First ecommerce regulation introduced in China
On June 1, 2010, the first ecommerce regulation “The interim measures on administration of internet-based goods and service transaction” was introduced, the new regulation will hugely influence Chinese ecommerce market.
According to the new law, individuals will have to provide real name and residential address to apply with local administration of industry and commerce, for approval to deal with goods or service related ecommerce business. For store owner on C2C website, such as taobao.com, they can submit their personal information to taobao.com, then taobao.com will submit the personal information of their sellers to Administration of Industry and Commerce for registration and approval. Independent ecommerce websites run by individuals should register up directly with local Administration of Industry and Commerce.
According to statistics and report released by Alibaba Inc, in 2009, the ecommerce market in China has reached 3.5 trillion RMB, a 48.5% increase than previous year. Among which, the C2C ecommerce market has hit 234 billion RMB, an almost 100% increase than 2008. China urgently need this law to govern their ecommerce transaction, especially B2C and C2C transaction, as in those cases, normally there are no contract signed or evidence left, scam and dispute often happen to an extend to harm the healthy growth of ecommerce market.
Leading ecommerce portal such as alibaba.com(B2B), Taobao.com(C2C) are requested by the law to monitor the transactions, make sure illegal products, services and transactions will not exist on portal websites. Predictably, illegal and grey products and services will be deleted from those websites soon, such as counterfeit brand products.
With more than 30 million websites run by individuals in China, there is huge amount of work for the registration and approval work related with that huge amount of websites. As webmasters complain, many of them might work thousand miles away from their residential address listed on their identity card, it would be extremely difficult for those to go back to the local administration of industry and commerce to register and get for approval. Many of them are thinking to host their websites to overseas server to escape the regulation of this new law.
Another noticeable thing is that the law particularly point out that illegal competition through technique like search engine optimization is prohibited. It will be interesting to see that will be enforced in the legal practice.