More Law & Order for China’s Booming E-Commerce Sector?

on February 7 2014 | in Digital | by | with No Comments

e-commerce, ecommerce, online shopping,

China’s new law to regulate the country’s considerable e-commerce sector will take effect in two months.

The country’s online sales have seen a dramatic increase over the past three years, growing from US$3 billion to US$64 billion in 2012. The Chinese online retail market became the second largest in the world last year, and over the next five years, its business-to-customer growth (B2C) is projected to average up to 34 percent.

Until recently, little action has been taken to control this now thriving market, but the recent third plenum has now announced new laws that will be instituted on March 15, which seem to have the best interests of consumers in mind.

Among the new laws is the right of the consumer to return an item within a week of purchase without needing a reason, as long as the product in question is in “good condition.” Another requires online retailers to register their names and addresses. If they are unable to provide them to consumers, buyers may seek a refund from the platform itself, according to the South China Morning Post.

Claudio de Bedin, a lawyer at the firm de Bedin & Lee, believes the laws are beneficial to consumers.

“I think the law is extremely important because it affects things at a time when e-commerce is taking off in China. It’s common to see working women shop at [their office computers] during lunch. It makes retailers more aware of the products they are selling, and ensure products don’t negatively affect the health of customers. They wouldn’t want to lose money when goods are returned,” he said.

The new regulations could harm businesses such as leading B2C platform Taobao.com, which is susceptible to fraud. Jeweler Chow Tai Fook, for instance, recently announced that it is taking legal action against the platform for selling reproductions of its products.

Guang Tian, a senior business development manager with JD.com, mainland China’s second-largest B2C platform, believes that the concern over fraud is unwarranted.

“Compared with our rivals, we have very strict entry requirements on certification. The brands we work with must be licensees … 100 per cent of our products we source are genuine. [Fake products] would never get onto the site,” he said.

While many international luxury brands — often the victims of counterfeit — see the laws as beneficial to business, others aren’t so certain. Andrea Fenn, the managing director of mainland digital consultancy Fireworks, which works with several fashion luxury brands, notes that the seven-day return policy could inhibit foreign firms, and doesn’t expect to see any dramatic changes in consumer behavior.

“It sounds like a good thing but this ends up favoring the local e-commerce providers and not the international ones. A seven-day return policy is complicated in that it adds pressure to provide flawless service. There are customs, taxes, and import restrictions for international retailers. It’s increasing the burden on international retailers,” he said.

De Bedin believes the law will be evolve gradually.

“The first stage is that people will be returning everything. But that will die down. In the second stage, customers will become more sensible, and retailers will be more responsible to consumers and realize they can throw back anything they don’t like. In the third stage, retailers in China will become more competitive and the companies that offer copy products won’t be so widely available,” he said.



image credit: maria elena

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