Following the release of the 12th Five Year Plan by the PRC government in March 2011, on 27 March 2012, the Ministry of Industry and Information Technology released its detailed 12th Five Year Plan on, amongst other key areas, e-commerce.

The PRC government's target is to grow e-commerce sales in China to RMB 18 trillion by 2015.  If this target is achieved, then China will become the largest single e-commerce market in the world, ahead of Europe and the US.  One of the key policies mentioned in the plan is to strengthen e-commerce laws and to create industry standards and practices for e-commerce operations.

New laws to address loopholes in untapped areas

The plan identifies three areas for which new laws must be introduced: online sales promotion, electronic contracting and payment settlement and collection.

It should be noted that although there has been in place an electronic signature law since 2005, the law currently has limited impact on the promotion of the use of e-commerce in the PRC due to the lack of detailed implementation rules.

Strengthen the existing laws relating to e-commerce

According to the plan, e-commerce service providers are expected to comply with and perform their statutory rights and obligations.  The plan also calls for an enhanced mechanism for the identity of parties to online transaction to be identified.

The plan has identified the following as areas in which the regulatory standards shall be enhanced:

  • disclosure of e-commerce information
  • credit rating service
  • online transaction
  • electronic payment
  • logistics and deliveries
  • after-sale service
  • dispute resolution

To this end, relevant PRC authorities have already issued a number of guiding opinions and practice standards for e-commerce, including:

2012

  • Opinion on strengthening the regulation of online group buy activities

2011

  • Service specifications for third party e-commerce platform operations
  • Opinion on developing the e-commerce credit rating system
  • Measures on regulating malpractices adopted by internet information/content providers

It is likely that more regulations relating to e-commerce will be promulgated in the next few years.

Better enforcement of e-commerce legislations

The plan also encourages PRC authorities to step up their effort to stamp out commercial fraud, intellectual property rights infringement, false advertising, anti-competitive behaviour committed online and illegal use of personal data.

In terms of the regulation of the use of personal data, although China currently does not have a general data protection code,  there are data protection provisions in the recently released regulations on regulating  malpractices adopted by internet information/content providers as explained in one of our previous e-bulletin articles (http://www.herbertsmith.com/NR/rdonlyres/A0C60ADB-2901-48AC-B1A5-285BBB950B33/25125/0305Newmeasurestoregulatemalpracticesadopted.htm).  The Standardization Administration of the PRC is also in the process of finalising a guide on personal information protection, as an IT standard.  The guide is expected to be promulgated later this year.

Conclusion

The PRC e-commerce market remains attractive for foreign service providers and investors alike.  Although the passing of additional regulations may arguably be seen as adding to the burden of service providers, these regulations are also likely to clarify the legal positions and requirements of operating in the e-commerce sector in the PRC thus providing a more predictable legal environment for the sector.