EditorialHong Kong will benefit from cybersecurity law
- Proposed China legislation, which will apply to firms listing in Hong Kong, can only bring greater transparency and more business opportunities
Far from threatening Hong Kong’s goal of becoming the region’s premier data and innovation hub, Beijing’s proposed regulation to screen mainland companies for cybersecurity before their initial public offerings in the city will help enhance its success.
This is because it will provide clarity for bosses and potential investors, and offer extra transparency and security for customers, in addition to protecting such data on national security grounds, a key concern of Beijing.
It’s true that the draft regulation, currently under public consultation by the Cyberspace Administration of China (CAC), will add an additional layer of vetting. But it will help the city play a more effective role in safeguarding data security.
In any case, the draft law has made it clear that the vetting for IPOs in Hong Kong will not be as onerous as for those seeking to list overseas. It may be applied to companies with more than 1 million users.
While the draft consultation is the first time the CAC has said national security reviews would apply to some listings in the city, mainland businesses would have been naive if they had thought listing here would give them a free ride.
The more lenient treatment will provide a great incentive for mainland tech companies with big data to choose Hong Kong for an IPO, rather than overseas, which usually means New York. It will therefore give the city an added comparative edge.