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China enacts its first law on e-commerce

19 November 2018 | Greater China
Legal Briefings – By Mark Robinson, Karen Ip and James Gong

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China’s long-awaited first law on electronic commerce was promulgated on 31 August 2018 and will come into effect on 1 January 2019. The Electronic Commerce Law 2018 (‘the Law’) significantly increases the responsibilities and accountability of platform operators and provides a range of measures to protect consumers and intellectual property rights. Mark Robinson, Karen Ip and James Gong examine the key features of the new Law and set out their observations. 

Background

China now has the largest e-commerce market in the world and handles more online transactions than France, Germany, Japan, the UK and the US combined1. The annual gross merchandise volume of online shopping in China reached RMB 6.1 trillion ($890 billion) in 2017 and is expected to increase at a rate of around 20% each year. The top e-commerce platforms accounted for 75% of the market share in 20172. However, despite China’s dominance in e-commerce, it had no national law governing e-commerce, with provisions governing online trading activities distributed amongst various laws such as those on consumer protection, product quality, tort and competition and in lower level regulations. Drafting of the Law started in 2013 and has taken nearly five years to finalise, with changes being made to the draft legislation right up until a few days before its promulgation on 31 August 2018. The legislative process involved 12 ministries and local legislatures, academics, industry associations and major e-commerce companies, and required four readings of revised 
drafts (as compared to the usual three readings) before the Law was submitted for a vote in the Standing Committee of the National People’s Congress3. The prolonged process demonstrates the precautions that the legislature took in regulating the e-commerce industry and also reflects the intense lobbying efforts of interested groups behind the scenes. 

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This article first appeared on the October 2018 issue of the Digital Business Lawyer

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