As the online commerce market in China is rapidly expanding, businesses and consumers are demanding an update of the country’s complex regulatory framework. A range of decrees, regulations and provincial frameworks are currently in place, regulating issues such as domain names, internet surveillance and monitoring, electronic signatures, telecommunications, online content control, contract law, IT security, internet access and copyrights.

As Internet usage is on the rise in China, more laws and regulations are needed.

Although the need for an update to the existing rules and the creation of one central law is rapidly growing, the complex legal framework that regulates e-commerce in China will not be updated ‘for another five years’, according to Lin Junqiang, Deputy Director of the Information Centre at the Industry and Commerce Ministry, part of the Chinese Central Government in Beijing. Junqiang spoke exclusively to Michiel Willems in Shanghai.

MW: How are e-commerce activities in China regulated?
J: Although there is no specific e-commerce law, other laws are suitable and provide a framework for e-commerce. The Government and the provinces have the right to make different regulations for different provinces. The most difficult aspect of monitoring online business is being able to get evidence to prove an online business is providing fake products, as people can easily withdraw their site and online registration.

MW: Copyright is a big issue in China, and indeed the rest of the world. What action has been taken to tackle copyright infringement?
J: Let me give you an example; the illegal Beijing market has been closed so there are no fake products being sold there now, although there are still fake products online.

MW: Are internet service providers responsible for the websites they offer?
J: Providers of internet connections have a duty to assist the Government to close websites if the Government asks them to but internet service providers cannot do the job alone, as it is very difficult to monitor the whole online space.

The Chinese Government strictly control the Internet.

MW: What does the Chinese Government currently monitor?
J: That is the most difficult issue right now. We are currently trialling an approach in a number of different provinces. The approach is aimed at making sure that all citizens’ online registration details are correct. We will then spread this approach across the nation gathering correct online registration information to a central government database, at which point we will gather feedback on the approach.

MW: Are there rules for online advertising in China? And what happens if an advertiser goes too far?
J: There is no law on this matter but we do have e-commerce institute regulations that deal with these issues. If an advert goes too far then the advertisement law applicable to traditional ads will be applied to the online ad and the Government will get involved.

MW: And what happens then?
J: There are several steps to take: a warning is given to pull the advert offline, a fine or penalty can be issued and if that does not work, the issue can go to court and the offender sued.

MW: What about personal information being shared and sold to advertisers?
J: China is different than the UK. Information protection is not a duty of the Chinese Government. Banks and similar institutions are responsible for protecting consumer data and the technology to do so is advanced. The Government has two roles in protecting private information. Firstly, it develops laws to protect private information and secondly, the Government will take action against companies that disclose private information, which occurred recently on a national scale.

MW: How does the Government deal with cyber-crime?
J: The Chinese Government does not have a duty to protect personal information; third parties have that duty. Neither does the Government have a duty to guarantee the safety of a website.

MW: If a product bought online is delivered to a consumer’s home and it turns out to be faulty, do any laws protect the consumer?
J: In China the payment method protects the consumer. A third party keeps the money during the transaction so if the product is faulty the money will not go to the supplier but back to the customer. There is also another way to pay; once a product is bought online a delivery driver brings the product to the customer who then checks the product and if they are happy with the item, they pay the delivery driver who then passes the money on to the supplier.

MW: Is the spur for the new e-commerce legislation in China due to the rise in e-commerce or a reactionary move due to the problems faced by illegal online activity?
J: A bit of both. The Government wants to develop a new e-commerce law because of the fast increase in e-commerce and with that the increase in e-commerce related problems. Chinese businesses see a rise in law suits and there are more and more user complaints.

MW: I understand you have been on a number of business trip recently to learn from other countries?
J: That is right. China has started looking at other regulatory systems around the world to learn from.

MW: Which countries are you looking to learn from?
J: In the last twelve months we visited Japan, Germany, the UK and the US to research the approach to e-commerce regulation. E-commerce is more developed in Germany and the UK than elsewhere in Europe. The law systems are different, so we made sure we went to developed countries to learn from them.

Chinese law comes in after a system of regulations are tested.

MW: And what were your findings? Are there lots of differences between the countries?
J: Certainly, we noticed a lot of differences. While the US has a very general, broad system; Japan is very detailed. There are common problems. Comparatively the US has a much more general framework than Japan and Korea, who have more detailed and strict legislation. Japan is very detailed, the US is more flexible.

MW: So, would China lean towards a more strict or flexible model?
J: Related to our constitutional system we would go for a more detailed approach. China will opt for a more detailed framework, based on the Japanese model but then with a Chinese approach.

MW: When do you expect to have the legislation complete?
J: Not for a long time. In China, we first make the regulations and then the law. It will take a long time –at least another five years. In the meantime the regulations can control the situation until the law is ready.

MW: So the regulations will be temporary until you have developed the law?
J: We will keep the regulations until the law is made. If some regulations are in conflict with the new law, the regulations will be scrapped.

MW: How do you see the future of the e-commerce market in China?
J: There is a developing trend in e-commerce across the globe. All countries are facing the same sudden increase so it is necessary to develop nationwide regulation to control the illegal behaviour that comes with this increase. We are currently researching e-commerce and the regulations in countries like the UK to complete this business area. The Chinese Government is trying to find technical methods to solve these problems and that is why we are communicating with people in the UK who are doing the same job and who are facing the same problems.

MW: Thank you for your time.