Beijing's New E-commerce Regulations

The Tentative Procedures apply to B2B and B2C activities, and reaffirm the permit licensing system previously set out in the 2000 Administration of Internet Information Services Procedures issued by the State Council. Under the Tentative Procedures, the term ge-commerceh means any trading of a commodity and distribution of trade information between two parties in a commercial transaction via the internet. An goperatorh refers to the owner of the website or the contractor who uses the website to engage in online sales. Business-oriented websites are subject to registration and must hold an Internet Information Services and Value-added Telecommunication Business Permit (Business Permit) from the Beijing Municipal Telecommunications Administration. However, business permit holders must also be duly registered with the BAIC in order to conduct business activities.

Online Obstacles

Cost and convenience are the primary attractions of online shopping; the greatest obstacles are concerns about the quality of goods or reliability of providers, security concerns, limited payment methods, and delays in delivery. The CNNIC survey reported that 36.9% of respondents cited problems relating to the gquality of products, after sales service, and creditworthiness of the producerh, and another 5.9% claimed that gunreliable informationh was the major obstacle to online shopping.

The Tentative Procedures attempt to address these problems by requiring operators to sell goods according to the price agreed online. Article 13 stipulates that when a consumer has confirmed the trading conditions online, the operator should send a confirmation notice. The notice should include the name and location of the operator, quantity of the goods, method of payment, after-tax price, delivery charges, provision of after-sale service, and how to return faulty goods.

Send it Back

The Tentative Procedures provide for the rescission of the order within 12 hours of receipt of the confirmation notice or an alternative time period stipulated by the operator. Consumers have the right to amend or cancel the order within the specific time period. Article 26 provides that consumers can return or exchange the goods they purchased within seven days after they have received the goods. Similar to shopping in the bricks-and-mortar world, the Tentative Procedures state that certain goods may not be exchanged or returned. They include custom-made goods, newspapers and journals, perishable goods, software, audio-visual products (except those found to contain viruses or other serious defects). Interestingly, the CNNIC survey confirmed that books and magazines constitute the most frequent purchases at 69% of all transactions, with computers and electronics coming second.

Under Article 11 of the Tentative Procedures, consumers have the right to ask the operator to provide specific product information and enquire about the method of delivery and the charges for the goods that they purchase or services to be provided. The Tentative Procedures impose an obligation on the operator to ensure that the information is clear and accessible.

Unless otherwise provided for under other PRC laws and regulations, operators are required to maintain information on online trades for not less than two years. Notably, data held by the operators is subject to the inspection of the BAIC.

Secure Platform

The Tentative Procedures also regulate B2B transactions and refers to B2B trading as the trade in goods and the release of trade information between enterprises via the internet. An operator who promotes goods produced and sold by it through its own website should ensure that the information is complete and accurate. The website owner that provides business operators with a platform for online sales is required to have the necessary technical means and management system to operate the site. The Tentative Procedures impose a number of obligations on website owners who allow other business operators to promote their goods on their site. Website owners must provide a secure and stable operating environment for business operators and stop any illegal acts.

To address the protection of intellectual property rights, authorization from trademark owners is required before the name or packaging associated with a famous product can be used. The Tentative Procedures also warn against computer hacking, the use of false e-mail addresses to mislead another party and the sending of computer viruses. These and other provisions illustrate a forward-looking approach by the BAIC to protect consumers against unscrupulous merchants. However, balanced against this are the elements China still lacks: a liberalized foreign trade system, and an efficient infrastructure for making delivery and collecting payments.

By Nancy Leigh
Baker & McKenzie, Hong Kong