Crest's market share too badly as there was no suggestion the product was harmful. But looking at the commercial itself, Crest's advertisement involved a celebrity boasting her teeth were visibly whiter after only one day of using the toothpaste – a bit of a stretch? Personal care and cosmetics companies that depend largely on commercials should really review their advertising and marketing strategies, as the Advertising Law is being amended and it is said to further enhance consumer protection by rooting out false advertising.

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Environment tax timetable revealed

The Chinese authorities have created a timetable for implementing a system for taxing polluters. It will replace the current administrative penalties that are widely considered ineffective and come into effect once the law behind it is finalised. Under the law, tax will be levied based on emissions of sulphur dioxide, nitrogen oxides, dust and ammoniacal nitrogen as well as chemical oxygen. The law will be submitted to the Standing Committee of the National People's Congress at the end of the year after being publicised to solicit comments. Experts say the tax will be more effective in discouraging pollution and fuel investment in the green industry, as companies will be encouraged to invest in anti-pollution technology. But given the enforcement of collecting pollutant discharge fees has been below expectations, can that of collecting taxes work better? And can all these recent initiatives, including the carbon trading pilot scheme and environment-related court cases, actually all work together to clear the skies once and for all?

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