All new industries get a grace period from regulation as authorities catch up to the new reality. Social media in the US will likely face government regulation in short order after a decade of freewheeling.
New regs from the Chinese government reflect the end of that grace period for eCommerce operators who have had no regulation until now in spite of tremendous growth in the five years ending in 2017 and 40% plus growth projections for the end of this year.
There are three types of operators recognized by China’s new law: platform operators, operators on platforms and online sellers. Here are four areas covered by the new law:
- IP protections are strengthened by requiring that e-commerce businesses must be licensed by the State Administration for Industry and Commerce. Unlicensed entities face potentially strong fines and copyright thieves will be identified.
- Regulations regarding unfair competition limit the market power of companies that have either a user or technical advantage over their competition by “prohibiting platform operators from imposing unreasonable restrictions, conditions, or fees on merchants.”
- E-commerce platforms will now share responsibility, along with individual merchants, for the sale of counterfeit goods sold on their sites with heavy fees for transgressors.
- Consumer rights get new protections. Sellers are required to disclose selling rules and “cannot assume consent from the consumer.” In addition, merchants must protect consumers from fake reviews regardless of origin – outside contractor or incentivized consumer.
Assuming these rules are enforced, it is a good day for intellectual property owners, for competition and for consumers. Source: Dezan Shira & Associates China Briefing