China’s new e-commerce rules come into effect

China’s new rules intended to drive counterfeits off e-commerce sites officially came into force today, placing additional obligations on companies like Alibaba, JD.com and Pinduoduo.

The new law – which was introduced earlier this year and approved in August - introduces a swathe of new requirements for e-tailers, including not only the platforms themselves but also the individuals and organisations selling goods on them as well as social media and messaging sites like WeChat.

One of the most contentious elements of the new law is the provision that e-commerce platforms which know – or should know – that a product offered for sale on their sites is counterfeit should share liability with the vendor if they have not taken measures to prevent the sale and protect the purchase from fraud. Previously, only individual merchants were liable when caught selling knock-off products.

It also introduces a framework for notification of infringing listings and “timely” takedowns, penalties for frivolous or fraudulent notifications, and sets out fines up to 2m yuan (almost $300,000) for platform operators who fail to remove listings quickly enough. They also have to keep records of product and service information – including transaction records – for at least three years.

China’s e-commerce market is the world’s largest, worth more than $1trn and accounting for more than 40 per cent of the value of worldwide transactions.

The move by the Chinese government follows efforts already put in place by e-commerce giants Alibaba and JD.com to tackle the counterfeit problem that has plagued their platforms following accusations they weren’t doing enough to protect intellectual property.

Last month, newly-listed and fast-growing e-commerce company Pinduoduo announced a set of measures to discourage counterfeits on its platform, including a vetting system for new sellers that will draw on information such as business operation appraisals, user comments and credit information from government sources, according to ChinaKnowledge.com.

The says that in August 1,128 retailers were asked to close down, and more than 430,000 suspect listings removed.