China to draft first law regulating e-commerce market

SHANGHAI, June 18 (UPI) -- China sought public opinions this month for its first law regulating the country's $36 billion e-commerce market in a move to curb trade in counterfeit goods and further protect consumer rights, a Chinese official in charge of drafting the law said.

The law aims to enforce registration and licensing among numerous sellers in China's booming online business, a group largely untracked by authorities, said Cao Lei of the China E-Business Research Center, an entity authorized by the State Administration for Industry and Commerce of China to draft the legislation.

"There may come a new type of license exclusively for online sellers," Cao said in a telephone interview. "Without the licensing, fake goods go rampant."

The law, which is expected to be enacted within the year, will address the mounting complaints of consumers unfairly treated in ill-regulated online transactions.

One example is sellers who cancel shoppers’ orders without negotiating with the buyer when the product is sold out due to deep-discount shopping frenzies. In a situation known as miao sha, literally translated as "second kill" or "instant kill," sellers offer products at exorbitantly low prices for just 1 second. The shopper who spots the price walks way with the trophy.

But technical problems often cause the actual purchase orders to exceed what the sellers can provide. Mass order cancellations follow. Since there's no law protecting shoppers, they often have to bear the cost of the cancellation.

“We receive hundreds of complaints a day, many of them are about order canceling,” said Yao Jianfang, a user experience expert at the research center.

The shoppers ask why no one is required to reimburse them, she said. The law will clarify who takes what responsibility in the likes of such accidents.

The law will define online commodities, and put both tangible and intangible types under supervision, said Cao. The term is often seen as the equivalent of tangible products like personal computers and clothes, but in recent years is increasingly becoming intangible. For example, gamers purchase weapons to slay monsters. There are virtual currencies on social networks and games.

Heavyweight e-commerce players in China are actively involved in the legislation process, Cao said, including Alibaba and its retail branch, Taobao, as well as 360buy, China’s largest business-to-consumer Web site.

The center accepted opinions until June 15. Now, experts are drafting the law.

Chinese officials two years ago proposed temporary guidelines to regulate online trading. Those guidelines have no legal power, but they will be used as a foundation for the new law, experts said.