China's comprehensive e-commerce law, passed in August, goes into effect on January 1, increasing the pressure on online retail companies to combat the sale of counterfeit and copied products on their platforms.
It covers the requirement for registration and licensing of e-commerce operators, taxation, electronic payment and resolution of electronic commerce litigation, as well as protection of intellectual property, according to a post from the Hong Kong-based Deacons law firm.
The law comes amid China's rapid development in the world's largest e-commerce market, with $ 1,53 trillion in sales last year, according to estimates by eMarketer research firm.
This expansion was largely led by Alibaba Group Holding, through its Chinese retail platforms Taobao Marketplace and Tmall, and rival JD.com.
The new law, which aims to help clean up China's reputation as an important source of counterfeit goods, also addresses other important aspects of e-commerce, including misleading advertising, consumer protection, data protection and cyber security, according to Deacons .
Which companies will be affected?
The new law will apply to three types of companies. These include e-commerce platform operators such as Taobao, outsourced merchants who sell products and services on the third-party e-commerce platform, and online providers who operate their own sites or do business through other network channels such as social media.
The addition of non-traditional e-commerce platforms means that merchants who sell products through Tencent Holdings' WeChat social messaging service or the video sharing application BytDance Tik Tok - known as Douyin on the continent - fall under the new law. Now, these vendors will need to record their trade moves and pay the relevant taxes.
Under the new law, operators can be fined up to 2 million yuan ($ 290.780,00) in serious cases of intellectual property infringement.
What about consumers?
The law improves consumer protection as marketers must clearly disclose any packages or clauses they have placed on each sale.
If goods and services provided on an e-commerce platform violate consumers' rights and interests, the operator will be held jointly and severally liable if it does not take the necessary steps to remedy the situation and protect its customers.
Source: South China Morning Post