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Traders hurt by new e-commerce regulations

By Chen Xiaorong (China Daily)
Updated: 2008-08-30 09:02

Xixi has to close her small but lucrative online shop on Taobao.com and is clearing stock by offering a large discount on all items.

The university student, who uses Xixi as an online name, is adhering to new e-commerce regulations that came into effect on Aug 1 in Beijing, which stipulates that online stores must now provide information such as a registered business address.

"My dormitory is a shared one, so it cannot serve that purpose, and I don't have a house in Beijing," she said.

The new regulations, issued by Beijing administration for industry and commerce last month, ask online traders to leave real information such as company names, business addresses, online shop names, IP addresses and contact details. It also requires traders to have a license before they start a business.

But the move is also making it more difficult to sell goods on the Internet, reducing the competitive edge that online traders have enjoyed over supermarkets and retail outlets in the past.

Basking in the low cost of e-business in a marketplace that boasts the world's largest Internet population, online traders in China have saved costs from not needing to rent houses or hire sales staff.

There are currently 150,000 business people in China who run full or part time online shops with a monthly income of more than 2,000 yuan.

Related readings:  New rule puts end to easy online profits  China to be Asia-Pacific's largest online shopping market

But with the new regulations in place, many online shop owners have to rethink their businesses, an online trading website said.

Ai Yongchun, a spokesperson for Shanghai-based Ebay.com.cn said she has received many enquires from hundreds of shop owners and online buyers.

"For shop owners in Beijing, they wonder whether our website will strictly implement the regulations, or they want to know how to register on our website," Ai said.

Under the new regulations, eBay, as well as other online shopping websites, must check business licenses of their contracted shops and set up records for every deal made. If service suppliers are found offering services to unlicensed online shops, they will also be punished.

Many online shoppers have also expressed their concerns that traders may pass on the costs incurred by the regulations to the end buyers.

But not all are complaining.

Xiong Yifu, a chief designer of Sh.dogoo.cn, an online trade platform exclusively for entity shops, said the regulations will help protect buyers' interest and consolidate a highly segmented marketplace, where tax evasion and IPR violations prevails.

"The only way to avoid fraud trade is to make it transparent to the public, and registration is much needed."