E-commerce is a massive topic in China nowadays. This sector has relentlessly developed year after year. China surpassed the US market in 2015 to become the world's largest e-commerce market, with the overall market value totaled at 20 trillion Yuan or equivalent to 3 trillion U.S. dollars. As a result, on December 2016 the Government of the People´s Republic of China finally published the draft of the country´s first e-commerce law aiming to further regulate and administrate the various e-commerce activities.
The scope of application of this law would rely on two main premises for its application. Thus, if finally approved, it would apply to e-commerce activities which take place in China and/or activities involving the participation of e-commerce operators or customers who are within China.
As such, a foreign e-commerce website that targets Chinese customers or a foreign e-commerce platform that allows Chinese vendors to trade on it will both fall into the regulatory regime of the draft and thus will be subject to the applicable requirements.
The draft differentiates “3rd party e-commerce platform operators” (e.g. Taobao) from “other e-commerce operators”, which include vendors selling on Taobao or JD or companies operating their own websites to sell their own goods.
The draft imposes certain obligations in the development of e-commerce. Accordingly, a platform operator shall have to examine and supervise the operational activities of other e-commerce operators residing on its platform; formulate and publish fair and clear rules for transactions conducted through its platform; take necessary measures to provide stable and secure platform services, and keep operation records properly; and establish credit evaluation mechanisms, emergency response mechanisms, mechanisms for a vendor to terminate its trading activities through the platform, and other necessary mechanisms.
This new law also aims to regulate the main aspects involved in usual e-commerce operations such as (i) electronic contracts defining its main requirements, (ii) rights and obligations concerning electronic payments and (iii) main responsibilities and liabilities regarding express delivery services.
Regarding the protection of customer interests, the draft emphasizes the importance of personal data protection and protection of intellectual property rights.
In regards to data protection practices, this law specifies the requirements pursuant to companies who will be allowed to use the personal data included or generated in e-commerce projects. It also sets out requirements concerning the authenticity of information, quality control of goods and services, use of standard contracts, and security deposits for customer protection.
For the purpose of protecting intellectual property rights, the draft provides requirements and procedures for dealing with intellectual property infringement complaints. Also, this new law lists the prohibited activities that constitute unfair competition or manipulation of credit evaluation.
The draft is now available for public comments until 26 January 2017. Comments from both domestic and foreign organizations are welcomed and will be taken into account for the final version of this new Chinese e-commerce law which is expected to be enacted soon.