What are the basic laws in regard to foreign invested enterprises (FIEs) conducting e-commerce in China?
Q1: What are the basic laws in regard to foreign invested enterprises (FIEs) conducting e-commerce in China?
A1: For companies looking to establish a legal entity in China to conduct e-commerce all laws relevant to the establishment and operations of FIEs in general will apply. There are many additional relevant regulations such as:
ICP (Internet Content Provider) License - governed by the Ministry of Industry and Information Technology, and
The approval and administration of foreign invested projects on selling goods via the internet and vending machines (Shangzizi [2010] No. 272).
Q2: What are the general requirements of the E-commerce approaches?
A2: There are a number of approaches to entering the Chinese market via online sales; some requiring an established entity in China and some needing an ICP (Internet Content Provider) license.
Such as:
1. Website outside of China
(1) Website developed for Chinese market but hosted outside China, is fairly easy to setup; including acceptance of Chinese credit cards
(2) Delivery issues as the products would be imported into China
(3) After sales service would be difficult at a distance
(4)Cannot receive ICP license and risk of being blocked without warning
2. Website in China
(1) Website developed for Chinese market and hosted in China
(2) Requires legal entity establishment in China
(3) Requires ICP License, majority Chinese partner needed for commercial license
(4) Better in terms of control of logistics and after sales service
3. Third party platform outside China
(1) Reduced cost for setup, no website development, hosting, etc.
(2) Same issues for delivery and service as website outside of China
(3) Chinese consumers unlikely to use due to language and payment issues
4. Third Party Platform in China
(1) Lower setup costs in terms of IT, though yearly fees have been rising
(2) Requires legal entity in China for agreement with platform provider
(3) Chinese consumers tend to trust these platforms more than individual seller's sites
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