The new Chinese E-Commerce Law

The new Chinese E-Commerce Law entered into force at beginning of 2019 with the aim of regulating and promoting this sector (increasingly important for the Chinese economy) and strengthening the protection of consumers who make purchases in internet.

The law defines as “e-commerce’ the activity of selling goods and services carried out using Internet or other networks (the law does not apply to the sale of financial products and services or to the publication of information). The law identifies two categories of subjects and provide specific obligations for them and relevant sanctions in the event of default:

- the e-commerce platforms, that are the companies that supply the virtual space and other services to the commercial operators in order to sell goods and services online;

- e-commerce operators, that are the natural or legal persons who sell goods or services using their own website or an e-commerce platform.

The law requires all e-commerce operators to register as a company (with the exception of natural persons who sell their own agricultural or craftsman products), as well as to comply with the tax obligations established by the laws and regulations in force.

E-commerce operators are required to:

- publish the business license and all the administrative authorizations required to carry out its business;

- provide information relating to selling products and services in a complete, truthful, accurate and timely manner in order to guarantee the right of consumers to make a conscious choice;

- inform consumers if they decide to terminate their activity by displaying a notice for at least 30 days before online sales cease;

- clearly define the reimbursement procedures (avoiding the need for unreasonable conditions for this) and guarantee a rapid reimbursement.

The e-commerce platforms have to adopt technologies that guarantee the security of the computer network, ensure the protection of data and allow users to check, correct or delete the data provided and give them the opportunity to delete their account; they are also required to record and archive information on products and services sold for at least three years from the day on which the transactions were concluded.

E-commerce platforms must verify identity, business license, tax registration and any authorization required from commercial operators to sell their goods or services; furthermore, they must take the necessary measures to block the sale online and report any illegal situation to the competent authorities if it verifies that an e-commerce operators does not have the administrative authorizations to sell certain products/services or their sale is prohibited or they do not comply with the requirements of security required by law.

The new legislation makes the e-commerce platform jointly and severally liable with the e-commerce operators who sell goods or services that do not comply with the requirements of the law regarding personal or financial security (or that violate legitimate rights and interests consumers) if the e-commerce platform know or should know these irregularities and did not prevent their sale.

The entry into force of the E-Commerce Law strengthens the protection of consumers from the risk of deception as it explicitly prohibits e-commerce operators from making misleading advertising or creating false reviews (or canceling negative consumers’ comments).

In addition, e-commerce platforms are required to establish regulations for the protection of intellectual property and to cooperate with intellectual property rights holders to pursue violations.

The holder of an intellectual property right, who believes he is the victim of a violation of his right, can send a communication to the e-commerce platform by providing preliminary evidence relating to the violation and asking him to take the necessary measures to remove or block the sale of the products or of the services accused (if the platform that does not take these measures promptly, it will be jointly and severally liable for any damage caused by such violation).

E-commerce operators accused of violating intellectual property have the possibility to challenge this accusation with a communication to the platform that provides preliminary evidence about the non-existence of the unlawful conduct (the owner of the intellectual property right that reports non-existent violations, causing damage to other operators, will be civilly liable according to the law).