China’s New E‑Commerce Law: Impact on Foreign Retailers

Chi­na’s new e‑commerce law, which came into effect on Jan­u­ary 1^st, 2019, has brought sig­nif­i­cant changes to the online retail mar­ket in Chi­na. The law aims to reg­u­late the e‑commerce sec­tor, pro­tect the rights and inter­ests of con­sumers and busi­ness­es, and pro­mote fair com­pe­ti­tion and sus­tain­able devel­op­ment. The law applies to all types of e‑commerce activ­i­ties in Chi­na, includ­ing cross-bor­der e‑commerce, which involves for­eign retail­ers sell­ing goods or ser­vices to Chi­nese con­sumers through online platforms.

If you are a for­eign retail­er who wants to sell your prod­ucts or ser­vices to Chi­na’s mas­sive and grow­ing online mar­ket, you need to be aware of the new e‑commerce law and its impli­ca­tions for your busi­ness. In this arti­cle, we will explain what the new e‑commerce law means for for­eign retail­ers, what are the main require­ments and oblig­a­tions you need to com­ply with, and what are the ben­e­fits and oppor­tu­ni­ties you can enjoy by fol­low­ing the law.

What are the main requirements of China’s new e‑commerce law for foreign retailers?

Accord­ing to Chi­na’s new e‑commerce law, for­eign retail­ers who engage in cross-bor­der e‑commerce in Chi­na need to meet the fol­low­ing requirements:

• Reg­is­ter as an e‑commerce oper­a­tor in Chi­na. For­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms need to reg­is­ter as an e‑commerce oper­a­tor in Chi­na and obtain a busi­ness license. This can be done either by set­ting up a legal enti­ty in Chi­na, such as a whol­ly for­eign-owned enter­prise (WFOE) or a joint ven­ture (JV), or by appoint­ing a domes­tic rep­re­sen­ta­tive or agent who is respon­si­ble for ful­fill­ing the legal oblig­a­tions of the for­eign retail­er in China.
• Pay tax­es and fees accord­ing to the law. For­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms need to pay tax­es and fees accord­ing to the applic­a­ble laws and reg­u­la­tions in Chi­na. This includes val­ue-added tax (VAT), con­sump­tion tax, cus­toms duties, and oth­er fees. For­eign retail­ers need to declare and pay tax­es and fees through the des­ig­nat­ed cross-bor­der e‑commerce plat­forms or cus­toms clear­ance ser­vice providers. For­eign retail­ers also need to issue elec­tron­ic invoic­es to Chi­nese con­sumers upon request.
• Com­ply with prod­uct qual­i­ty and safe­ty stan­dards. For­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms need to com­ply with the rel­e­vant prod­uct qual­i­ty and safe­ty stan­dards in Chi­na. This means that for­eign retail­ers need to ensure that their prod­ucts or ser­vices meet the nation­al or indus­try stan­dards, have clear labels and instruc­tions, have valid cer­tifi­cates or licens­es if required, and do not infringe on intel­lec­tu­al prop­er­ty rights or harm pub­lic inter­ests. For­eign retail­ers also need to pro­vide after-sales ser­vices and han­dle con­sumer com­plaints accord­ing to the law.
• Pro­tect per­son­al infor­ma­tion and con­sumer rights. For­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms need to pro­tect the per­son­al infor­ma­tion and con­sumer rights of their cus­tomers accord­ing to the law. This means that for­eign retail­ers need to obtain con­sent from their cus­tomers before col­lect­ing, using, or dis­clos­ing their per­son­al infor­ma­tion, adopt mea­sures to safe­guard their per­son­al infor­ma­tion from leak­age or mis­use, and respect their cus­tomers’ rights to access, cor­rect, delete, or with­draw their per­son­al infor­ma­tion. For­eign retail­ers also need to respect their cus­tomers’ rights to choose prod­ucts or ser­vices freely, can­cel orders with­in a rea­son­able peri­od of time, return or exchange prod­ucts with­in sev­en days with­out any rea­son, and claim com­pen­sa­tion for dam­ages caused by defec­tive prod­ucts or services.

For­eign retail­ers who fail to com­ply with these require­ments may face penal­ties such as fines, con­fis­ca­tion of ille­gal gains, sus­pen­sion of busi­ness activ­i­ties, revo­ca­tion of busi­ness licens­es, or even crim­i­nal liability.

What are the benefits of China’s new e‑commerce law for foreign retailers?

While Chi­na’s new e‑commerce law impos­es more reg­u­la­tions and oblig­a­tions on for­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms, it also brings some ben­e­fits and oppor­tu­ni­ties for them. Here are some of them:

• More mar­ket access and fair com­pe­ti­tion. Chi­na’s new e‑commerce law opens up more mar­ket access for for­eign retail­ers who want to sell their prod­ucts or ser­vices to Chi­nese con­sumers through online plat­forms. The law allows for­eign retail­ers to reg­is­ter as e‑commerce oper­a­tors in Chi­na with­out hav­ing a phys­i­cal pres­ence in Chi­na, as long as they appoint a domes­tic rep­re­sen­ta­tive or agent who can ful­fill their legal oblig­a­tions in Chi­na. The law also pro­hibits any e‑commerce plat­form or ser­vice provider from abus­ing their dom­i­nant mar­ket posi­tion, dis­crim­i­nat­ing against any e‑commerce oper­a­tor, or inter­fer­ing with the nor­mal oper­a­tion of the online mar­ket. This cre­ates a more lev­el play­ing field and fair com­pe­ti­tion for for­eign retail­ers who want to enter or expand their pres­ence in Chi­na’s online retail market.
• More con­sumer trust and sat­is­fac­tion. Chi­na’s new e‑commerce law enhances the pro­tec­tion of con­sumer rights and inter­ests, which can increase con­sumer trust and sat­is­fac­tion for for­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms. The law requires for­eign retail­ers to pro­vide clear and accu­rate infor­ma­tion about their prod­ucts or ser­vices, pay tax­es and fees accord­ing to the law, com­ply with prod­uct qual­i­ty and safe­ty stan­dards, pro­vide after-sales ser­vices and han­dle con­sumer com­plaints accord­ing to the law, and pro­tect per­son­al infor­ma­tion and con­sumer rights accord­ing to the law. These mea­sures can improve the qual­i­ty and cred­i­bil­i­ty of for­eign retail­ers’ prod­ucts or ser­vices, reduce the risks and costs of cross-bor­der e‑commerce trans­ac­tions, and increase con­sumer con­fi­dence and loy­al­ty for for­eign retailers.
• More pol­i­cy sup­port and incen­tives. Chi­na’s new e‑commerce law pro­vides more pol­i­cy sup­port and incen­tives for for­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms. The law encour­ages the devel­op­ment of cross-bor­der e‑commerce, sup­ports the inno­va­tion and inte­gra­tion of e‑commerce and oth­er indus­tries, pro­motes the coöper­a­tion and exchange of e‑commerce between Chi­na and oth­er coun­tries, and facil­i­tates the cus­toms clear­ance and tax admin­is­tra­tion of cross-bor­der e‑commerce. The law also pro­vides pref­er­en­tial poli­cies for for­eign retail­ers who sell goods or ser­vices to Chi­nese con­sumers through online plat­forms, such as low­er tax rates, sim­pli­fied pro­ce­dures, faster clear­ance, and more favor­able treat­ment. These poli­cies can reduce the bar­ri­ers and costs of doing cross-bor­der e‑commerce in Chi­na, and cre­ate more oppor­tu­ni­ties and advan­tages for for­eign retailers.

In con­clu­sion, Chi­na’s new e‑commerce law is a com­pre­hen­sive and impor­tant leg­is­la­tion that reg­u­lates the online retail mar­ket in Chi­na. The law has sig­nif­i­cant impli­ca­tions for for­eign retail­ers who want to sell their prod­ucts or ser­vices to Chi­nese con­sumers through online plat­forms. For­eign retail­ers need to be aware of the new e‑commerce law and its require­ments and oblig­a­tions, as well as its ben­e­fits and oppor­tu­ni­ties. By com­ply­ing with the law and adapt­ing to the chang­ing mar­ket envi­ron­ment, for­eign retail­ers can seize the huge poten­tial of Chi­na’s online retail mar­ket and achieve suc­cess in China.

Frequently Asked Questions

If you are inter­est­ed in cross-bor­der e‑commerce in Chi­na, please con­tact us today for a free con­sul­ta­tion. We will be hap­py to assist you with any ques­tions or chal­lenges you may have. We look for­ward to hear­ing from you soon!

Sources:

1. The State Coun­cil of Chi­na | E‑Commerce Law of the Peo­ple’s Repub­lic of China
2. The Min­istry of Com­merce of Chi­na | Notice on Issues Relat­ed to Cross-Bor­der E‑Commerce Retail Import Tax Policies
3. The State Tax­a­tion Admin­is­tra­tion of Chi­na | Announce­ment on Mat­ters Con­cern­ing Val­ue-Added Tax Poli­cies for Cross-Bor­der E‑Commerce Retail Imports
4. The Min­istry of Ecol­o­gy and Envi­ron­ment of Chi­na | Notice on Strength­en­ing Envi­ron­men­tal Man­age­ment of Cross-Bor­der E‑Commerce Retail Imports
5. The Chi­nese Acad­e­my of Sci­ences | Chi­na’s Belt and Road Ini­tia­tive Pro­motes Glob­al Sci­en­tif­ic Coöper­a­tion and Innovation