MOFCOM Circulates Two New Draft Standards on E-commerce

On 22 March 2016, the Ministry of Commerce (“MOFCOM”) circulated for public comment two draft industry standards applicable to online sellers and e-commerce platforms:

  • Business Services Specifications for Mobile Commodity E-Commerce, which stipulate operating standards that would apply to online sellers and e-commerce platforms in relation to mobile commodity transactions; and
  • Business Services Specifications for Cross-Border Commodity E-Commerce, which spell out operating standards that would govern online sellers and e-commerce platforms in relation to cross-border commodity transactions.

Both drafts, which are designated to be non-binding standards, would establish standards applicable to the administration of online sellers, including for example:

  • product pricing and payment;
  • product measurements, origins or geographical indicators, inspection and testing and logistics;
  • contracts, change orders, variation, breach and termination;
  • insurance;
  • claims; and
  • dispute resolution.

Both draft standards also pay particular attention to data privacy issues and require e-commerce platforms to:

  • require authorisation by the data subject as a condition to gathering and processing his or her personal information;
  • desensitise data, that is, modify personal data so that it no longer contains sensitive private information, before the data is used for commercial purposes;
  • ensure the security of data assets, that is, data of value to the organisation, whenever the platform is accessed by online sellers, logistics or payment services providers, and purchasers through a mobile device;
  • encrypt personal data before it is transmitted online; and
  • record transmissions of personal data to administrative or judicial authorities.

Comments on each draft standard may be submitted until 31 May 2016.

The draft standards are related to draft standards on online retailing and online services circulated by MOFCOM in September 2015.

Market Reaction

Paul McKenzie, Managing Partner, Morrison & Foerster, Beijing and Shanghai

“Mobile e-commerce as well as cross-border e-commerce platforms like Tmall Global are among the fastest growing parts of China’s e-commerce sector. These draft standards represent a significant effort by MOFCOM to define best practices. Not only should they be of interest to online sellers and marketplace operators in China, the draft standards governing cross-border e-commerce are of interest to international brands selling into China via e-commerce platforms such as Tmall Global.”

Action Items

Though these standards are not yet in effect, General Counsel of online sellers and e-commerce marketplaces in China should carefully study the draft standards, as well as the draft standards on online retailing and online services circulated by MOFCOM in September 2015, and consider adjustments to related terms and conditions and operating practices in order to conform to the standards. It also could demonstrate goodwill to a company’s local commerce bureau for counsel and government relations colleagues to enquire into the status of the drafts on a named basis.