Today, just to detour a little bit from my preferred topic (i.e. M&A) I will continue to introduce a new subject, i.e. e-commerce, which I started to analyze at the very beginning of my “postings” (
http://blawg.lehmanlaw.com/wordpress/?p=1545
), not only because it is my second favorite theme, and I will talk more extensively about it in the future, but also because I promised to a new friend and reader (who is Chinese nationality and living in the US, and, I assume I can describe her as my first “follower”) to treat this topic more in detail’
We all know to what it refers this term “e-commerce,” but it is complicated to explain how it works and how it is regulated. It is interesting to note that it does not exist a widely accepted precise definition of this term. In a loose sense
e-commerce
means doing business over the Internet, selling goods and services which are delivered off-line as well as products which can be ‘digitised’ (
this term i.e. “digitised’ means the physical form of a good or service can be coded using digital technology and therebywhich can be distributed over the Internet)
and delivered on-line, such as for example computer software.
It is worth noting that the MofCOM plays an important role in developing a new legal environment for fostering the development of e-commerce. In fact the task of the Department of Electronic (
http://english.mofcom.gov.cn/departments/dzsws2/
) commerce and Informatization within the Ministry of Commerce is to establish China’s e-commerce development program, formulate and implement relevant policies and measures to promote informatization of businesses and develop domestic and overseas market by e-commerce. To support small and medium-sized enterprises with e-commerce application and push forward the sound development of e-commerce for consumers like on-line purchase. And more importantly to formulate standards and rules on e-commerce, organize and take part in the international negotiations, consultations and exchanges on such standards and rules, and advance the international e-commerce cooperation.
It is evident that no single government or nation can completely regulate the Internet or electronic commerce. Co-operation amongst States is necessary in order to harmonize the existing rules and to give that certainty and predictability that business activity needs when taking place over the “Net.” As already stressed in the previous entry about e-commerce (
http://blawg.lehmanlaw.com/wordpress/?p=1545
) China has already put in place a legal framework regulating e-commerce (and this theme will be discussed further in other entries), considering the example of other Nations. Here, before to discuss in details the regulatory environment I want to point out the following: this electronic medium offers many possibilities and advantages: (i) reduced operational cost; (ii) increased efficiency due to increased precision and speed; (iii) access to local, national, or international markets; (iv) it allows personalised products and services to be offered; (v) it allows specialised marketing due to the many databases available. Forward-thinking companies have grasped this truth and have opened their own website, confident of increasing and enhancing their business and efficiency.
This new way to conduct business (through e-commerce) is literally changing the material marketplace in China (and not only here) adding new room for businesses with the expansion of what we can call “market-space” thanks to the Internet.
E-commerce
undeniably represents the new frontier in business activities. The legal environment in which it is developing, and the instruments adopted in order to regulate it, they have an important role to play in realising its full potential.
As mentioned before one of the main piece of legislation regulating e-commerce are the so called SAIC’s “
Interim Measures for the Administration of On-line Commodity Trading and Relevant Services Activities
” (hereafter the “
SAIC’s Measures
”), which took effect on 1 July 2010.
Today I am not going to describe the set of laws regulating in detail transaction over the Internet in China, however it is worth to note that recently the Chinese legislator has introduced a new piece in this puzzle concerning the function e-commerce in China: i.e. the
National People’s Congress Standing Committee Decision concerning Strengthening Network Information Protection
, passed on 28 December 2012 at the 30
th
Committee Meeting of the 11
th
National People’s Congress Standing Committee. (
) The aim of this new set of rules is to enhance the protection of personal information online and safeguard public interests, requiring Internet users to use real names to identify themselves to service providers when signing web access agreements. This new set of rules have the same legal effect as a law. The 12-article decision includes an identity management policy requiring Internet users to use their real names to identify themselves to service providers, including Internet or telecommunications operators.
This is another example, which is signaling that the smooth and clear functioning of the Internet and thus of the e-commerce, for the Chinese government is of extreme importance in order to use it as a tool in sustaining and possibly boosting China economy.
There is no doubt that
e-commerce
represents one of the key strategies to expand or to accelerate the sales in China. Small, medium-sized and big enterprises can trade their products and services efficiently through this mean, and it is not surprising if e-commerce is expected to grow rapidly in China. Indeed, a report by Forrester Research Inc. predicts that e-commerce in China will grow 20% annually through 2016. However, businesses have to understand that the legal framework governing both the Internet and e-commerce is expanding in China. Establishing a presence on the Internet seems to be the most reasonable step to go forward, however adapting to the new legal environment regulating this instrument can be laborious and a lot of details need to be considered as it will be exposed.
– Cristiano Rizzi