What is GDPR? Key Points and Compliance Measures Japanese Companies Should Know

Introduction: Overview and Background of GDPR

The GDPR (General Data Protection Regulation) is a comprehensive data protection regulation enacted by the European Union (EU) on May 25, 2018. It was introduced to strengthen individuals’ privacy rights in the digital age and to hold businesses accountable for transparent and responsible handling of personal data.

The rapid advancement of internet technologies and the increase in data collection rendered the previous Data Protection Directive (established in 1995) insufficient. As a result, the EU implemented GDPR to protect personal rights while promoting healthy growth in the digital economy.

Scope and Applicability of GDPR

GDPR does not only apply to companies within the EU. It also applies in the following cases:

• Companies offering goods or services to individuals in the EU: Even if located outside the EU, businesses that target EU residents with their services or products are subject to GDPR.

• Companies monitoring the behavior of individuals in the EU: Businesses that track or analyze the behavior of EU residents—such as through browsing history or geolocation data—are also covered.

• Companies processing personal data on behalf of EU entities: Japanese companies contracted by EU companies to handle personal data must comply with GDPR.

Thus, GDPR applies broadly to non-EU companies, including many in Japan.

Main Provisions and Obligations Under GDPR

GDPR imposes the following obligations on businesses:

1. Lawful and Fair Processing of Personal Data

Companies must process personal data with a clear, lawful purpose and by fair means. The principle of data minimization requires that only necessary data be collected.

2. Respect for Data Subject Rights

GDPR grants individuals (data subjects) the following rights:

• Right of Access: Know how and why their personal data is processed.
• Right to Rectification: Request correction of inaccurate data.
• Right to Erasure (“Right to Be Forgotten”): Request deletion under certain conditions.
• Right to Data Portability: Transfer personal data to another provider.
• Right to Restrict Processing: Limit how their data is used under specific circumstances.
• Right to Object: Oppose certain types of data processing.

3. Appointment of a Data Protection Officer (DPO)

Depending on company size and data handling scope, appointment of a DPO may be mandatory. The DPO oversees compliance and advises on data protection issues.

4. Mandatory Breach Notification

In the event of a data breach (e.g., unauthorized access or data leak), companies must report to supervisory authorities within 72 hours and notify affected individuals if necessary.

5. Adequacy Decisions and Data Transfers

Personal data transfers outside the EU are only allowed if the recipient country has been granted an adequacy decision. Japan received such recognition on January 23, 2019, allowing Japanese companies to receive EU data without additional safeguards.

Why Japanese Companies Must Comply with GDPR

Japanese businesses need to address GDPR for several key reasons:

1. Business Relationships with the EU

Japanese firms with EU subsidiaries or branches process data of local customers and employees, falling under GDPR jurisdiction.

2. Offering Goods or Services to EU Residents

Even companies operating solely in Japan must comply with GDPR if they target EU residents.

3. Receiving Outsourced Work from EU Companies

Companies contracted to process data on behalf of EU entities must implement GDPR-compliant safeguards.

4. Risk of Hefty Penalties

Violations of GDPR can result in fines of up to €20 million or 4% of global annual revenue—whichever is higher.

Practical GDPR Compliance Measures for Japanese Companies

To comply with GDPR, Japanese companies should take the following steps:

1. Understand Current Data Processing

Identify what personal data is collected, how it is processed, and map out data flows.

2. Update Privacy Policies

Develop and publicly disclose a privacy policy that aligns with GDPR requirements.

3. Implement a Consent Mechanism

Ensure that individuals provide clear, informed consent before collecting or processing personal data.

4. Appoint a Data Protection Officer (If Needed)

Assign a DPO to oversee compliance and provide internal guidance on GDPR.

5. Prepare a Breach Response Plan

Establish a robust response protocol to quickly notify authorities and affected individuals in case of data breaches.

Intended Audience and Impact

This article is intended for Japanese business leaders, legal and compliance officers, and IT managers considering international expansion. Understanding GDPR’s scope and obligations can help reduce legal risk and enhance trust in global business operations.

Conclusion

GDPR applies not only within the EU but also to any business handling the personal data of EU residents. For Japanese companies, understanding and complying with GDPR is crucial to maintaining international trust and competitiveness.