Complete Manufacturing and Distribution for China, Vietnam, and Hong Kong

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Doing eCommerce in China?  Pending rules may impact you.

Jan 13, 2017

By Paul Stepanek, President, Complete Manufacturing and DistributionRF pallet-1665471_1280.jpg

In 2013 China surpassed the USA in eCommerce volume, and will soon overtake the USA and Europe combined.  Mindful of growing needs for security, Beijing has its hands full balancing needs for protecting consumers while continuing to fuel growth.   

Briefly summarized, new laws announced in December of 2016 are in the works; and if passed, will require companies to:

  • Notify consumers who is collecting personal information like names, addresses, phone numbers, emails, transaction details, etc. – and how the data is used.
  • Create an internal control system to manage data.
  • Manage cash and control risk (for those handling transactions).
  • Have emergency plans in place should a data breach occur.
  • Respond to complaints that can be escalated in lawsuits and compensate victims.
  • Maintain records for a minimum of three years.

Significantly, the new law also widens the net to include more than just mega e-tailers like the Amazons of the world.  Companies handling logistics, delivery services, cross-border sales, and payment transactions—basically anyone possessing customer data—may have to comply. Some may find these requirements unfamiliar, complex, and potentially expensive to manage.

For example, take delivery companies.  In the USA, it’s a three player court with:  USPS, UPS, and FedEx.  China in contrast has 8,000+, all of which will likely need to make big changes to comply with new laws.  

Penalties for non-compliance are stiff – up to 500,000 RMB (about $75,000 USD) in fines and cancellation of business licenses.  Of course, the monetary impact pales in comparison to the repercussions negative PR can have on a company’s brand reputation.

Given China’s booming eCommerce economy, Beijing is under pressure to pass these laws quickly. CMD expects to see movement in the first couple of quarters of 2017 and will be monitoring developments closely.  

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