19 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 WWW.LEGALBUSINESSONLINE.COM/CHINA compliance assessments conducted by professionals can enhance the safety of data-related commercial activities and serve as a ‘safety valve’ especially in the current environment where there is a lack of comprehensive regulatory documents.” “Third, judging by the regulatory trends of data trading, in the foreseeable future, to improve the credibility and transparency of data trading, the government is sure to step up regulatory efforts on data security and privacy protection, and gradually establish a compliance framework for data asset trading.” Jiang also agrees that “if a firm has accumulated rich experience in data security, data compliance and personal information protection and compliance in the past, such experience will certainly be helpful for enterprise data asset services.” However, he also cautions that “how the data market is developing at the moment has added new dimensions to the understanding of business models. In particular, the serious nature of accounting standards has further raised the bar of compliance, which requires lawyers to continuously enhance their knowledge and services.” Wang shares with ALB that datarelated services are all under the “data compliance” practice group in Shihui. As digital assetization creates more room for imagination to this practice group, he has three suggestions for the future development of law firms’ data services. First, a firm should diversify its data services as much as possible, and avoid focusing solely on any specific area such as IPO data compliance or data export. Second, particular emphasis shall be placed on the “principle of top clients” in data services. Serving top industry clients not only reinforces the market influence of a firm, but also enables the firm to more quickly standardize services and improve input-output ratio in the service process. Finally, the data practice group must also strive for internal balance. “We need stable, high profit margin business to support projects that are more cutting-edge and time-consuming and that do not generate returns in the short term. they also face new challenges in providing services. One of the challenges is that the rules for data ownership and trading are not yet robust enough. Although the 20 Articles on Data has to some extent sidestepped the issue of data ownership, the lack of clarity on this core issue still poses practical challenges to legal services. Dora You admits: “Clear ownership of data is necessary to protect the rights of data rights holders and better stimulate the vitality of data trading. As no clear-cut solution has been found yet, in practice, lawyers need to clarify relevant matters by agreement in contracts to lower the possibility of disputes.” Jiang has similar observations. “The 20 Articles on Data is only a policy document which is difficult to rely on as legal basis by lawyers. Although the design of separation of data ownership, right of data processing and use and right of data operation is significant in the sense of creating a new way for confirming data rights, what it actually means and how to apply it are not clear from a legal perspective.” “In addition, there are practical difficulties in the provisions and understanding of anonymization and de identification of personal data. So lawyers also find it hard to provide definitive legal analysis and opinions.” Dora You also points out that “there are still many gaps in the laws and regulations on data trading, and matters such as the scope of data trading, valuation and pricing standards, data quality and data responsibility are not clearly regulated. Data lawyers have to base their judgment of many red line issues on their experience in the field of data compliance.” The second challenge lies in how to apply existing rules to new situations. Zou gives the example of public data. “For example, are the transaction rules on State-owned assets applicable to transactions of public data? To whom should the revenue from public data transactions be allocated? These are all questions that worth further study. We have seen that some places have established uniform public data trading centres, which is a very valuable practice.” Considering that data assetization often involves multiple departments, Wang thinks that the third major challenge of such services lies in the requirement for diversified capabilities of a lawyer’s team. “Lawyers need to have conversations with all parties, and if they don’t understand accounting standards or IT knowledge, communication can be difficult. Therefore, for such projects, companies prefer legal teams that understand technology, internal data lifecycle and data governance, and even internal business situations.” NEW BLUE OCEAN After the implementation of the three key pieces of data legislation in China in 2021, many firms have gained market leadership in the field of data compliance over the past three years. Can such advantages be effectively translated to the field of data assetization in the next step? The data lawyers interviewed believe so. According to Zuo, lawyers mostly enter the field of data through “compliance.” They provide clients with services such as compliance system building, compliance review and data rights confirmation in various stages such as data collection, processing, flow and balance sheet recording, which are presented in forms such as due diligence reports, compliance gap analysis reports, compliance system planning, legal opinions, etc. “We believe compliance is the inevitable path for data assetization, and data compliance services are inevitably the foundation of data asset-related services. The development of data assets also incentivizes clients to raise their data compliance level. The two are complementary. The unwavering hard work of our firm and the positive achievements we have made in the field of data compliance will undoubtedly help us continue to develop rapidly in the field of data asset services,” says Zuo. Dora You also thinks that the complementarity between data compliance and data assetization is determined by many objective factors. “First, data compliance runs through the entire process of data trading. Second, having data DATA COMPLIANCE
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