China will implement a new e-commerce law from January 1, 2019. The new law will extend legal protection for consumers and brand owners and will arm the fight against the country’s reputation as a source of fake goods.

The timing is important as e-commerce sales accounted for 23.8% of all retail sales in China in 2017, and is projected to reach 33.6% by 2019. As the country’s e-commerce market grows at a staggering rate, so does the need for stricter oversight and market regulation.

Responding to this, the Standing Committee of the National People’s Congress (NPC) passed a new law on August 31, to improve the regulation of China’s booming e-commerce market. It was first reviewed in December 2016 and deliberated upon by the NPC in October 2017 and June 2018.

Stronger IP Protection & Fighting Unfair Competition

E-commerce platforms must establish rules to protect IP rights, and when notified of a violation, respond in a timely manner. Those who fail to do so will face penalties of up to 293,130 USD.

To further strengthen IP protection, retailers on e-commerce sites must also register with the State Administration for Industry and Commerce to obtain a business license.

By requiring registration, the law aims to make it more difficult for those who infringe on IP to avoid detection and punishment.

Article 22 of the new legislation highlights fair competition obligations for all e-commerce operators, with special emphasis on those with dominant market positions.

Operators with advantages in the market through methods such as number of users and technological advantages, are prohibited from abusing their position to exclude or restrict competition.

Article 35 further underlines fair competition by prohibiting platform operators from imposing unreasonable restrictions, conditions, or fees on merchants.