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Draft E-commerce Law gets third reading; heading for fourth

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China’s draft E-commerce Law (电子商务法草案) was submitted to the National People’s Congress (NPC) Standing Committee for a third reading this week.

WebJD China E-commerce Law

E-commerce Law

China boasts the world’s largest e-commerce market, with online retail sales growing 32.2% year on year in 2017 to reach RMB 7.18 trillion yuan (USD $1.12 trillion). Yet despite the explosive growth of this industry, China has to-date implemented little to no regulation in this area.

The draft E-commerce Law is focused on the obligations and liabilities of e-commerce operators (e.g., Alibaba, JD), and aimed at not only protecting consumer rights, but also controlling sales channels. For many WebJD readers the most pertinent control mechanism in the new law relates to Cross-border E-commerce (Chapter Five), which requires all cross-border e-commerce to flow through designated processing centers, thereby precluding foreign retail brands from making direct sales to Chinese consumers. Online sales can only be conducted through domestic Chinese entities that have obtained the requisite commercial ICP (ICP备案) license.

Legislative history

The first official draft E-commerce Law was released in December 2016 by the NPC for public comments, in accordance with the standard lawmaking process in China.

The NPC published a second draft E-commerce Law in November 2017 for public comments. One significant change in the second draft was that it removed the first draft’s requirements to collect user’s personal information — the second draft only specified that e-commerce operators must comply with relevant laws and regulations when/if collecting and using users’ personal information of users.

This week the NPC reviewed a third draft E-commerce law at a four-day bimonthly session, however the NPC will not vote on the E-commerce Law at the end of the session. Accordingly, the NPC is expected to return for a fourth (and final) review of the draft E-commerce Law later in 2018.

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