China's revised National Defense Mobilization Law took effect on 1 October, creating a framework that affects corporate activities, including data management, supply chains and legal compliance, on the grounds of national sovereignty and security. To maintain business continuity, Japanese companies are required to prepare for dispersion in emergencies and strengthen the management of their data and assets.
China's revised National Defense Mobilization Law is intended to address threats to national sovereignty and security and enable a rapid transition from peacetime to wartime. It is expected to apply broadly rather than target any particular country or company.
The first risk involves data and technology management. It will be important to determine how customer information, manufacturing data, AI, software and other assets should be separated and managed between Japanese headquarters and local operations.
The second risk involves the impact on supply chains. Companies may be required to stockpile and use strategic materials, conduct research and development and production of military goods, and provide repair and maintenance services. Attention must also be paid to the possibility that local facilities may be used during a national defense mobilization.
The third is the risk arising from gaps between multiple legal systems. While confirming consistency with export controls and sanctions in Japan and the United States, companies should also recognize that refusing to comply could affect the continuity of their domestic operations. The fourth is the risk to business continuity involving local personnel and assets, including the possibility that civilian resources subject to mobilization and reserve personnel may be requisitioned.
Going forward, companies will be required to identify risks across multiple areas, including national security, personnel, assets, laws and regulations, and supply chains, while preserving business opportunities, and to establish business continuity plans.