NEWSSep 14, 2018

E-commerce Law is Passed and Expected to Reduce Market Chaos

On August 31, China's first comprehensive law in the field of electronic commerce, the Law of the People's Republic of China on Electronic Commerce, was passed at the fifth meeting of the Standing Committee of the Thirteenth National People's Congress and will come into force on January 1, 2019.

China's e-commerce industry developed rapidly in recent years. Last year's report on China's e-commerce development shows that the scale of China's e-commerce continued to expand and the role became increasingly important in 2017. The scale of e-commerce transactions reached 29.16 trillion yuan in the whole year, and the volume of transactions increased by 11.7% year-on-year, which is 2.8 times of that in 2013. E-commerce has become a powerful driving force for the development of the national economy. According to the National Bureau of Statistics, in the first half of 2018, China's e-commerce transactions amounted to 14.91 trillion yuan, showing an increase of 12.3% over the previous year.

However, the rapid development of e-commerce has also brought many problems, such as counterfeiting, commercial fraud, infringement of intellectual property rights and payment disputes. These problems not only affect the order of e-commerce market transactions and integrity but also harm the interests of consumers.

The Law on Electronic Commerce aims to establish a basic legal framework for the development of China's e-commerce industry. The law views the operators of electronic commerce and the operators of e-commerce platforms as the normative subjects and sets forth four major provisions, including electronic commerce contract, dispute resolution, industry promotion and legal liability, making principle stipulations on the obligations, platform liabilities and basic rules and summarizing experience in solving some common disputes in practice.

For the common phenomena of forging favorable comments and deleting negative feedbacks, the Law on Electronic Commerce stipulates that e-Commerce operators shall not conduct fake or misleading commercial propaganda by means of fictitious transactions or fabricated user evaluations, or delete consumers ‘comments on goods sold or services provided on their platforms.

In addition, many people who buy tickets through commercial platforms have found that platforms usually bundled insurance and terminal services. In this regard, the Law on Electronic Commerce stipulates that the tie-in sale of goods or services by e-commerce operators should be brought to the attention of consumers in a significant way and that the tie-in sale of goods or services should not be taken as an option for tacit consent. Moreover, unreasonable fees, unreasonable restrictions, or additional unreasonable conditions on transactions, transaction prices or transactions with other operators should be prohibited.

In view of the legitimate rights, interests and information security of consumers, the Law on Electronic Commerce also made relevant provisions. The competent authorities concerned shall take necessary measures to protect the safety of the data and information provided by the operators of electronic commerce, and strictly keep confidential personal information, privacy and trade secrets, and shall not disclose, sell or illegally provide them to others. When an e-commerce operator provides a search result of commodity or service to a consumer according to his or her interests, hobbies and habits, operators should provide the consumer with options that are not specific to his or her personal characteristics and respect and equal protection of the legitimate rights and interests of the consumer.

As a basic law in the field of e-commerce in China, the adoption and implementation of the Law on Electronic Commerce mean that the industry standardization. Platform, merchants, consumers will face more specific and detailed constraints. From the perspective of industry development, the bill will promote the healthy and orderly sustainable development of e-commerce; protect the rights and interests of all parties, especially the legitimate rights and interests of consumers. Market chaos caused by information asymmetry and lack of rules is expected to be reduced.

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