Understanding China’s PIPL: A Strategic Guide for International Businesses

China’s Personal Information Protection Law (PIPL) came into effect on 1 November 2021, marking a significant milestone in the country’s data governance regime. For businesses operating in or with China, the PIPL is more than just another data protection law, it’s a key regulatory framework shaping how personal information must be handled, stored, and transferred across borders.

This article provides a practical overview of PIPL, how it compares to international standards like the GDPR, and what foreign companies must consider to ensure compliance when engaging with the Chinese market.

What is the PIPL?

PIPL is China’s first comprehensive law dedicated to the protection of personal information. It regulates the collection, use, processing, and storage of personal data, with an emphasis on protecting individual rights and national data security. Alongside the Cybersecurity Law and Data Security Law, the PIPL forms a core part of China’s regulatory framework governing digital activity and information flows.

The law applies not only to companies operating in Mainland China but also to foreign organisations that process personal information of individuals within China—for example, through offering goods or services or tracking behaviour.

Key Requirements and Principles

PIPL introduces a rights-based, consent-driven model of data protection. Some of its key requirements include:

  • Lawful basis and informed consent for processing personal data.
  • Data minimisation: Only collect what is necessary for the intended purpose.
  • Cross-border data transfer restrictions: Transfers outside of China are subject to government-approved mechanisms, such as security assessments or certifications.
  • Processor obligations: Clear responsibilities for third parties handling data on behalf of others.
  • Data subject rights: Individuals can request access, correction, deletion, or restriction of their data.
  • Severe penalties: Fines of up to 5% of annual revenue or RMB 50 million (whichever is higher) for serious violations.

PIPL vs. GDPR: What’s Different?

While PIPL shares many similarities with the EU’s General Data Protection Regulation (GDPR)—such as a focus on individual rights and extraterritorial application—there are notable differences:

  • Stronger localisation emphasis: PIPL places greater restrictions on transferring data out of China, especially for critical information infrastructure operators (CIIOs) and large data processors.
  • Security assessments by the Cyberspace Administration of China (CAC) are required before exporting certain data.
  • Criminal liabilities and government enforcement are more direct, with national security considerations often intertwined.

Sector-Specific Considerations

Certain industries face heightened compliance challenges under the PIPL:

  • Technology & Internet Platforms: Subject to strict scrutiny on algorithms, consent mechanisms, and targeted advertising.
  • Healthcare & Biotech: Dealing with sensitive personal information and health data requires extra safeguards and explicit consent.
  • E-commerce & Logistics: Must manage large volumes of user data across jurisdictions while ensuring lawful cross-border transfers.
  • Multinational Corporations: Often need to redesign internal data governance systems to align with both PIPL and global standards.

Cross-Border Data Transfers: A Complex Landscape

Cross-border data transfers remain one of the most complex aspects of PIPL compliance. Companies must ensure:

  • Proper contractual agreements (standard clauses approved by the CAC).
  • Security assessments if certain thresholds are met (e.g., volume of data or handling of sensitive information).
  • User notification and consent, with clear purposes and risk disclosures.

Given the practical implications, many organisations are restructuring data flows, setting up data centres in China, or revisiting international service arrangements.

What Should Companies Do?

International businesses working with the Chinese market should take a proactive approach:

  1. Conduct a PIPL compliance audit of existing data handling processes.
  2. Map data flows, particularly those involving transfers out of China.
  3. Update privacy notices and consent mechanisms to meet PIPL standards.
  4. Develop internal policies and training tailored to Chinese legal requirements.
  5. Engage legal counsel to assess cross-border data strategies and regulatory risks.

How We Can Help

At SLLS, we guide multinational clients through the evolving landscape of China’s data protection laws. Our cross-border legal and technical team offers:

  • Compliance assessments aligned with PIPL and global standards
  • Advice on cross-border data transfers and government reporting
  • Internal governance policies and contractual reviews
  • Risk mitigation strategies for sensitive sectors

We combine legal expertise, regulatory insight, and technological innovation to help businesses navigate China’s regulatory environment with confidence.

Need to align your data strategy with PIPL?
Contact us today to discuss how we can support your compliance and operational goals in China.

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