China has implemented its first ever comprehensive E-Commerce Law, or ECL. The law applies to any business that sells goods via e-commerce platforms, such as Alibaba or JD.com as well as via own company web shops in China. The law sets clear rules for protection of consumer and privacy (data protection) rights, as well as IP and delivery liability. Companies that don’t abide by the new law, risk facing serious penalties.
“To great extent, it is actually a reflection of existing practice. But there are some important new regulations that any company that is involved in e-commerce in China should comply with”, says Li Jiao, Counsel at Buren, Legal, Tax, Notary, an internationally oriented corporate law firm with offices in Amsterdam, Beijing, The Hague, Luxembourg and Shanghai, to Club China. What are the articles in the ECL that are relevant for foreign companies operating in the e-commerce sector of China?
Local entity – All e-commerce business operators shall complete market entity registration formalities pursuant to the law. This means the possession of a Chinese business license is required to qualify as an e-commerce business operator in China.
Fapiao (official tax invoice) – Anyone involved in e-commerce in China needs to issue proof of purchase of goods or services such as hard copy or electronic fapiao (the well-known Chinese official tax invoice) and file tax re-turns.
Fair business – e-commerce operators shall disclose information about goods or services fully, truthfully, accurately and promptly, and protect the consumers’ right to know and their right to choose. This article intends to stop sellers from using any false or misleading business promotion, including false transactions, fabricating user reviews etc. Also, any operator that provides search results for goods or services based on consumers’ preference or consumption habit should also provide consumers with options that are not targeted at their personal characteristics.
Intellectual Property – The ECL contains clear notice-and-take-down procedures. An IP right holder shall have the right to request the e-commerce platform operator to adopt measures such as deleting, shielding or removing hyperlinks, terminating transactions and services etc. Such a notice shall include the preliminary evidence for the infringement. As required by law, the platform operators, upon receiving the aforesaid notice form the IP right holder should take “necessary measures” and forward the notice to the in-platform operators. The new law specifies the next steps that both parties can (or should) take to resolve the matter.
Deliveries – E-commerce business operators shall deliver goods or services to the consumers in a manner and within the deadline as committed to the consumers or agreed with the consumers. The risks and liability for transportation of goods shall be borne by the e-commerce business operators unless a consumer selects another logistics service provider.
Data protection rules – The ECL handles personal information protection. E-commerce business operators shall state clearly the method and procedures for inquiry, correction and deletion of user information as well as for the de-registration of user accounts to which no unreasonable conditions should be imposed. Upon the request of the relevant competent authorities based on the laws or administrative regulations, the e-commerce business operators should provide the relevant e-commerce data information.