The Measures for the Supervision and Administration of Online Transaction (the Measures) came into effect in China on May 1, 2021. The Measures strengthen steps against operators of infringing online stores.

The State Administration of Market Regulation of China (SAMR) released the Measures on March 15, 2021. They set out rules for the implementation of the E-Commerce Law on transactions, the responsibilities of e-commerce platforms, and the protection of consumers’ rights and interests.

1. Clear rules to improve the transparency of the identity of sellers

Despite clear rules set by the E-Commerce Law, rights owners continue to be plagued by the difficulties faced in obtaining the identity and information about operators of infringing stores.

The Measures set out the following rules, and introduce penalties for non-compliance:

• Sellers must properly register their business, except in specific circumstances where registration is exempt by law;
• Sellers must publish their identity in a prominent (but unspecified) way;
• Online marketplace operators must verify the business registration of the sellers and facilitate publication of relevant information.
• If they fail to comply with the above obligations, sellers and online marketplace operators are subject to the sanctions provided in Article 76 (rectification + fine below RMB 10,000 [US $1,500]) and Article 81 (a fine ranging from RMB 20,000–500,000 [US $3,000–US $78,000]) of the E-Commerce Law.

2. Live-streaming sales are subject to supervision

The business model of live-streaming e-commerce, in which retailers, influencers, or celebrities sell products and services via online video streaming where the presenter demonstrates and discusses the offering and answers audience questions in real time, has developed rapidly in China during recent years. This has become one of the major platforms for the sale of counterfeits. Until now, however, it was not clear whether such activity was regulated by the E-Commerce Law.

The Measures clarify that those selling through live streaming are subject to the obligations in the Measures. Moreover, given that trades occur in real time, the Measures also require records of live-streaming sales to be saved for at least three years, facilitating evidence-gathering for enforcement.

3. Authorities have access to more detailed trade information

The Measures empower the Administration of Market Regulation to request online marketplace operators to reveal the identity of sellers, information about goods or services, payment records, logistics and express delivery, returns and exchanges, and after-sales transaction information. Detailed trade information of this nature will no doubt be of great help in identifying the networks of counterfeiting activities.

Finally, the Measures also introduce rules on personal data protection and unfair competition such as curbing click farming and fake comments. The Measures should facilitate a better business climate for both sellers and operators.

Authored by He Wei

First published on INTA Bulletin