2 Jun 2010 12:33

Real name registration for online retailers to launch on July 1

Shanghai. June 2. INTERFAX-CHINA - China will implement a registration system for online individual and corporate e-commerce retailers effective from July 1, according to a draft regulation issued by The State Administration for Industry and Commerce (SAIC) on June 1.

The new policy is aimed at preventing fraud and protecting consumer rights, and requires all individuals intending to operate online stores to register their personal information, including full legal names and addresses, through the system. SAIC will impose a fine of RMB 10,000 to RMB 30,000 ($1,464 - $4,392) on any parties operating in violation of the new regulation.

Existing e-commerce platforms will also be required to verify and archive the personal information of individual vendors, while retailers already in possession of business licenses must display relevant documentation on their store's home page.

Since August 2008, the Beijing branch of the SAIC (BAIC) has required all "profitable" online retailers in Beijing, excluding individuals who sell and exchange personal items, to obtain a business operating licenses, sparking speculation that SAIC would implement similar regulations across the nation.

Currently, the majority of e-commerce vendors are not required to obtain business licenses and taxes are not levied on these types of businesses.

"The 2008 BAIC regulation was harshly criticized, as industry insiders feared that might result in taxation on sales made by individual vendors, effecting the low prices of goods bought online, potentially stunting industry development," Zhou Hongmei, a senior analyst with Beijing-based IntelliConsulting told Interfax.

"Since the new regulation will only require registration, and not require vendors obtain operating licenses, it should not have a significant impact on the industry. Most individual vendors on well-established e-commerce sites, such as Taobao, for example, are already registered under their real names," Zhou said.

"It is expected that taxes and the introduction of business registration fees could be implemented over the next three to five years," Zhou said.

As of June 2009, there were 87.88 million online shoppers in China, up 38.9 percent year-on-year. Online transactions were valued at RMB 119.5 billion ($17.5 billion), according to figures released by China Internet Network Information Center (CNNIC).