Jurisdiction - China
Reports and Analysis
China – Seeking To Update Its Legislation To Address Burgeoning E-Commerce Market.

5 December, 2013

 
 

1. Introduction


With increasing internet penetration throughout the country, the e-commerce industry, like other industries in China, is growing at a swift pace. This was recently demonstrated by the online shopping frenzy for Singles Day (光棍节) which is China’s ‘Anti-Valentine’s Day’ and takes place on November 11 every year, with RMB 35.01 billion transacted over Alipay alone via Taobao Marketplace and Tmall. However the relevant legislation in China has not kept pace with the new issues thrown up by this astonishing growth. As a result, the Chinese government has, in the past year, released laws, regulations and guidelines focusing on e-commerce consumer protection and unlawful disclosures of personal data1, and is trying to update previous laws to meet the new challenges of e-commerce with Chinese characteristics.


Recently, China’s State Administration of Industry and Commerce (“SAIC“) issued a draft of the new Online Commodity Trading and Related Services Administrative Procedures (网络商品交易及有关服务管理办法) on 11 September 2013 (the “Draft Online Trading Procedures“), with the objective of revising and clarifying the Online Commodities Trading and Related Services Tentative Administrative Procedures (网络商品交易及有关服务行为管 理暂行办法) issued by it on 31 May 2010 (the “Tentative Online Trading Procedures”). The aim of the Tentative Online Trading Procedures was to regulate online commodity trading conduct and to protect consumers and business operators engaging in online trading.


In addition, China’s Ministry of Commerce (“MOFCOM”) also released a draft of the Online Retailing Conducted on Third-Party Platforms Transaction Rules Administrative Procedures (网络零售第三方平台交易规则管理办法) on 26 September 2013 (the “Draft Transaction Rules Procedures”), which aims to regulate transaction rules stipulated by third-party service platforms (such as Taobao, Yihaodian and so forth). The above-mentioned drafts represent a further attempt to regulate the booming e-commerce industry, while providing a more secure environment for e-commerce. The very fact that these drafts have been issued suggests that that there are still a number of unresolved issues relating to e-commerce in China that the current legislative framework is ill-equipped to address.

 

1. Introduction

 

2. Aims of the Tentative Online Trading Procedures (Part 1)

 

3. Aims of the Tentative Online Trading Procedures (Part 2)

 

4. Online Retailing Conducted on Third-Party Platforms, Concluding Thoughts

 

End Notes:


1 On 25 October 2013, the Standing Committee of the National People’s Congress issued an amendment to the 1993 Consumer Rights and Interests Law (中华人民共和国消费者权益保护法)(“Consumer Protection Law”), with almost half of the clauses in the current law being amended to cover ecommerce. This is the first attempt at amending the 20 year-old Consumer Protection Law. If is notable that Article 10 of the Draft Online Trading Procedures imposes a specific obligation on online product vendors to comply with the Consumer Protection Law, the PRC Product Quality Law and other applicable laws, regulations and rules, and to not prejudice the rights and interests of consumers, thereby providing express linkage between itself and consumer protection legislation. The Ministry of Industry and Information Technology of the PRC issued two rules which became effective in September 2013, namely, (i) the Protection of Personal Data of Telecommunications and Internet Users Provisions (电信和互联网用户个人信息保护规定) which were formulated in accordance with the Standing Committee of the National People’s Congress’ Decision on Strengthening Network Information Protection (全国人民代表大会常务委员会关于加强网络信息保护的决定) on 28 December 2012; and (ii) the Registration of the True Identity Information of Telephone Users Provisions (电话用户真实身份信息登记规定) (together, the “Provisions”). These Provisions outline the standards for the collection and use of personal information, establish specific security protection requirements for personal data collected, and impose financial penalties for violation of the Provisions.

 

Hogan Lovells

 

For further information, please contact:

 

Roy Zou, Partner, Hogan Lovells
[email protected]


Sherry Gong, Hogan Lovells
[email protected]


Stephanie Tsui, Hogan Lovells
[email protected]


Andrew McGinty, Partner, Hogan Lovells
[email protected]

 

Hogan Lovells TMT Practice Profile in China

 
 

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