China Cracks Down On Online Fakes

To curb illegal sales, China says Internet entrepreneurs will be required to register personal details before they start operating an online business.

Mike Clendenin

July 7, 2010

2 Min Read
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In an effort to curb the sale of fake and illegals goods online, China says it will enforce a new set of rules released that require real-name registration for online shop owners.

The controversial "Interim Measures for online commodity trading and related services" went into effect on July 1 in China. The measures, issued by China's State Administration for Industry and Commerce (SAIC), state that all internet entrepreneurs are now obliged to register personal details, such as real names and addresses with e-commerce sites before they start operating an online business.

In addition to real name registration for individual traders, which will require the National Citizen's Identify Card system for verification, larger online shops must provide a genuine business license and other documentation.

Once the measures are implemented, the SAIC will conduct a comprehensive survey and verification of the true identities of online shops using platforms. Sellers providing false information will not be approved.

China's largest online shopping platform, Alibaba's Taobao, says that this will not pose a problem and in fact they have required real-name registration since they began operations. The measures are more likely to affect smaller trading platforms who may find the new costs associated with regulation prohibitive.

Many online traders say they are not concerned about the real-name registration, but have taken the word "interim" to imply that further regulation is in the pipeline, including the possibility of taxation on their online income. This will of course affect their net profits and put burdens on their business operations, which the larger traders will be able to handle but small traders may not be able to cope with.

The public's attitude to the new measures is mixed. A recent survey posed the question "Do you think the real-name system for online shopping will efficiently regulate transactions?" The response was 44.65 percent agreed that it could, while 44.19 percent believed it couldn't, with the remainder undecided.

The measures are also designed to cope with the burgeoning online trade in counterfeit and illegal merchandise. Taobao and other online market places are notorious for finding pirated games, music and software as well as other illegal products.

Previously the platforms had relied on a customer review and points system similar to steer consumers towards shops with better products and better customer service. Now it will be up to the platforms themselves to monitor and crackdown on illegitimate trading.

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