There is a clear demand for ediscovery in China, with 96 percent of the study’s respondents (law firms and corporates combined) indicating that there is a need or may be a need to process data locally in China.

1. NEW FRONTIERS IN EDISCOVERY | 25
China is the second largest economy in the
world, with a booming manufacturing sector
and the world’s fastest growing consumer
market. Geographically, it is a vast country
and politically, its socialist market economy
makes it a unique place to do business.
On the one hand, there is a thriving open
market that is not widely regulated. On the
other, the state-owned sector dominates
and onerous laws such as the State
Secrets Law can be a burden for privately
owned companies operating in China.
The status of China as a global economic
giant combined with its complicated legal
system has made it one of the newest and
fastest growing ediscovery markets.
What is unique about
ediscovery in China?
Doing business in China comes with its own set of laws,
practices and customs that often clash with foreign legal
obligations. The conflict between China’s guarding of
data and the demand from the United States or other
countries for production make ediscovery in China
a balancing act between accessing the necessary
data for a case and complying with local laws.
Who uses ediscovery technologies?
We recently conducted a market study in China,
interviewing lawyers from eight firms and 19
corporations about how they use ediscovery.
Overall, respondents reported using ediscovery
technologies and services on a wide range
of cases even though there are no local rules
requiring ediscovery to be carried out.
The key findings from the study were:
■■ There is a clear demand for ediscovery in China, with
96 percent of the study’s respondents (law firms and
corporates combined) indicating that there is a need
or may be a need to process data locally in China.
■■ Demand for ediscovery is increasing. Participating
law firms noted that ediscovery is something
their clients have needed to carry out between
four and dozens of times a year in the past two
years, and they see this trend continuing.
■■ Law firms see ediscovery vendors as the party
primarily responsible for collecting, processing
and producing data in review tools for use
by legal teams. Companies see themselves
as playing a greater role in these tasks.
China: Mastering the Ediscovery Process
by Understanding the Culture
Legal System: The Chinese legal system is based
primarily on the Civil Law model.
Applicable Rules:
■■ Law on Guarding State Secrets
■■ Counter-Terrorism Law of the People’s Republic
of China
Ediscovery Practices: There is a clear and
increasing demand for ediscovery technology
in China. Local or mobile solutions are essential
to avoid severe punishments for breaching state
secrecy laws.
At a Glance

2. 26 | KROLL ONTRACK | Report
What data protection and privacy
laws in China impact ediscovery?
China does not have a single data protection
law that specifically addresses the collection,
storage, transmission and processing of personal
information. However, there are certain privacy
laws that practitioners should be aware of before
conducting ediscovery, specifically, laws concerning
the regulation of information which employers are
able to access without consent. As China does not
formally require discovery, it is often a challenge to
explain the purpose of discovery to local employees.
Even if employers can obtain information with consent,
they face another hurdle; China’s State Secrets Law.
This law prohibits the disclosure of information that is
classified as a “state secret,” which is loosely defined
as, “matters that have a vital bearing on state security
and national interests and, as specified by legal
procedure, are entrusted to a limited number of people
for a given period of time.”1
This intentionally vague
definition and broad scope provide the government
with flexibility. A document can be determined to be
a “state secret” at any time, even if its production
was previously allowed. This law has been applied
not only to national defence information but also to
everyday information that most Westerners would
never consider to be a “state secret.” While steps have
been taken by the Chinese government to promote the
appearance of transparency and deter the arbitrary
invocation of the State Secrets law, what information
constitutes a “state secret” is still somewhat unclear.2
When dealing with a Chinese entity in an ediscovery
matter, practitioners also need to understand that
the company’s data itself may actually be a “state
secret.”3
Many businesses, including small businesses,
are owned by the state or by those who possess
political influence, making their data subject to the
State Secrets law.4
What becomes more challenging
for practitioners is that because what constitutes a
“state secret” is so arbitrary, a document may not be
classified as a “state secret” until it has already been
disclosed in litigation and it is too late.5
Practitioners
need to tread with caution and process data locally
since unauthorized possession (even by counsel) or
transmission of these secrets outside of the country can
result in severe punishment. These punishments can
include fines, surveillance and even life imprisonment.6
Are there any other barriers to using
ediscovery technology in China?
Aside from the complexities of Chinese data protection
law, there are cultural, linguistic and geographical
barriers to using ediscovery technology in China.
Data can be lost in translation
Mandarin, the official language of China and the
most prevalent, uses two concurrent written forms;
Traditional and Simplified, both of which are made
up of pictorial characters. These can be problematic
for ediscovery procedures. For the most accurate
results practitioners need an ediscovery tool that
can handle traditional and simplified Chinese
characters and a Chinese speaking ediscovery
consultant to run frequent quality control checks.
Data is kept within the family
China has a strong family-focused culture, and
whilst hiring family members in the West is often
frowned upon as being nepotistic, it is a very
common practice in China. If there is an investigation,
employees will often go out of their way to protect
their boss, which can make data collection difficult.
Practitioners need to act quickly, since it is not
unheard of for employees to delete potentially
incriminating data and computer forensic experts
needs to know where to look as the data may not
be where, or with whom, it is expected to be.
Unchartered territories
China is an enormous country, and many of
the manufacturing and production plants in
China are located in remote locations with no
English speakers or often, no street maps.
When collecting data in these isolated locations, it is
important to be as broad as possible. There is great
potential for data to be deleted or the factory to be
barricaded after departure so forensics teams may only
have one chance to gather everything that is needed.
Ediscovery solutions that allow clients
to process data in country and onsite
at a company’s premises in China are
essential.

3. NEW FRONTIERS IN EDISCOVERY | 27
What are some examples of
best practice in China?
Despite the difficulties, it is possible to
conduct successful ediscovery in China.
Below are suggestions for practitioners in
overcoming the challenges discussed.
■■ Understand secrecy, privacy and data protection
laws before processing data avoid accidentally
violating a regulation. Data production needs
to be closely monitored to avoid inadvertent
disclosure of protected information.
■■ Review responsive documents after
collection and protect privileged data.
■■ By choosing an ediscovery partner with both a
local presence and experience in handling cases
in China, the risks and obstacles associated with
removing data from the country can be mitigated.
■■ In China, much business is conducted over
WeChat (a Chinese language mobile text and
video messaging service), so it is very important
to capture the chat logs and messages.
■■ When conducting ediscovery in China, companies
must review and clear any state secrecy
concerns and redact sensitive information prior
to transporting it out of China. Mobile solutions
can be used as a cost-efficient method of
segregating and filtering out personal information,
sensitive company data or privileged documents
early on to protect unwanted disclosure.
REFRENCES
1
Law on Guarding State Secrets (promulgated by the Standing Comm.
Nat’l People’s Cong., Sept. 5, 1988, rev’d Apr. 29, 2010, effective Oct.
1, 2010), art. 11, 2010 P.R.C. Laws 71.75 (China), http://www.hrichina.
org/sites/default/files/pdfs/law/20101001-statesecretslaw-en.pdf
2
Richard Silk, China’s Secret Anti-Secrecy Act, Wall Street
Journal, (Feb. 3, 2014 9:36 PM), http://blogs.wsj.com/
chinarealtime/2014/02/03/chinas-secret-anti-secrecy-act/
3
See Gary J Gao, Zhong Lun, Shanghai, An Inevitable Conflict: China State
Secrets Review in Cross-Border Litigation, International Bar Association, (May
11, 2016), http://www.ibanet.org/Article/Detail.aspx?ArticleUid=afea32c8-
0aec-480c-a0ac-e50592ff250a (discussing when a document is
potentially a state secret); Richard Wigley, China: China’s State Secrets
Law and Compliance Issues for Foreign Companies, Mondaq.com (Sept.
30, 2014) (discussing the likelihood that a document may be marked
as a state secret) http://www.mondaq.com/x/343186/Trade+Secrets/
Chinas+State+Secrets+Law+and+compliance+issues+for+foreign+companies
4
Mark Jenkins, Et Al, FCPA Compliance in China, Fraud-magaine.com, (March
2014), http://www.fraud-magazine.com/article.aspx?id=4294982094
5
Gary J Gao, Zhong Lun, Shanghai, An Inevitable Conflict: China
State Secrets Review in Cross-Border Litigation, International Bar
Association, (May 11, 2016), http://www.ibanet.org/Article/Detail.
aspx?ArticleUid=afea32c8-0aec-480c-a0ac-e50592ff250a
6
Willis Sautter, China Investigations: Handling State Secrets and Privacy Data,
kwm.com (Sept. 10, 2015), http://www.kwm.com/en/uk/knowledge/insights/
china-investigations-handling-state-secrets-and-privacy-data-20150910