New rules for online trading, auctions and e-commerce

Lots of people buy and sell on Taobao, China’s eBay

Yesterday, the Beijing Administration of Industry and Commerce published on its website the draft of a new set of rules governing Internet commerce.

The rules, set to take effect on August 1, stipulate that all “for-profit online stores” are required to register for a license while “individuals who sell or exchange items for personal use” are not. This has aroused questions about how to draw the line between “for-profit” stores and “not-for-profit” ones.

According to a report in yesterday’s The Beijing News, anyone who wants to open a home-based “for-profit” online store must have the permission of their local neighborhood committee (居委会或业委会) after consulting nearby residents, for example, the neighbors.

Trying to explain the difference between “for-profit” and “not-for-profit” e-coommerce, the newspaper quoted an explanation from Wang Jing, an official in Beijing Administration of Industry and Commerce:

“If the price is negotiated and accepted by both sides, it can be categorized as “not-for-profit”; if a buyer thinks that the seller intends to make a profit, and this is confirmed by the enforcement department, then the seller will be punished for doing business without a license.”

The newspaper also quoted a lawyer, Liu Huaiyang who apparently has a slightly different answer from Wang’s. Liu said that the “for-profit” status should be based on whether the seller is conducting the same kind of business during a certain period of time. For example: if someone has sold a watch on the Internet, he is not necessarily “for-profit”, but if he has sold 100 watches in separate deals, he falls under the definition of “for-profit”.

Despite the two explanations given by the newspaper, ambiguity remains: It is likely that some online stores conduct business in a “for-profit” style like selling 100 watches for a couple of months and then selling some personal stuff like a antique watch inherited from grandfather.