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China: Online Shops Must Register
Source: China Daily
Source Date: Friday, July 02, 2010
Focus: ICT for MDGs, Internet Governance
Country: China
Created: Jul 05, 2010

Internet entrepreneurs are now required to register their personal details, including their real names and addresses, with e-commerce agents before they begin to operate their businesses online, according to a regulation that came into effect on Thursday.
Many online shop owners are worried that the regulation, issued by the State Administration for Industry and Commerce (SAIC), the country's market regulator, is a signal that the government is preparing to start collecting taxes from them.

As the country's first regulation administering online trade and services, the rule lists the obligations of online shop owners and e-commerce agents. It also stipulates the obligations of commerce authorities over the management of e-shopping.

If online business owners fail to abide by the regulation, they face a fine up to 30,000 yuan ($4,410), according to the regulation.

Some online trading platforms, including taobao.com and paipai.com, can expect to be targeted by the SAIC as it monitors the implementation of the regulation, since they are the most influential e-commerce agents, with the largest number of transactions, the administration said.

The platforms are required to register and review online shop owners' identities along with their business credentials, establish mechanisms to ensure the safety of online transactions and protect the buyers' legal rights. They also need to monitor sites and bar the sale of counterfeit goods, according to the regulation.

Commerce regulators in east China's Zhejiang province put the SAIC's regulation into effect on Thursday, specifying the local online trade inspectors' duties and urging businesses to protect their credibility.

Half of the profits produced by the country's online transactions are from the province, according to a report by 21st Century Business Herald.

Beijing and Shanghai are also reportedly due to publish their local online trade rules.

"The regulation poses no impact on my business," said Zhang Dan, who works for a logistics company in Shenzhen, Guangdong province, while she also moonlights with an online clothes shop.

"As an online shop owner as well as an ordinary consumer, I hope the authorities will strengthen their supervision of online business to ensure all those who sell counterfeit goods are purged from the market," she told China Daily.

However, some online entrepreneurs have begun to worry that taxation may follow in the wake of the regulation's implementation, which may reduce their net profit and inflict further burdens on their operations.

"There is nothing about the regulation that worries me, other than the buzz that taxes may soon be imposed on us," said Lin Nan, the owner of an online garment shop.

"The way we make profits online is by always keeping the goods cheaper than the same ones in the department stores. If the authorities order us to pay taxes, the advantage of doing business online will disappear," Lin said.

"A considerable number of college graduates who run online shops will also lose their jobs. The government should take these concerns into consideration," she added.

"If any tax is levied on us, we will have to pass the extra expense on to the buyers," said Crystal He, a Shanghai-based cosmetic dealer.

"In order to establish a sound and credible online market, the government should certainly push forward the real name registration. The move will have positive effects on the development of China's online market," said Fang Yingzhi, an analyst with the China e-Business Research Center.

"The regulation has not mentioned the collection of tax from online shop owners, which suggests the authorities are currently aiming to boost e-commerce in the country. In the long run, however, it is inevitable that the regulators will seek to collect taxes in the booming market," she added.

According to a research conducted by the China e-Business Research Center, the number of China's online business websites will rise to 25,000 by the end of this year and the number of online shops is estimated to be more than 3 million.
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