New data exchange solves dilemmas for using and managing information

It is a dilemma facing all government regulators around the world: how to improve the use of data to stimulate the economy and build a smart society, while ensuring data security and a fair and transparent system.

Shanghai’s response is embodied by the launch of the new Shanghai Data Exchange and a growing ecosystem, spanning data commerce and transaction innovation, drawn from various industries, regulations and laws.

The new exchange is designed to improve data usage and connect ‘isolated data islands’ to stimulate the construction of the city’s digital hub. More than 20 projects from eight sectors, including finance, utilities and transportation, completed their listing on the first trading day of the stock exchange. Over 100 projects are in preparation for a listing soon.

Shanghai Mayor Gong Zheng unveiled the exchange at the 2021 Global Data Ecosystem Conference.

The conference, held for the first time nationwide, attracted organizations and businesses involved in data transaction, data asset valuation, data security and other industries.

Ecosystem rather than just data exchange

A comprehensive industrial ecosystem in Shanghai, also covering audit, law and IT infrastructure, is the key to the sustainable development of data exchange.

“It requires a whole ecosystem rather than traders and an exchange,” Dou Yifan, associate professor at the School of Management at Fudan University, told the Shanghai Daily in an exclusive interview.

Shanghai has unique advantages because the data exchange has been on trial for several years, with experiences of using data and application scenarios, especially in financial credit and digital marketing, said Dou.

The Fudan University School of Management is one of the leading think tanks to help develop business mechanisms for Shanghai data exchange, and Dou is a key member of the project.

According to a paper by researchers including Dou, internal company data is increasingly valuable, with a booming technological development in AI, when merged for business-to-business analysis and forecasting. However, business-to-business data transactions present a new pricing challenge due to the complex nature of the data, such as asymmetry of quality information, lack of pricing standards, and negligible marginal cost.

Meanwhile, large-scale data transactions and profit from them are quite “difficult”. Unlike commodities, data is virtual goods with privacy restrictions, little quality transparency, and limited price standards, according to the document, which identified 18 factors to influence data trading.

Therefore, the data exchange process should be followed by traders, technology providers, lawyers and various organizations to establish an ecosystem, Dou added.

The research echoed the views of the local industry regulator who cited “five difficulties” in commerce.

They cover rights confirmation, price assessment, trust, entry, regulation and supervision, said officials from the Shanghai Economy and Computerization Commission, the main regulator of the city ​​industry.

Active market response among participants

Despite the challenges of business design and data security, no one can deny the enormous potential of the Shanghai Data Exchange.

On its first trading day, November 25, several organizations became the premier group of traders on the exchange, including industry giants and local tech startups.

The Industrial and Commercial Bank of China and Shanghai Electric Power have reached an agreement between the finance and energy sectors regarding the integration and use of data.

Banks will now be able to easily access data from utilities and mobile operators when deciding to grant loans to businesses, thereby reducing their exposure to risk.

China Telecom’s data services subsidiary has signed an agreement with a government-approved research institute, making it the exchange’s first data trade agreement in the telecommunications industry.

The subsidiary has four types of data: population, network signal, geographic information and network behavior. It uses AI and knowledge graphics to process data and can dig deeper into social and business aspects, such as traffic forecasting and location choice services for commercial buildings.

Shanghai-based Intsig has listed two exchange data service products based on its Qixinbao platform. Qixinbao has a database covering 230 million companies and 100 billion lines of data under 1000 “labels” such as company and industry information, fundraising, shareholders, legal information and credit. It can provide media reporting analysis, risk control, trademark and patent investigations and investment reports based on in-depth data analysis.

The exchange marked a “fundamental shift” in the use of data among business and society. Data has become more valuable assets to stimulate the economy and drive innovation in various industries, said Michael Zhen, president of Intsig.

The data service will also be used in the design of e-commerce, financial technology and ease-of-use interfaces, e-commerce giant JD said.

Located in Pudong New Area, the data exchange will boost the district’s digital transformation and fuel-related industries, with output of over 500 million yuan ($ 78.6 million), local officials said. . In Zhangjiang, more than 300,000 people will work in the data-driven industry by 2025.

In Shanghai, there are more than 3,000 companies with “data” in their name, a third of them founded after 2020. This means great potential for the whole data-driven ecosystem, said Fudan’s Dou, citing industry sources.

Dos and don’ts of data usage

The chairman of the exchange, Zhang Qi, said the organization’s digital data exchange system can guarantee real-time listing and trading and ensure the traceability of every trade.

The Shanghai Data Transactions Expert Committee, consisting of 31 experts in the fields of legal compliance, financial transactions, data industry and data security, has also been established.

The exchange primarily targets users in businesses and organizations. All use and exchange of data will be under strict rules, such as “data to be used but not seen” to protect individual data security and privacy, the experts said.

Data security is gaining more and more national attention as China strengthens data and personal information protection and publishes new laws, such as the Personal Information Protection Law implemented for enter into force since November.

A local law specifically for the use and management of data will come into force next year, covering detailed regulations on how the government treats data collected from residents.

The law will classify public data into three categories depending on whether it can be viewed by third parties. Data on personal information and privacy, trade secrets and classified business information are not accessible, while other types of data will be made available to the public on a conditional or unconditional basis, according to the new law. .


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