Cross-border Data Governance Challenges of Multinational Corporations and Suggestions for Countermeasures

The data of MNCs need to be transferred and flowed between different regions, and due to the differences in regulatory requirements in different countries and regions, the process of cross-border data flow may face double or multiple jurisdictions and regulations, and the motives that cause MNCs to carry out cross-border data governance can be categorized into three types, such as business model, centralized operation and compliance regulation.

In order to reduce management and operation costs or export uniform standard products or services, many multinational companies will adopt a centralized operation model, that is, the headquarters (global multi-center) is responsible for R&D, analysis and other back-end business, and the front-end work such as manufacturing and sales around the world, which inevitably requires the cross-border transfer and centralized processing, storage and utilization of its employees, customers and suppliers’ data around the world. This type of scenario is often found in multinational companies that are global chains.

For example, Uniqlo mentions in its privacy policy that “in order to ensure the consistency, continuity and system security of its global business, and to enhance the quality of service provided by our brand to users, we may provide personal information provided by users to our parent company outside of China and other companies under the Xpress Group outside of China”. Starbucks also mentions that “cross-border transfers of personal information are made when necessary and in compliance with applicable laws and regulations in order to manage the Group’s global business and to safeguard our service standards”.

As countries and regions around the world begin to focus on and regulate cross-border data flows, multinational companies are beginning to face various challenges in conducting global business based on cross-border data flows.

It is generally believed that data governance involves both security and development dimensions, but currently there is no mature model for reference globally. Due to the prominent problems of privacy leakage, personal information abuse and data security, which are harmful to the legitimate rights and interests of citizens and even national security, countries and regions including the EU, China, Brazil and India are led by the government to formulate the top-level design of data governance rules, and enterprises, as the subjects of the aforementioned problems, are often in a passive state of acceptance. In practice, data from production to circulation and utilization are generally accomplished by multiple participants, and data are widely available in terminals, networks, platforms and systems and under the control of multiple parties. The reasonable opinions of enterprises on rules based on data practices should be given sufficient attention, otherwise they will face difficulties in the process of implementation.

As the global economy is gradually shifting to a digital economy, the ability and extent of data utilization will become one of the core competencies of multinational companies and will help shape their competitive advantage in the global market. Therefore, MNCs must take necessary measures to meet the challenges of cross-border data governance, which is an important proposition that MNCs must answer in the era of digital civilization.

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