About per week ago, in China’s New E-Commerce Law and Its Foreign Company Impacts, I wrote how China’s new e-commerce regulation will probably impact overseas businesses doing commercial enterprise in China or with China. Because the brand new regulation does no longer offer lots practical steerage and has yet to be strengthened through legitimate interpretations or implementation policies, it is difficult to the kingdom with precision how exactly it is going to be carried out and applied. Nonetheless, the use of what we’ve read within the professional and unofficial press and our discussions with Chinese government officials and also the usage of also what we’ve found out over the past decade from representing groups worried with China’s e-commerce enterprise, we beneath (and in a subsequent Part III to this submit) seek to give an explanation for some basic components of the e-commerce regulation.
— What constitutes e-trade sports beneath Chinese regulation? Under the new e-commerce law, e-commerce sports encompasses the selling of goods or services via facts networks. Goods bought thru information networks can be tangible things, along with garb, electronics, and cosmetics or intangible such things as coupons you may redeem at an eating place. Services via informational networks include offerings executed online, which includes telemedicine, and offerings bought on-line however performed offline, including online sales of journey programs, condo car reserving offerings, or tutoring. The regulation governs transactions finished using information networks, whether the real provider or transport of products happens on line or offline.
— Are foreign corporations challenge to China’s new e-trade law? It depends. The e-trade law applies most effective to e-trade enterprise sports inside China. Though “within China” is not simply described, a famous (albeit unofficial) view is that if the activity consists of any Chinese detail, it’ll be deemed to arise “inside China.” Under this view, a China WFOE promoting merchandise of its figure agency on-line might be taken into consideration a China e-trade activity, as might the sale of merchandise on a Chinese e-trade platform through a foreign enterprise without a Chinese entity. Even the sale of merchandise on an overseas website by using a foreign entity to a patron in China will probably additionally be considered to have come about within China and therefore problem to the e-commerce law.
Even a foreign business that is no a concern to China’s new e-trade regulation desires to take note of different Chinese laws when selling products to China, which include the legal guidelines concerning uploading and exporting, customs, guides, and cybersecurity.
— Further Impact on overseas brands. Though the new e-trade regulation is not aimed simply at cracking down on daigou (See China’s Daigo Shopping Model: This is the End, My Friend….) and although it’s going to manifestly now not stop Chinese customers from searching for different channels from which to shop for overseas items, it’ll serve to reduce daigou/gray market income and by doing so it always will bolster legal e-commerce sales by means of overseas businesses.
The dangerous most probably to be negatively impacted are the “expert” dangerous. These are the people who tour overseas frequently to bring lower back 3 (or greater) suitcases full of products, or who live abroad and go to an outlet mall every weekend to ship products lower back to their buyers/agents/compatriots in China. They generally have shops on e-trade systems inclusive of Tmall or they often submit photographs on their WeChat or different social media bills to replace their clients and then they communicate with the ones customers on WeChat and near their transactions thru WeChat as nicely.