By Fredrick Xie
On 24 February 2026, the State Administration for Market Regulation (SAMR) released a new regulation dedicated to the protection of trade secrets. The rules will take effect on 1 June 2026 and will replace the 1995 provisions that have governed administrative enforcement in this area for three decades.
The new regulation does not create a separate legal regime. Instead, it builds upon China’s Anti-Unfair Competition Law and provides more detailed guidance on how administrative authorities will identify, investigate, and penalize trade secret violations.
The regulation reaffirms the three classic elements of a trade secret under Chinese law:
the information must not be publicly known,
it must have commercial value, and
it must be subject to reasonable confidentiality measures by the rights holder.
What is noteworthy is the level of practical clarification.
“Technical information” is broadly defined to include structures, formulas, processes, data, algorithms, software code and similar materials.
“Business information” includes operational strategies, management data, financial information, client lists, transaction habits, and even customer preferences.
This reflects the digital reality of modern competition, where data and algorithms may be as valuable as manufacturing know-how.
The regulation also clarifies what does not qualify. Information that is common industry knowledge, easily obtainable by observing products already on the market, or publicly disclosed in publications, exhibitions, or reports will not be protected.
However, if publicly available information is reorganized, refined, or improved in a way that creates new value and is not easily accessible, the improved version may still qualify as a trade secret.
Importantly, even failed R&D results or interim technical data can have commercial value if they save time or cost in future development.
This is a significant reminder that not only “successful formulas” deserve protection.
Confidentiality Measures: A Practical Compliance Standard
One of the most business-relevant sections concerns confidentiality measures. The regulation makes clear that protection depends heavily on what the company actually does to keep information secret.
Examples of acceptable measures include confidentiality agreements, internal policies, access controls, visitor management, data classification, encryption, remote-work security tools, and exit procedures for departing employees. The regulation specifically mentions digital environments such as cloud storage, remote collaboration, and system logs, showing a strong awareness of cross-border and online business operations.
For international companies, this reinforces an important point: global compliance programs should be localized. A general corporate policy is helpful, but enforcement authorities in China will expect evidence of practical implementation within the Chinese entity or operations.
What Constitutes Illegal Acquisition or Misuse
The regulation elaborates on improper means of obtaining trade secrets. These include theft, bribery, fraud, coercion, electronic intrusion, unauthorized downloading or transferring of data, and exceeding authorized access rights.
The scope is intentionally broad. For example, accessing a company’s server beyond the scope of permission, installing malicious programs, or transferring confidential files to private email accounts after authorization has expired may all constitute violations.
The rules also address “assistance liability.” A company or individual that knowingly encourages, induces, or assists another party in breaching confidentiality obligations may also be considered an infringer. Even third parties who “should have known” that information was unlawfully obtained may bear responsibility.
This is particularly relevant in recruitment scenarios. Hiring competitors’ employees is lawful in principle, but companies must avoid actively encouraging disclosure of confidential information.
The regulation draws clear boundaries to prevent over-expansion of trade secret claims.
Independent development and reverse engineering from publicly available products remain lawful.
Former employees are allowed to use their general knowledge, skills, and industry experience.
Disclosure to authorities for the purpose of reporting crimes or safeguarding public interests is also protected.
This balance reflects the principle that trade secret protection must coexist with fair competition and employee mobility.
Administrative Complaints and Enforcement
Rights holders who believe their trade secrets have been infringed may file complaints with market supervision authorities. They must provide preliminary evidence showing that the information qualifies as a trade secret and that infringement has likely occurred.
Authorities are empowered to conduct inspections, question relevant parties, review and copy documents, seize relevant materials, and even examine bank accounts under certain conditions. At the same time, they are under strict confidentiality obligations during investigations and may not disclose protected information when publishing administrative penalty decisions.
The regulation also allows parties to engage qualified appraisal institutions or technical experts to assess whether information is publicly known or whether two sets of information are substantially identical. This formalizes a practice already common in complex technical disputes.
However, while granting the MSA certain authority in exercising its power, the new regulations also impose restrictions: inspections of business premises must be reported in writing to the principal leader of the market supervision department and get approval; actions such as sealing or seizing related assets and querying bank accounts require written reporting to the principal leader of the market supervision department at or above the prefecture-level city and approval. This might indicate the MSA will not do any action unless the case is super straightforward.
Administrative penalties follow the Anti-Unfair Competition Law. Authorities may order cessation of infringement, confiscate illegal gains, and impose fines ranging from RMB 100,000 to RMB 1 million. In serious cases, fines may reach up to RMB 5 million.
Serious circumstances may include large economic losses, significant disruption to operations, harm to national or public interests, or repeated violations within two years. Criminal liability remains possible in cases that meet criminal thresholds.
Notably, cessation orders may remain in effect until the information no longer qualifies as a trade secret. In practice, this could mean long-term restrictions on use of misappropriated information.
Extraterritorial Application
The regulation explicitly states that conduct occurring outside China may still be addressed if it disrupts domestic market competition or harms the legitimate rights of businesses operating within China.
For multinational enterprises, this underlines the need for consistent compliance practices across jurisdictions when handling China-related data or technical information.
Why This Matters for Businesses
The new regulation signals a more mature and structured administrative enforcement environment in China. It reflects three broader trends:
Greater emphasis on digital and data-based assets.
Stronger procedural tools for administrative authorities.
Clearer expectations regarding internal compliance systems.
For Chinese companies, the regulation encourages the establishment of formal trade secret management systems, including documentation, classification, and employee training.
For international companies, it highlights the importance of aligning global compliance frameworks with Chinese enforcement realities. Trade secret disputes are no longer limited to traditional manufacturing; they increasingly involve software, algorithms, customer databases, and cross-border collaboration.
Trade secrets remain one of the most flexible and vulnerable forms of intellectual property. The new regulation makes clear that in China, protection will depend not only on the value of the information, but on how seriously companies treat its confidentiality in practice.