Foreign companies selling their products online in China will soon not only have to deal with the new regulations on cybersecurity but also comply with the upcoming law on e-commerce. The Chinese government released the second draft for public comments in November 2017. So far it is not known when the law will come into effect.
This will be the first comprehensive law on e-commerce in China. Article 10 gives a definition of the term e-commerce operator, which includes operators of own website with an online shop, e-commerce platform operators and shop owners on e-commerce platforms. The law stipulates respective duties for each of these groups. E-commerce platform operators for example have to clearly flag advertisements. More importantly, they have to block infringing offers and the respective online shop operators from their platform. Furthermore, companies will be made liable for false information about products, sales or fake customer reviews.
For foreign companies it is particularly important – and frustrating – that the new law supports the now effective regulations on foreign online trade: no foreign company is allowed to open an online shop in China. Selling goods online is only allowed on Chinese e-commerce platforms, unless you have a Chinese partner company or a subsidiary in China.
We expect that the final version of the law will defer from the now available second draft. What can be said by now is that relevant changes in take-down procedures and liability for e-commerce operators will take place. Western companies should keep a close eye on further developments.