All You Need to Know About China’s New E-Commerce Law

Top legislators of China passed an e-commerce law on August 2018. The new law is aimed at regulating the China’s online luxury sales market and will become effective on January 1st 2019. The law differentiates different e-commerce operators. The law, which is set to “protect legal rights and interests of all parties” and “maintain the market order,” requires all e-commerce operators to fulfill their obligations to protect consumers’ rights and interests as well as personal information, intellectual property rights (IPR), cyberspace security and the environment. The new law also contends that platforms should take responsibilities in the customer-seller disputes that take place on the platform, which would lead to more legal risks.

The single purchase limit will increase from $288 (RMB 2,000) to $720 (RMB 5,000), and the yearly purchase amount increases from $2,900 (RMB 20,000) to $3,780 (RMB 26,000). Cross-border purchases under the new limits will be exempt from duties and receive a 30 percent discount on consumption tax and VAT.

Platform Operators– This refers to any legal persons or unincorporated organizations that offer virtual places of business, transaction matching, information release and other services to the parties of an e-commerce transaction to enable them to carry out independent transaction activities. A typical example would be the operator of Taobao.

Operators on Platform– This refers to third party merchants that sell goods or provides services on e-commerce platforms. An example is a vendor operating an online store on Taobao.

Other E-commerce Operators– This might include e-commerce operators that sell their own goods or provide their own services through self-established websites or social network such as Tencent’s WeChat.

For goods or services that are related to the lives and health of consumers, e-commerce platforms will bear corresponding responsibilities if they fail to examine the qualification of vendors on their platform. According to the new law, if a customer suffers any health-related problems by using a product bought online, the e-commerce platform will be responsible. So it makes it really important for the e-commerce platforms to properly verify each and every dealer doing business on their site.

Have a look at some of the most important articles of the new law

Article 15 of the new law appears to require that vendors make their ID data available online.

Article 12 of the law requires vendors to display business registration certificates containing core information on their company.

Article 28 of the law to “remind” – but not require – vendors that are not already incorporated to obtain business licenses, and to work with local MSBs in this regard.

Articles 42, 43 & 45 of the new law contain provisions that, on their face, seem to dilute the protections currently offered in take-down work in China.

The law is wide-ranging and covers the requirement for registration and licensing of e-commerce operators, taxation, electronic payment and e-commerce dispute resolution. It also addresses other important aspects of e-commerce including false advertising, consumer protection, data protection and cybersecurity. One practice that definitely won’t benefit from the law is daigou buying. Daigous are the shoppers who buy luxury products overseas, where those goods cost less and don’t incur China’s high import tariffs, but they’ll now come under scrutiny for their undocumented practices.

There is a provision in the new law that said the State Council, local governments at or above country-level as well as related departments should take measures to support and promote environmentally friendly packaging, storage and transportation in e-commerce.

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A Guideline on How to Remove Counterfeit Products from E-commerce Sites

It has been noted quite often that American and European companies seek assistance from the China lawyers for preventing the counterfeit of their product in China. Most of the time, counterfeited products and items are listed on the Chinese e-commerce websites like Tmall and Taobao as well as American e-commerce giants such as eBay and Amazon. Companies have”font-to remove the listing of their counterfeited products from the listings of the e-commerce portals in order to keep their brand image in tact. But finding the fake product is a complex task.

Tips on how to find infringing products online

  1. Proactively monitor the internet for counterfeits in the most popular e-commerce sites in China such as Taobao and Alibaba
  2. Search for your brand or product name in Chinese. Chinese consumers like to translate brand names into Chinese, either as a phonetic translation or by translating the meaning. Where possible ask a Chinese colleague or use a translation tool to search e-commerce sites in Chinese.
  3. Search for names which are identical or similar to your brand or product name.
  4. Use your product name plus your home country as key search terms.
  5. Search for items in the same category as your product.

In order to get rid of the listed products that are infringing the IP rights of a third party, major e-commerce sites maintain a formal internal procedure. Companies need to adhere their procedures to secure the successful removal of the infringing listings of their products from the e-commerce portals.

Before submitting a take-down request, companies need to provide large two documents to the e-commerce sites and get them verified-

  1. Proof of identity For companies, this includes a business incorporation certificate or certificate of incorporation. For individuals, identification documents such as a passport or national identification card are required.
  2. Proof of IPR ownership:Including patent registration certificate, trademark registration certificate or copyright registration certificate (please note an application receipt is insufficient).

Identification of the alleged infringer and details of the listing which you wish to have removed. It is best to include clickable hyperlinks. After verifying the authenticity of your charges, the e-commerce portals will discard the listing of the counterfeit product/products within a week or so.

The propensity of counterfeiting products is a major concern. Businesses need to come up with a comprehensive anti-counterfeiting solutions to protect their sales and brand reputation. In case your claim gets rejected, you must appoint a person on your side who has the following skills-

  • The appointed person must be fluent in speaking Chinese
  • Must have a thorough knowledge of the intellectual property law of China
  • Experienced enough in tackling the IP issues with the particular Chinese website that is displaying your counterfeit products
  • The person must be capable of convincing the top-officials of the e-commerce site how the listing of the fake product is breaching your IP

Similar to the American and European countries, China also provides ample protection to the Intellectual Property Rights (IPR) including trade marks, copyrights and patents. You need to take assistance from a subject-matter expert to navigate the complex counterfeit issues.

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