New e-commerce rules expected to address market access and IP protection

He outlined issues the new legislation should address: 1) providing well-functioning , clear and accessible rules for market access trading platforms and rules on their rights, responsibilities and obligations; 2) improving the security of online transactions; 3) strengthening the protection of intellectual property (IP); 4) clamping down on false propaganda; 5) protecting the legitimate interests of consumers; 6) clarifying the roles of government departments; and 7) offering further details on the abuse of market dominant position of the PRC Anti-monopoly Law in relation to online market platforms.

“There is a lot of IP rights infringement through the selling of counterfeit and shoddy products online, and the regulation should enhance the supervision of online shopping platforms and their operators,” he said. “There isn't yet a regulatory framework to provide a credible, safe and convenient online shopping environment for consumers or to deal with difficult trade disputes.”

First and foremost, said Shang, was that companies engaged in online business should be familiar with policies regulating e-commerce to avoid any penalties that may be imposed by regulators.

Then, after ensuring its IP is protected, a company needs to solidly manage its distribution system and distributors. Otherwise, its branding could be damaged by unscrupulous distributors that don't adhere to the company's pricing system. “Companies need to keep an eye on the online environment to prevent its pricing system from being damaged,” said Shang.

The rapid proliferation of China's e-commerce market has outpaced regulatory developments so far and many online businesses have been operating without clear guidance. The lack of specific regulations and its effects were highlighted in a recent protest against Alibaba Group by online vendors using the Taobao platforms over a fee hike. CM