China’s New E-commerce Law: The Basics
What: A new Chinese e-commerce law went into effect on January 1, 2019.
Why: With economic interests at the forefront, China wants to shed its rep as the OZ of counterfeit products. Instead, it wants to be seen as a trustworthy e-commerce mecca. To that end, Chinese officials passed the new law as a way to signal a commitment to mitigating intellectual property fraud and bolstering consumer protection standards.
How: The law requires online sellers to register as e-commerce businesses and pay taxes. The law also features intellectual property provisions and advertising parameters.
Punishment Stakes: The new law has provisions for punishing both sellers and e-commerce platforms.
Potential Winners: Larger Chinese e-commerce platforms like Alibaba, JD.com, and Taobao, which are already equipped to handle international e-commerce, will emerge the victors. Moreover, legitimate e-commerce businesses from around the world — especially in North America — may be able to leverage the new law to their benefit.
Potential Losers: According to reports, millions of “daigous” — globally stationed shoppers who buy things on behalf of Chinese residents — are all scrambling to find ways to skirt the new law. For example, some are posting “sketchy drawings attached to random descriptions” in an attempt to throw enforcement agents off their scent. They’re also trying to disguise product descriptions in nonsensical “biographic” tidbits. To wit, one ostensibly law-dodging daigou selling Clinique products posted: “’Qianqian from our neighbor village has a brother named Qianbi [Chinese name for Clinique] — Qianbi. ‘Good lad, not oily. Weighs 125.’” Afraid of colliding with online “bot agents,” daigous are assiduously avoiding words and phrases like “payment” and “place order”; they’re also encouraging potential customers to connect via voice message.
How Will China’s New E-commerce Law Impact U.S. Businesses?
Today’s e-commerce marketplace is global, and China’s new e-commerce law will likely have worldwide ripple effect. Yes, the new rules will hurt daigous. However, stateside e-commerce businesses may be able to fill the potential gap.
The major online shopping platforms in China are eager to work with overseas e-commerce suppliers in the west. Their population craves western goods, and the more they can buy online, the better these e-com platforms do.
With the right connections and legal guidance, it’s possible for stateside businesses to fill the “trade gap” presented by China’s new e-commerce law.
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