New E-Commerce Law is to Take into Effect Next Year

On August 31, 2018 the 5th Session of the Standing Committee of the 13th National People’s Congress of PRC took place in Beijing. During the meeting it was decided to implement the E-Commerce Law, the first comprehensive law in the field of E-Commerce in China, which will come into force on January 1, 2019.

In China 2017, the world’s largest E-Commerce market, has reached online retail sales growth of 32.7 % equivalent of 7.18 trillion Chinese Yuan.

During the discussion of law drafting, Mr. Xu Hui, the Vice Chairman of the NPC Constitution and Law Committee, has stressed the implementation of E-Commerce Law is necessary to protect the legitimate interests of all E-commerce stakeholders, to regulate the operation of E-commerce business, as well as to support its sustainable development.

Summary of E-Commerce Law is as follows:

  1. Strengthen Supervision and Management of E-commerce Platform Operators Engaged in Cross-Border E-commerce

E-Commerce platform operators engaged in Cross-Border E-commerce should comply with the relevant import and export supervision and management laws as well as administrative regulations.

  1. Improve the Regulation for Delivery of Goods and Services

If the intended customer is not present to receive the delivery, service providers should ask for customers’ confirmation for whom it can be delivered to.

  1. Strengthen the Protection of Merchants on the E-commerce Platforms

Where an E-commerce platform operator imposes unreasonable restrictions on or adds unreasonable conditions to the trading, transaction prices or transactions with other merchants within the platform, or collects unreasonable fees from the merchants within the platform, the State Administration for Market Regulation shall take measures and impose a penalty that may reach 500,000 Chinese Yuan (73,417 U.S. Dollars), or in serious cases up to 2, 000,000 Chinese Yuan (293,290 U.S. Dollars).

  1. Clarify the Liabilities of E-commerce Platform Operators

If an E-commerce platform operator knows or supposed to know that the commodities sold or the services provided by the merchant on the platform do not meet safety requirements, or has committed other acts that infringe upon the legitimate rights and interests of consumers, and fails to take necessary measures, the platform operator shall bear joint liabilities with the merchant on the platform according to law.

For commodities or services related to consumers’ safety and health, E-commerce platform operators shall bear proper share of responsibilities according to law if they fail to fulfill their obligations to examine and verify the qualifications of the merchants on the platform, or if they fail to fulfill their obligations to ensure the safety of consumers and cause damage to consumers.

  1. Support and Promote the Environmental Protection 

E-commerce platform operators should fulfill their obligations to protect the environment. The State Council, local governments or other related departments should take measures to support and promote environmentally friendly packaging, storage, and transportation for E-commerce.

Regarding the extension of the Grace period, so far there are no official comments and announcements issued by the authorities. As a reminder, last year the Grace Period for Cross-Border E-commerce was extended for another year until the end of 2018. Knudsen&Co will keep it updated.

Original source of the E-Commerce Law can be found here.