China's First E-Commerce Law Published

China,E-Commerce,Cosmetic,Law,Regulation

China Electronic Commerce Law was adopted at the fifth meeting of the Standing Committee of the 13th National People's Congress on Aug 31, 2018. It will come into effect on Jan 1, 2019. This law is the first electronic commerce law in China. The whole content includes seven chapters and eighty-nine articles.

Chapter I General Provisions	8 Articles (Article1-8)
Chapter II E-commerce Operator (Section 1 General Rules)	18 Articles (Article 9-26)
Chapter II E-commerce Operator (Section 2 E-Commerce Platform Operator)	20 Articles (Article 27-46)
Chapter III Formulation and Performance of E-Commerce Contracts	11 Articles (Article 47-57)
Chapter IV Settlement of E-Commerce Disputes	6 Articles (Article 58-63)
Chapter V Promotion of E-Commerce	10 Articles (Article 64-73)
Chapter VI Legal Liability	15 Articles (Article 74-88)
Chapter VII Supplemental Provision	1 Articles (Article 89)

This Law applies to e-commerce activities in China. Including the definition of E-commerce, E-commerce Operator, E-Commerce Platform Operator, and Operator within the platform. Where the existing laws and administrative regulations are available for the goods or services sold online as well. This Law shall not apply to internet financial products and services such as online banking, insurance, securities, stocks, funds, lending platforms, payment platforms, financing platforms, using information networks to provide news, audio and video programs, publishing and cultural products etc.

Any natural person, legal person or unincorporated organization can become an e-commerce operator to carry out legal e-commerce activities. An e-commerce operator shall, according to the law, fulfill the registration of market entity to perform the obligation of tax payment and enjoy tax incentives. Nevertheless, as an individual, who sells self-produced agricultural or sideline products, or household handicraft products, or uses its own skills to engage in public convenience services, or sporadic and low-value transactions, no need to make the registration of market entity but to fulfill the tax obligations. Upon the occurrence of the tax obligation for the first time, as required to handle tax registration and report the tax truthfully. It means that in the future, the wechat business and daigou will gradually be eliminated by the market without any price advantage. When an e-commerce operator engages in business activities required to be licensed, the administrative license shall be obtained in terms of the law. It is not allowed to conduct false or misleading commercial promotion to defraud or mislead consumers by fictional transactions, fabricating user reviews or any other means. An e-commerce operator shall send an advertisement to a consumer based on the relevant provisions of the Advertising Law of the People's Republic of China. This Law regulates the marketing modes which frequently involved in the field of electronic commerce (Article 18, 19 and 21), such as directional pushing according to personal interests and consumption habits, tying products or services, and the way of deposit refund. Due to the rapid changes in cross-border policies, the management of cross-border e-commerce mentioned in this Law only refers to the administrative regulations and other relevant provisions of import and export supervision and management.

In order to create a fair online market competition environment, platform operators need to maintain a neutral position to treat products or services sold by settled merchants so as to avoid double standards to infringe the interests of operators within the platform and to mislead consumers, especially when the product competition exists between platform operators and settled merchants. Therefore, e-commerce platform operator should distinguish between the self-operated business and the business carried out by the settled merchant in a significant way. Do not remove the consumers’ comments on the products or services offered within their platform. Search results should be displayed to consumers in a variety of ways, sorting by the price, sales volume or credit etc. For the goods or services that are ranked in the auction, the "advertising" should be marked clearly. E-commerce platform operators are not allowed to provide services for e-commerce operators by centralized trading ways such as centralized bidding and market makers and to conduct standardized contract transactions.

In order to promote e-commerce operators to use public data legally, the state take measures to urge the establishment of public data sharing mechanism. Supporting small and micro enterprises to engage in cross-border e-commerce. They can go through relevant formalities with the national import and export administration department on the basis of electronic documents. The national import and export management department shall promote the construction of comprehensive services and supervision systems for cross-border e-commerce customs declaration, tax payment, inspection and quarantine, optimize the supervision process, promote information sharing, mutual recognition and mutual assistance, and improve cross-border e-commerce services and regulatory efficiency. Pushing the establishment of exchanges and cooperation with cross-border e-commerce between different countries and regions, participating in the formulation of international rules for e-commerce, and promoting international mutual recognition such as electronic signatures and electronic identities.

Legal Liability

Where an e-commerce operator violates below articles, imposing a fine of less than RMB 10,000: 1) Did not show the info or link identifier of business license, administrative license or of not required to handle the registration of market entity in the prominent position on the front page; 2) Did not show the related info of terminating e-commerce business in the prominent position on the front page； 3) Did not explain the way and programs of user info inquire, correction, deletion and logout or set up unreasonable conditions.
The e-commerce platform operators did not take necessary measures to the operators within the platform violating the provisions of the preceding paragraph, a fine between RMB 20,000 and 100,000 shall be imposed.
The e-commerce operators violate the following regulations, a fine between RMB 50,000 and 200,000 shall be imposed. For serious situations, a fine between RMB 200,000 and 500,000 shall be imposed. (Article 18) When providing the search results of commodities or services to the consumers based on the hobby, consumption habit, or any other traits thereof, the e-commerce operator shall provide the consumer with options not targeting his/her identifiable traits and respect and equally protect the lawful rights and interests of consumers. (Article 19) The e-commerce operator typing the commodities or services should remind the consumers in a conspicuous manner and is not allowed to sell as a default option. (Article 21) If an e-commerce operator receives the deposits from consumers as agreed, it shall express the manner and procedure for the refund of the deposits and shall not set unreasonable conditions.
The e-commerce platform operators violate the following regulations, a fine between RMB 20,000 and 100,000 shall be impose. For serious situation, a fine between RMB 100,000 and 500,000 shall be imposed. 1) Failure to perform the verification and registration obligations stipulated in Article 27 of this Law； 2) Failure to notify relevant information to the market supervision and administration department or the tax department in accordance with the provisions of Article 28 of this Law； 3) Failure to take necessary measures for the violation of the law or fail to report to the relevant competent authorities in accordance with the provisions of Article 29 of this Law; 4) Failure to perform the retention obligations for the info of goods, service and transaction stipulated in Article 31 of this Law. 5) The info of platform service agreement, transaction rules or the link identifier of aforesaid information not public in the prominent position on the front page; 6) The revision of transaction rules not shown in the prominent position on the front page for public opinions; The revised contents not public in advance as prescribed time, or preventing the operators from exiting the platform. 7) Failure to distinguish between the self-operated business and the business carried out by the operators within the platform in a significant way; 8) No way for consumers to evaluate the products or services offered in the platform or deletion of consumer comments without authorization.
If the e-commerce platform operator violates the provisions of Article 40 that the products or services ranked in the bidding price are not markedly marked as “advertising”, it will be punished in accordance with Advertising Law of the People’s Republic of China.
The e-commerce platform operators violate the following regulations, a fine between RMB 50,000 and 500,000 shall be imposed. For serious case, a fine between RMB 500,000 and 2000,000 shall be imposed. (Article 35) E-commerce platform operators shall not use service agreements, trading rules and technologies to unreasonably restrict the transaction prices and other transactions with operators, or impose unreasonable conditions and charge unreasonable fees. (Article 38) The e-commerce platform operators knows or should know that the goods or services provided by the operators in the platform do not meet the requirements for protecting the personal and property safety, or that having violations of the legitimate rights and interests of consumers, and if necessary measures are not taken, the platform bears the joint liability with the operators within the platform. (Article 42) If the intellectual property right holder believes that his intellectual property rights have been infringed, he has the right to notify the e-commerce platform operator to take necessary measures such as deleting, blocking, disconnecting, terminating transactions and services. If the e-commerce platform operator fails to take necessary measures in a timely manner, the expanded part of the damage shall be jointly and severally liable to the operators within the platform. (Article 45) The e-commerce platform operator knows or should know that the operators within the platform infringe the intellectual property rights, he shall take necessary measures such as deleting, blocking, disconnecting, terminating the transaction and service. If the necessary measures are not taken, the infringer shall bear joint responsibility.

Reference:

http://www.npc.gov.cn/npc/xinwen/2018-08/31/content_2060172.htm

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