Dr. Hong Xue

Laws and Practices of Cross-Border E-Commerce in China

Monograph

ebooks@prospekt.org

Информация о книге

УДК 341:339(510)

ББК 67.412:65.428(5Кит)

H77

Author:

Dr. Hong Xue, Law Professor of Beijing Normal University, National E-Commerce Expert appointed by China Ministry of Commerce, Member of State Expert Committee on Trade Digitization, and Vice Chair of World Internet Conference Expert Committee on Cross-Border E-Commerce.

The book is a monograph to comprehensively research all the critical legal issues involved in cross-border e-commerce in China. It provides an in-depth study regarding the unique Chinese legal system in the field of e-commerce, and reflects the world-leading Chinese e-commerce practices. The book places the refined and summarized Chinese e-commerce legal paradigm in the context of the relevant international legal system, highlighting the forward-looking, open and globalized characteristics of China’s legal thinking.

The book is not limited to research digital trade law, but extends to the other key legal issues related to paperless trade facilitation, consumer protection, personal information protection, intellectual property protection, cybersecurity and data security, trade in data, dispute resolution and international cooperation, so as to present a holistic legal view regarding the cross-border e-commerce laws in China.

Legislation updated as of June 27, 2024.

The book that decomposes each important legal system, provides the insightful research and analyzes the relevant practical cases will be a useful handbook for researchers, practitioners and other audience.

УДК 341:339(510)

ББК 67.412:65.428(5Кит)

© Hong Xue, 2024

I. INTRODUCTION

China has the world’s largest Internet user community and still has a great potential for e-commerce development. According to the latest official statistics released in August 2023, there are 1.08 billion Internet users in China, which means that 76.4% of 1.4 billion population are online. Internet retail sales, mobile electronic payments and live stream streaming services keep growing steadily.¹

According to the Statistics released by the China General Administration of Customs, 2023 total volume of cross-border e-commerce imports and exports reached RMB 2.38 trillion Yuan (roughly US$ 0.34 trillion) and the annual growth rate was more than 15.6%, in which export grew more than 19.6%. TEMU, Tiktok Shop, Shein, AliExpress and Shopee have become front runners in global e-commerce market.

China recognizes creation of internationally-competitive digital industrial clusters the key area of national development and long-term economic strategy.² The government policies stimulate digitization of all industrial sectors and trade areas in which data becomes the core element of social productivity.³ Under the National Plan implemented from the beginning of 2022, enable digital economy has become the power engine of the new-round of technological and industrial revolution and a secured, open, cooperative, and orderly network community with shared future should ensure network and data sovereignty.⁴ With a number of world-class digital platforms being developed, digital economy is expected to take more than 10% of the Chinese GDP in 2025.⁵

1. E-commerce Innovations Powered by New Technologies

New technology has always been an important driver of trade. The prosperity and development of e-commerce cannot be separated from the popularization and application of network information technology. The application of pioneering new technologies such as artificial intelligence, blockchain, 3D printing, and the Internet of Things to e-commerce has spawned new business models (such as data transactions of IoT devices) and new service formats (such as data authentication), and triggered changes in transaction behaviors, transaction rules, and transaction systems. The application of new technology makes the transaction process clear and transparent, greatly enhances the traceability, guarantees the authenticity and integrity of transaction data, reduces the cost of contract management and performance, and significantly improves the efficiency of e-commerce. The smart contract system built on blockchain technology ensures that the transaction data and the performance process are consistent and cannot be tempered, which enhances the risk management ability of the parties to the transaction and ensures the security of the transaction.

China is the frontrunner for creation and application of technical innovations in e-commerce. For example, SHOPLINE, a company building independent websites SaaS system for cross-border e-commerce brands, provides end-to-end solutions for merchants all over the world, from product selection, website construction, traffic attraction, conversion to fulfillment to meet the needs of sellers of overseas brands. Relying on technological innovations, SHOPLINE has launched self-developed functional plug-ins, and tried to build Al-empowered website creation features to help brands achieve deeper operations. At the same time, based on the open ecosystem capability, SHOPLINE has started cooperation with ecosystem partners at home and abroad to rapidly expand the number and categories of apps in app stores, to empower more diversified e-commerce scenarios of independent websites, and help overseas enterprises achieve cost reduction and efficiency improvement. In addition, with the help of SHOPLINE’s integration system, merchants can effectively manage inventory, optimize operations and diversify sales channels, while maintaining brand consistency. SHOPLINE has provided services to more than 600,000 sellers around the world, including world-renowned brands such as Linsy, FMS and Samebike.

In another case, Hangzhou Shulex Technology Co., Ltd combines the services with Al innovation, realizes the intelligence and automation customer service, intelligently analyzes the relationship between the market and consumers, and uses the custom Al tag feature to identify new groups, new demands and new usage scenarios. In 2022, its business covers more than 100 countries and regions and has more than 100 million users around the world.

Meanwhile, new technologies have its limitations. Different systems such as blockchains, digital identities, or the Internet of Things are operating according to their own rules and are not connected to each other, potentially resulting in silos of data and over-centralization of data infrastructure. For the healthy and sustainable development of e-commerce, the development and application of global technical standards should be promoted, and the compatibility and interoperability between technologies, systems and applications should be enhanced, so that transactions and data systems can be interconnected.

E-commerce characteristic of algorithm, smart contracts, high-frequency and large volume requires the corresponding progress of the relevant trade rules and legal supervision. In e-commerce activities involving multiple actors in the supply and value chain, any small technical error or defect in the operation of AI systems can cause catastrophes and distort the entire contractual relationships interconnected with each other. But flows in system design, errors of human-computer interaction, and even failures in the execution of computer code are difficult to trace. Artificial intelligence (AI) models with deep learning ability operate in a technical black box and show some kind of autonomous will, in the absence of a clear legal basis, it is extremely difficult to attribute the responsibility of the AI outputs and make the affected parties obtain relief and compensation. In order to ensure the mutual trust and predictability of transactions under AI conditions, the human-centered principles proposed by the Digital Economy Partnership Agreement (DEPA) deserve consideration in international coordinated governance, namely: the algorithm shall be explainable, the information shall be transparent, and the system setting shall be relatively fair.

The application of new technologies in e-commerce must adapt to the relevant legal and policy environment. Technologies such as 5G communication, 3D printing equipment, drone delivery, and self-driving cars have raised public safety concerns. The network security of networked products, devices and facilities is the major concern. Countries have launched the relevant cybersecurity certification, assessment and other mandatory regulation, but the different scope of application and standards of national regulations may become a barrier to cross-border trade, and increase the compliance cost of e-commerce enterprises.

The application of new technologies shall not harm the legitimate rights and interests of citizens, legal persons and other parties concerned. China’s Regulations on the Protection of Minors Online clearly prohibit providers of online products and services from conducting commercial marketing to minors through automated decision-making, strengthening the legal obligation of e-commerce operators to protect minors’ personal information. The application of AI and big data analysis in e-commerce on consumer data profiling and targeting advertisement shall not damage the legitimate rights and interests of consumers, such as consumers’ right to know and right to choose. With respect to those software-driven connected products, quality warranty, after-sales services and product liability need to be defined by new legal norms.

New technologies evolve and advance very quickly, and their potential and value in e-commerce should be tested in market competition. The regulation of policies and laws should strictly adhere to the principle of technology neutrality, giving different technological solutions and implementation plans equal opportunities for competition, as well as avoiding abuse of market dominance by super-large platforms or enterprises, unreasonable monopoly of data and transactions, and damage to normal market competition.

In e-commerce, maintenance of a delicate balance between technological innovation and legal regulation to ensure development of new technologies in line with the efficient and sustainable development goals will be a difficult task for regulators in a long run. For the sake of common development goals, it is necessary for all countries to strengthen international information communication and cooperation, jointly promote the development and implementation of common technical standards, coordinate and harmonize new technology regulatory laws and policies, avoid conflicts and frictions between rules, and reduce the risk of fragmentation of the trade rule system.

The development of e-commerce in the world’s economies is extremely uneven, and the application of new technologies is exacerbating the existing digital divide. The Internet penetration rate in the least developed countries is still below 20%, technological innovation and application rate is low, and digital divide has become a development gap. E-commerce should be guided by the United Nations Sustainable Development Goals, promote inclusive development and win-win cooperation, and encourage multi-channel and multi-level technical assistance and technology transfer. E-commerce powered by new technologies will take off and creates new opportunities for global economic and trade growth.

2. The Global Development of Cross-Border E-Commerce

Digital technology is assimilating comprehensively across all domains and processes of human economic, political, cultural, social, and ecological civilization in the world. This assimilation is ushering in new concepts, business formats, and modalities, engendering a broad and profound impact on human production and life. Digitalization and the Internet have also profoundly changed the environment, models, and value chain of international trade, enabling the globalized market to become a more effective information system. Consequently, international trade has transcended into a new epoch of deep globalization, reveling in unprecedented development opportunities. Supported by digital network technology, digital trade of goods, services and intellectual property rights has taken a substantive portion of the total volume of international trade, enhanced trade efficiency, created new jobs and promoted economic growth and social progress. Against the background of deceleration of the world economy, e-commerce continues to uphold a robust growth trajectory, and becomes the new engine of global economic development.

Cross-border e-commerce characteristic of conclusion of sales contracts of goods or services via digital networks has become the main part of digital trade. Digital platforms are critical in cross-border e-commerce, which enable micro, small and medium-sized enterprises (MSMEs), and even individuals, to enter the field of international trade and engage in direct trading activities with foreign subjects. The infusion of Generative Artificial Intelligence (AI), Augmented Reality (AR), Virtual Reality (VR), and other avant-garde technologies are being extensively deployed in cross-border e-commerce, reshaping the modes and business formats of international trade. Cross-border e-commerce, that is enabled by modern information networks, promoted by the new cutting-edge technologies, and supported by digital platforms carrying tens of thousands of MSMEs, profoundly changes the pattern of world trade and global trade rules.

Cross-border e-commerce has emerged as a key and focal point in international economic and trade rulemaking. In the international multilateral trade system. Global e-commerce negotiations on electronic contracts, signature and invoices and consumer protection taking place at the World Trade Organization (WTO) and other for a have yielded new consensus, while countries are still at odds on the topics of international taxes, market access, online fraud, and cross-border data flow. Meanwhile, countries are exhibiting more flexibility as they engage in bilateral or regional trade systems tailored to their distinct circumstances. With respect to the international trade rulemaking on cross-border e-commerce, multiple negotiating and evolving processes, paths, platforms, systems, and fora are coexisting and mutually stimulated.

Development of cross-border e-commerce, however, is plagued by the insufficient compatibility of international rules and other issues and challenges. Huge disparities in terms of network penetration, infrastructure, degree of digitization, etc. among different countries and regions have led to highly uneven development of cross-border e-commerce in the world. Today, when cross-border e-commerce is gradually becoming the main form of international trade, countries (especially least developed countries) that lack the capacity to digitally transform their trade system are not only losing valuable development opportunities, but also facing the risk of being marginalized from the international trading system. The digital divide is getting widening in digital economy and digital trade.

The international rules of cross-border e-commerce are in the process of continuous development and evolution, while countries in digital transformation (especially LDCs) lack the ability to grasp and understand the changing international rules, this deficit leaves them in a state of disenfranchisement or semi-disenfranchisement at the pivotal juncture of the evolution of the international system of cross-border e-commerce.

The development of cross-border e-commerce depends on an appropriate policy and legal environment. However, developing countries have insufficient relevant policy and legal framework to effectively protect consumer rights, personal data and privacy and intellectual property rights.

Escalated compliance costs for developing countries and for the large number of MSMEs engaged in cross-border e-commerce increase trade uncertainty and risk. Influenced by the evolving international system, many developed countries and regions have strengthened their policies and legal regulation on cross-border e-commerce and the regulation on cross-border e-commerce is intensifying, with stronger penalties for non-compliance. Meanwhile, international system of cross-border e-commerce is increasingly complex and costly for compliance.

Developing countries lack the capacity and resources to implement measures to facilitate the import and export of goods in cross-border e-commerce. With the continuous development of the international system of cross-border e-commerce, not only are traditional multilateral systems such as the WTO active, but a large number of regional free trade agreements and digital economy agreements have emerged. However, developing countries that are not able to effectively implement paperless, automated, and digital single window mechanisms for regulatory processes suffer from inefficient trade, higher trade costs, and reduced competitiveness in the international market.

Developing countries have a deficit in understanding and readiness concerning novel legal challenges brought by emerging technologies, and are potentially left behind the evolution of the international rules system.

Given the global essence of cross-border e-commerce, countries in digital transformation need to confront new issues and undergo revisions and enhancements of their legislations and regulations in a timely manner.

3. Chinese Laws and Policies Enabling Cross-Border E-Commerce

A sound legal and regulatory environment is essential for e-commerce to maintain keep sustainable growth and reach its full potential. Although China has already developed a legal framework that broadly acknowledges legitimacy of trade contracts in digital form, many new regulations and policy documents for promotion of e-commerce were enacted. For example, the State Council issued the Guidance on Promoting the Healthy and Rapid Development of Cross-border E-commerce on 16 June 16 2015.

The Chinese National People’s Congress (NPC), the highest legislature in China, on August 31, 2018, officially approved and enacted the Electronic Commerce Law, which entered into force on from 1 January 2019. Unlike any other e-commerce laws in the world, the Chinese E-Commerce Law is not limited to legalizing e electronic transactions, per se, but addresses a variety of legal issues, such as e-payment, logistics and express delivery, e-commerce operators, consumer protection, data protection, intellectual property protection, online dispute resolution, governmental supervision and regulation, market competition and cross-border e-commerce. This comprehensive law lays down the legal foundation of the Chinese digital economy as well as creating es an enabling legal environment for e-commerce.

Apart from the E-Commerce Law, 2016 Chinese Cybersecurity Law, 2021 Data Security Law and Personal Information Protection Law, along with the other regulations and policies set up the regulatory framework to ensure e-commerce and digital trade operating in an orderly and lawful manner.⁶

Chinese cross-border e-commerce is developing vigorously in the enabling legal and regulatory environment. The Chinese legal systems regarding digital trade, paperless trade facilitation, data and security, consumer trust, intellectual property protection and alternative dispute resolution are particularly playing the essential roles in the development of cross-border e-commerce and deserve in depth research.

II. REGULATORY SYSTEM ON DIGITAL TRADE

By the end of 2018, China had 619 million consumers of Internet retail sales, 73.6% of 829 million Chinese Internet population shopped online, 71.4% of Internet population used mobile phones and 583 million people used mobile electronic payments when shopping; Alibaba Inc’s Alipay and Tencent’s Wechat pay have been operating in more than 40 countries and regions.⁷ Given that the Internet penetration rate was only 59.6% of China’s 1.4 billion population, China as the world’s largest Internet user community had great potential for e-commerce development. A sound legal and regulatory environment was needed to be crafted for e-commerce to maintain sustainable growth and reach its full potential.

Although many regulations and policy documents for promotion of e-commerce have been promulgated, for example, the Guidance on Promoting the Healthy and Rapid Development of Cross-border E-commerce issued by the State Council on June 16, 2015, they are short of the authority and coverage of laws. The Chinese National People’s Congress (NPC), the highest legislature in China, therefore tasked the Economic and Financial Committee to draft the E-Commerce Law at the end of 2013. The Draft was completed in the middle of 2016 and the Bill for the E-Commerce Law was filed and reviewed by the Standing Committee of the NPC four times from 2016 to 2018. On August 31, 2018, the NPC officially approved and enacted the Electronic Commerce Law of the People’s Republic of China (hereafter E-Commerce Law). The Law entered into force on January 1, 2019.

Unlike any other e-commerce laws in the world, the Chinese E-Commerce Law is not limited to legalizing electronic transactions, per se, but addresses a variety of legal issues, such as e-payment, logistics and express delivery, e-commerce operators, consumer protection, data protection, intellectual property protection, online dispute resolution, governmental supervision and regulation, market competition and cross-border e-commerce. This comprehensive law lays down the legal foundation of the Chinese digital economy as well as creating an enabling legal environment for e-commerce. To understand this unique Law, it is necessary to look into the legal systems and norms.⁸

The comprehensive E-Commerce Law contains the relevant legal norms from civil, commercial, administrative, financial and other laws and covers a variety of legal subjects and legal issues. The comprehensiveness of the Law aims to meet the needs of the complicated legal demands of e-commerce. Despite its comprehensiveness, the Law does not attempt to be a lengthy collection of a cluster of laws. Instead, the Law effectively coordinates with the existing laws and enables further legal developments in a coherent, robust and vibrant eco-system. The Law creates many innovative legal norms to fill in legal gaps between the existing laws, it updates and modifies certain provisions of the existing laws as well as creating completely new norms for e-commerce. The Law also effectively takes into account international legal developments and the need for cross-border e-commerce. In a nutshell, the E-Commerce Law that is comprehensive, coherent, innovative and internationalized which is a unique existence in the Chinese legal system.

Under the E-Commerce Law, e-commerce means the business activities of selling goods or providing services through the internet or any other information network. Financial products and services (except for electronic payment) are excluded from the scope of the application of E-Commerce Law. Content services provided via information networks, such as news information, audio-video programs, publications, and cultural products, are subject to the other laws on content regulation, but transactions of digital goods (for example, audios, videos, e-books, or visual games, etc.) shall apply the E-Commerce Law.

The E-Commerce Law applies to e-commerce both within the territory of China and in cross-border circumstances,⁹ particularly the follows:

• Chinese e-commerce operators invested in by foreigners;

• foreign e-commerce operators offering goods or services to consumers in China; or,

• regional or bilateral trade agreements between China and other countries adopting the Chinese laws.¹⁰

The E-Commerce Law may also be applied to cross-border e-commerce based on the transaction rules and service agreements of Chinese e-commerce platforms or the choices of the transactional parties.

In addition to the Chinese Civil Code, the E-Commerce Law provides the legal norms salient to digital trade, especially on automated contracting, electronic payment and express delivery, and e-commerce platforms.

1. Automated Contracting

The E-Commerce Law does not affect the other laws applying to the sales or service contracts. Formation and performance of e-commerce contracts shall comply with the Civil Code, the Electronic Signature Law, and the other relevant laws. But e-commerce contracts are typically concluded and frequently performed via automated information systems, which is specifically defined in the E-Commerce Law.

(i) Users of automated information system

The E-Commerce law clarifies that the e-commerce parties that use an automatic information system to enter in or perform a contract shall be responsible for the legal effect of using such a system.

Even if both parties commonly use one automated information system, there may be one party who can control and set up the system, while the other party (such as consumers) has no choice but to accept the setting and arrangement of the system. The party in control, under the E-Commerce Law, shall clearly, fully, and explicitly inform users of the procedures for forming contracts, matters that need attention, and the download methods, etc., to ensure the users’ convenient access to and download of such information in full.

E-commerce operators shall also provide access for users to correct any input error before submitting an order. If the users attempt to correct their input errors after submitting the orders, certain conditions shall be met, as provided in the United Nations Convention on the Use of Electronic Communications in International Contracts. The Convention, Article 14, provides that where a natural person makes an input error in an electronic communication exchanged with the automated message system of another party and the automated message system does not provide the person with an opportunity to correct the error, that person, or the party on whose behalf that person was acting, has the right to withdraw the portion of the electronic communication in which the input error was made if: (a) The person, or the party on whose behalf that person was acting, notifies the other party of the error as soon as possible after having learned of the error and indicates that he or she made an error in the electronic communication; and (b) The person, or the party on whose behalf that person was acting has not used or received any material benefit or value from the goods or services, if any, received from the other party.

(ii) Conclusion of e-commerce contracts

E-commerce operators’ acts of publicly disclosing the information of their goods or services via information system do not constitute the binding offers, per se. Only when the information on goods or services disclosed is sufficiently specific and explicit to constitute an offer, a contract shall be deemed concluded upon the other party’s successfully placing an order for the chosen goods or services, unless otherwise agreed by the parties.

However, with respect to consumer trade, a contract is formed with the e-commerce operator the moment the consumer has made the payment after placing the order. Even if the operator has the standard clauses that repudiate the formation of the contract, such standard clauses shall be void. This provision of the E-Commerce Law purports to protect consumers from any dishonest business offering because Chinese consumers get used to completing electronic payment immediately after submitting an order.

(iii) Presumption of capacity

Normally, parties in e-commerce shall be presumed to have corresponding civil capacity for contracting, unless evidence to the contrary is sufficient to rebut the presumption. In specific businesses, e-commerce operators, however, are required to verify the genuine identities of the other parties and cannot rely on the presumption of capacity. For example, operators offering online visual games services shall, in accordance with the administrative regulations, deploy a facial recognition system to prevent underage minors from accessing and purchasing their services. The guardians of such minors can always revoke contracts between the minors and the service providers because facial recognition evidence can sufficiently prove that the service provider knew or should have known the lack of capacity of the minor.

(iv) Performance of e-commerce contracts

The e-commerce parties to a contract may agree upon the method or timing for performance. If there is no such agreement between the parties, the performance time is defined by the E-Commerce Law.

Where the subject matter of a contract is for the delivery of goods by courier and logistics services, the delivery time shall be the time when the addressee signs for the receipt of goods.

Where the subject matter of a contract is for the delivery of services, the delivery time shall be as specified in the document of proof so created in electronic or paper form. Where the said document does not specify the time, the delivery time shall be the time of the actual provision of services.

Where the subject matter of a contract is to be delivered by means of online transmission, the delivery time shall be the time when the subject matter enters the specific system designated by the addressee and is capable of being retrieved and identified.

2. Electronic Payment and Express Delivery

Electronic payment and express delivery are two instruments supporting the continuing grow of e-commerce, both which have been legally recognized and regulated.

(i) Electronic payment

Cross-border e-commerce financial services include supporting payment service to enable transactions and derivative services on financing and taxation. With the application of digital technology in financial services, financial institutions continue to explore innovative financial service formats and models. For example, Airwallex builds a global fund collection and payment network and uses AI algorithm to drive global fund allocation and transfer to ensure the safe and efficient operation of cross-border payment services. Airwallex builds an integrated platform for cross-border payment, providing safe and compliant cross-border settlement, international collection and payment, foreign exchange management and other services for global corporate customers. Through the self-built global fund collection and payment network, Airwallex is connected to the local clearing systems of major countries and regions in the world, and manages the global collection and payment. Airwallex has built the global fund liquidity management system, and at the same time, optimized the foreign exchange high-frequency trading strategy model with the help of Al algorithm to help customers avoid foreign exchange losses in cross-border payment. Airwallex has established a strict information security management system to ensure the safe operation of cross-border payment business. Airwallex provides cross-border clearing and settlement, international payment and other services for corporate customers in nearly 150 countries and regions around the world, covering more than 50 currencies. Hangzhou Cross-Border E-Commerce Comprehensive Pilot Area builds a cross-border payment highland by expanding cross-border payment scenarios, increasing the size of cross-border payment, extending the service chain, and building innovative and diversified payment formats.

The Chinese E-Commerce Law allows e-commerce parties to use electronic payment upon agreement and stipulates the corresponding duties of the services providers and the users.

Electronic payment service providers have the legal duties to their users in the following aspects:

• Compliance: comply with State provisions and not attach unreasonable transaction conditions;

• Information disclosure: inform users of the functions, instructions, matters that need attention, relevant risks, and fee rates of electronic payment services;

• Payment security: ensure that electronic payment instructions are integral, consistent, traceable, verifiable, and tamper-proof;

• Payment record retention: provide, free of charge, users with statements of account and transaction records of the latest three years; and,

• Payment acknowledgment: upon completion of electronic payment, provide users with timely and accurate information on the acknowledgment of payment as agreed upon.

Electronic payment service providers shall meet the requirements of the State for payment security management. Failing to manage payment security, they shall be liable to compensate the users’ loss or damage.

Electronic payment users, on the other hand, shall assume the following legal duties:

• Before issuing payment instructions, they must verify the complete information in the instructions, including the amount of payment and the payee;

• Properly keep their transaction passwords, electronic signature data and other security tools; and,

• Upon becoming aware of a loss or theft of the security tools, or an unauthorized payment, the user must notify the electronic payment service providers in a timely manner.

Since users are obliged to verify the information in the payment instruction, the electronic payment service providers shall not be liable for the users’ loss or damage caused by the errors occurring in the payment instructions, provided the service providers are able to prove that the error was not caused by them. The electronic payment service providers shall find out the reasons of errors in a timely manner and to take relevant measures to correct such errors.

Electronic payment service providers shall be liable for the loss or damage resulting from any unauthorized payment, except where they are able to prove that the unauthorized payment was caused by the fault of the user. Upon becoming aware of unauthorized payment instructions or receiving notices of unauthorized payment instructions from users (for example, negligently permitting others to access or use the security tools), the service providers shall promptly take measures to prevent subsequent loss or damage, or be liable for the users’ subsequent losses or damages.

(ii) Express delivery and logistics

Logistics and warehousing play an important role in cross-border e-commerce supply chain. Different from the traditional logistics model, cross-border e-commerce logistics has a longer chain due to the existence of import and export customs declaration, customs clearance and other requirements. Efficient synergy between trunk transportation and last mile delivery is essential. The continuous innovation of digital technology, the transformation of hosting model of logistics and warehousing services, the innovation of transportation mode, and the improvement of supporting facilities and after-sales service system have strongly guaranteed cross-border e-commerce to go global. For example, East China International Intermodal Port (ECIIP), which is operated and managed by Jinhua Zhejiang China Railway Combined Transport Port, Ltd., actively integrates and optimizes the existing logistics facilities, forms a multimodal transport system consisting of highway, railway, air, and waterway, and builds an inland international land port integrating the Belt and Road international trains-sea-rail intermodal transport and road-rail intermodal transport. Relying on China (Zhejiang) International Trade Single Window, it builds the intelligent intermodal management platform of Smart Port Area to realize the efficient and coordinated development of train operators and related entities. The standardization, normalization and intelligence of train operations have been enhanced, the transportation efficiency and service quality of trains have been effectively improved, and the data value and data capacity of the port area have been strengthened. Such a transport pattern covering five Central Asian countries, West Asia, Europe and Southeast Asia has been formed.

Xi’an Chan-Ba International Port has significantly improved the transportation timeliness of Cross-border e-commerce trains. It has built the consolidation center of China Railway Express, developed the online intelligent consolidation information management system, developed innovative shipping model, and improved the customs clearance efficiency for cargoes. Construction of cross-border e-commerce overseas warehouses has greatly reduced the consolidation time and transportation costs. At present, the China Railway Express freight train has covered 45 countries and regions along the Belt and Road”, broadening the channels for enterprises. The Functional Zone of Xi’an Chan-Ba International Port has successively introduced domestic and foreign well-known platforms and upstream and downstream enterprises to settle and develop, registering more than 270 e-commerce and supporting service enterprises, attracting more than 4,000 e-commerce talents, and realizing the agglomeration of cross-border e-commerce enterprises. From May 2021 to the end of 2023, a total of 525 cross-border e-commerce trains were operated, with the cumulative trade volume exceeding 10.2 billion yuan, effectively driving the increase of the scale of import and export trade. Xi’an Chan-Ba International Port has become a highland for the development of cross-border e-commerce in the western China and a new growth pole for Shaanxi’s foreign trade.

Pangoo Teknihall improves the efficiency of warehousing after-sales service with the help of digital technology. In order to solve the after-sales challenges faced by cross-border e-commerce business, such as return sorting, labeling and re-labeling and efficient quality inspection, Pangoo has independently developed ware-housing and after-sales system through technological innovations, providing localized solutions for export brands. It has not only integrated the platform, Enterprise Resource Plan (ERP), warehousing and logistics, but also realized seamless flow of goods, information and capital through the close integration of truckload platform to provide strong back-end support for brands going global. Pangoo also actively explores the application of big data and Al technology to empower application scenarios, and improves warehouse management and operational efficiency by integrating advanced warehouse management technologies and automation solutions.

Sunshine Express’ “55train.com” is a one-stop digital logistics platform for cross-border e-commerce between China and Europe. The platform pioneered the China-Europe road-rail intermodal transport service model. Domestic shipping warehouses are distributed in more than 15 cities with cross-border e-commerce sources in the Yangtze River Delta and Guangdong Province, and commercial express delivery centers in 32 cities in the European Union, directly serving global cross-border e-commerce giants such as Alibaba, Cainiao Network, DHL, Amazon, eBay and Wish. Sunshine Express has promoted innovations in international logistics and transportation, and explored the innovative “road-rail-road” cross-border transportation mode, the first of its kind in China and unique in the industry. Relying on the transportation modes such as Horgos-Europe China Railway freight train, overhead land bridge, sixth-generation port China-Europe Express, China-Kazakhstan-Europe Land-Air Intermodal Transport, the goods are safely and efficiently transported to overseas warehouses.

Express delivery service is vital to the success of sales of goods online. With the quick development of overseas warehousing facilities, Chinese express delivery services are going international. E-commerce parties may agree upon delivery of goods through courier and regular logistics services. Delivery service providers for e-commerce have the following legal obligations under the Chinese Law:

• Compliance: complying with laws and administrative regulations, and observing promised service specifications and time limits;

• Availability for addressees’ check: reminding addressees or designated persons to check the goods in their presence upon receipt;

• Eco-packaging: using environmentally friendly packaging materials as required to enable recycling and reuse of the packaging materials.

Courier and regular logistics service providers may, in addition to providing delivery services, collect payments from the addressees upon the delegation of e-commerce operators.

3. E-commerce Market Regulation

The E-Commerce Law is enacted to safeguard the lawful rights and interests of e-commerce participants, regulate e-commerce, maintain market order, and promote sustainable and sound e-commerce development. Chinese government authorities at all levels have strengthened their support for e-commerce by improving new commercial infrastructures, such as e-payments and logistics, and also by promoting and guiding the development of the e-commerce service industry.¹¹ The system of Inter-Ministerial Joint Meeting for E-commerce has been established which has constituted a set of promotional schemes to enable national and local entities to work closely in improving e-commerce services. On the other hand, e-commerce operators shall provide e-commerce data and information where the competent authorities so require pursuant to laws or administrative regulations. The competent authorities shall take the necessary measures to protect the safety of the data and information provided by e-commerce operators, strictly keep personal information confidential, maintain privacy, and protect trade secrets therein, and shall not divulge, sell, or otherwise illegally provide any such information to any other party.

In order to fulfil the lawmaking purposes, the E-Commerce Law sets out the basic principles and specific norms for regulating e-commerce market.

(i) Regulatory principles

The State shall provide equal treatment to online and offline commerce and stimulate their integration, and the authorities shall not implement discriminatory policies or measures nor abuse their administrative power to exclude or restrict market competition.

The State shall establish a coordinated administration system adapted to the characteristics of e-commerce and shall promote the formation of an e-commerce market governance system in which competent authorities, e-commerce industry associations, e-commerce operators and consumers, etc., jointly participate.

E-commerce industry associations shall, pursuant to their bylaws, exercise self-discipline, establish and improve industry standards, promote credibility building of the industry, and oversee and guide business operators in their industry to fairly participate in market competition.

(ii) Anticompetitive practices

Business concentration and consolidation in e-commerce have become pervasive. A few Internet giants, such Alibaba, Baidu and Tencent, dominate the relevant markets. The E-Commerce Law provides the legal mechanisms to regulate the anticompetitive practices in e-commerce.

E-commerce operators which have a dominant market position as a result of their technological advantages, number of users, capability of controlling the relevant industry, other business operators’ dependence on them in transactions, or any other factors, shall not abuse their dominant market positions to exclude or restrict competition.

4. E-commerce Platforms

E-commerce platforms are the core component of the cross-border supply chain. As an interactive channel of information flow, platforms provide goods or services information for suppliers and consumers, connect resources and services, promote accurate matching between supply and demand, and effectively facilitate global trade. Platforms have fully leveraged the advantages of global digital network, actively expanded commodity categories, explored innovative business models and provided capacity-building services, which has effectively promoted the digital transformation and upgrading of traditional foreign trade enterprises and digitally empowered small and medium-sized enterprises to go overseas. Platforms have different business models and business areas.

Alibaba.com, established in 1999, has become the global business-to-business cross-border platform to empower SMEs to go abroad. The digital foreign trade platform driven by new technologies serves enterprises in Chinese coastal areas and SMEs in inland areas. Since 2008, it had served about 1,500 foreign trade enterprises in Shaanxi Province, helping them accurately match buyers, identify the industry segments and capture new growth opportunities. The platform has turned the traditional foreign trade companies into new forces of cross-border e-commerce.

Alibaba Group’s Tmall Global New World Factory initiative explores a new model for import industrial chain and helps high-quality overseas brands reach domestic consumers, the core of which is bonded import plus retail processing plus omni-channel sales. Overseas brands can directly open a factory or entrust a specialized factory in special customs supervision areas in China. Cross-border retail import supply chain, terminal processing and sub-packaging of overseas finished products are moved to China and the finished products in large packages and in bulk are processed quickly to realize a new global supply chain service model with omni-channel retail and customized sales for consumers in China. According to statistics, through the cooperation of international industrial chain and supply chain, the initiative has created more than 500 direct jobs and more than 5,000 indirect jobs in e-commerce operation, live-streaming e-commerce, logistics and supporting services, and significantly reduced the international transport of packaging materials and accessories.

SHEIN is the world’s leading online retailer of fashion and lifestyle, serving consumers in more than 150 countries and regions around the world, and has become the most popular fashion brand in the world through innovative digital flexible supply chain. SHEIN is actually a successful industrial chain platform. In 2023, it unveiled the one-million-vendor scheme and the nationwide initiative called the “500 City Industrial Belt Going Global” plan. Based on its strong user base, social networking traffic and mature global market power, and digital flexible supply chain on its own platform, it aims to drive SMEs, brands and industrial belts to go global through cross-border e-commerce, and help the industrial chain to upgrade digitally while expanding global market sales and promoting brands. SHEIN launched the whole-process training system, operation and tool empowerment, one-stop fulfillment support, order and settlement support and low input cost, covering all stages of development from introduction to growth to comprehensive capability improvement. The plan aims to help 10,000 sellers around the world to achieve annual sales of over US$ 1,000,000.

Guangzhou Dora Technology Co., Ltd. builds the platform to help Chinese goods and merchants to enter the Middle East market, Dora has helped more than 45,000 Chinese enterprises sell their goods in overseas markets, and provided high-quality products to consumers in the Middle East and Gulf region and more than 30 countries in Europe. 60%of the countries covered by the platform have signed cooperation documents with China to jointly build the Belt and Road. Dora has continuously promoted the landing of the new digital economy models in countries along the Belt and Road to facilitate the development of Digital Silk Road.

Under the E-Commerce Law, platforms are the digital facilities providing the services, such as online business premises, deal-making, or information releasing, to enable the parties using the platform to engage in e-commerce transactional activities independently. They have a pivotal position and role in the cross-border e-commerce market, with their governance being a vital aspect of ensuring a fair and competitive market landscape. China’s E-Commerce Law has pioneered some noteworthy mechanisms in regulating the governance of digital platforms, by acknowledging the essence of platform governance and incorporating platform rules and governance into legal system.

To foster the healthy and stable growth of cross-border e-commerce, it’s pivotal that governments not only effectively regulate digital platforms but also sustain communication and collaboration with them. A notable instance is the memorandum of cooperation established between Hangzhou Comprehensive Pilot Zone and Amazon focusing on export cross-border e-commerce in May 2016. Following this, in 2017, the “Hangzhou Cross-border E-commerce Park” under Amazon Global Selling was established. In 2019, Hangzhou Comprehensive Pilot Zone and Amazon collaboratively nurtured the “Top 50 Amazon Global Selling Hangzhou Brands” enterprises, propelling the advancement of Hangzhou’s specialized industrial zone. In addition, the two sides have also conducted a series of activities such as “Top100” special action, talent cultivation, brand building, and Amazon Global Selling Direct Procurement Conference. These endeavors have effectively spurred the transformation and elevation of manufacturing enterprises and especially SMEs in Hangzhou, and even across Zhejiang Province.

(i) Governance of the platform

An e-commerce platform operator governs its platform by making and implementing the transaction rules that are contracted into the service agreements. The E-Commerce Law also sets out the procedural and substantive requirements of the platform operator’s transaction rules.

The transaction rules shall specify the issues such as the relevant parties’ rights and obligations in respect of joining and quitting the platform, assurance of the quality of goods and services, protection of consumer rights and interests, and protection of personal information.

The rules formulated and implemented by the platform should be in line with the legal principles of collaborative engagement, open consultation, and joint development by all stakeholders. Businesses and consumers on the platform are no longer passive recipients of platform rules and governance, but rather active participants in platform governance vested with legal rights. Not only do they have the right to file complaints and reports on any improper governance behaviors implemented by the platform and to seek legal remedies, but they can also directly participate in the process of modifying platform rules and voice their opinions comprehensively. Where modifying the platform service agreements or transaction rules, the platform operator shall solicit public comments at prominent places on their homepages and primary webpages and take reasonable measures to ensure that the relevant parties can fully express their opinions in a timely manner. The modified contents shall be published at least seven days prior to implementation. Where on-platform business operators do not accept the modifications and seek to quit the e-commerce platforms, the platform operators shall not prevent them from doing so. Platform operators shall assume relevant responsibility in accordance with the service agreements and transaction rules prior to the modification.

The E-Commerce Law prioritizes the requirement of transparency regarding platform operator’s transaction rules. Platform operators shall continuously display their platform transaction rules (through hyperlinks) at prominent places on their homepages and primary webpages to ensure convenient and easy access to and download of such information in full by the on-platform business operators and consumers.¹² E-commerce platform operators shall take the measures, such as warning, suspending or terminating services, against the on-platform business operators’ violations of any applicable laws, regulations, or rules, and shall publicly disclose the measures in a timely manner.

Platform rules and service agreements shall follow the principles of openness, fairness, and impartiality. E-commerce platform operators shall not utilize the service agreements or transaction rules to unreasonably restrict or place unreasonable conditions on the on-platform operators’ transactions, trading prices, businesses with other business operators, or charge the on-platform operators with unreasonable fees.

(ii) Management of on-platform operators

E-commerce platform operators are legally obliged to manage the identities of the on-platform operators not only for business purposes but for competent authorities’ regulation.

Businesses operating on a platform generally shall complete business registration in accordance with law, except that no business registration is required by any laws or administrative regulations.¹³ E-commerce operators shall also duly obtain the relevant administrative permit required by law for their business operations. The business licenses and the relevant administrative permits shall be prominently displayed at the virtual sites. Where there is any change to the information of business registrations, operators shall update the displayed information in a timely manner.

Platform operators shall request the business operators applying to sell goods or provide services on their platforms to submit authentic information about their identity, address, contact, and administrative permit, and verify and record such information, establish register files, and regularly verify and update the files.

E-commerce platform operators shall submit the identity information of on-platform operators to the relevant departments for market regulation in accordance with the applicable provisions, remind the business operators which have not completed their business registrations to complete it as legally required, and cooperate with the relevant departments for market regulation to facilitate the relevant on-platform business operators to complete business registration as required.

E-commerce platform operators shall submit the identity information and the tax-related information of on-platform operators to the tax department in accordance with laws and administrative regulations, and remind the on-platform operators to fulfill tax payment obligations.

Where e-commerce operators are to voluntarily terminate their business on a platform, such information shall be displayed at the prominent place of the platform continuously 30 days before the termination.

(iii) Legality of goods and services on the platform

All goods or provide services trading in e-commerce shall meet the requirements on personal and property security and environmental protection. The goods or services, the trading of which is prohibited by any laws or administrative regulations, shall be exclude from e-commerce market.

Where e-commerce platform operators discover any information on goods or services on their platforms which violate any legal requirements (such as having no necessary administrative permit, endangering personal and property safety, damaging environment, or the trading of the goods or provision of services being prohibited), they shall take the necessary measures in accordance with law and report such violations to the competent authorities.

(iv) Platform credit system

Under the E-Commerce Law, platform operators shall establish and improve credit rating systems, publish credit rating rules, and provide access for consumers to make comments on the goods sold or services provided by on-platform business operators. Platform operators shall ensure the completeness and integrity of the consumers’ comments in the credit rating systems, and never delete any comment made by consumers regarding the goods sold or services provided on the platforms. However, if consumers’ comments contain insulting, defamatory or other illegal information, the platform operators may take action to redact illegal parts according to the Internet content regulation laws and regulations.

E-commerce operators shall respect consumers’ comments regarding their goods or services offered on the platform and shall not fabricate or falsify user comments to defraud or mislead consumers.

China is also building a comprehensive social credit system, in which e-commerce is an important component. The State support legally-established credit rating institutions to provide e-commerce credit rating services to the public. E-commerce industrial associations shall promote credibility building in e-commerce. It is expected that the cross-platform credit rating rules and credit records will be established and credit rating organizations will be accredited by the competent authorities.

An e-commerce operator, if violating its legal obligations, shall be recorded in the credit files according to the consumer protection laws and other relevant laws and administrative regulations, and the credit file shall be made public.

(v) Anti-competitive activities

E-commerce platform operators shall not, by virtue of their service agreements or transaction rules, or by technology or other means, unreasonably restrict or place unreasonable conditions on the on-platform operators’ transactions, trading prices, businesses with other business operators, or charge the on-platform business operators with unreasonable fees. An e-commerce platform operator, in violation of this duty, shall be ordered by the competent authorities to correct such violations within a specific time limit, and may be fined not less than RMB 50,000 yuan (approximately US$ 7,500) but not more than RMB 500,000 yuan (approximately US$ 75,000) or, where the circumstances are serious, not less than RMB 500,000 yuan but not more than RMB 2 million yuan (approximately US$ 300,000).

E-commerce platform operators have other legal obligations on the protection of consumer rights and interests, intellectual property rights, cybersecurity, and personal information, which will be analyzed in the following relevant parts.

III. REGULATORY SYSTEM ON PAPERLESS TRADE FACILITATION

The evolution towards paperless trade is a cardinal prerequisite for the advancement of cross-border e-commerce. Establishment of a digital single window and adoption of cross-border paperless trade measures are the key efforts to foster the development of cross-border e-commerce.

The E-Commerce Law establishes a series of measures to facilitate the development of cross-border e-commerce. Cross-border e-commerce operators may complete relevant formalities with the import-export regulatory authorities by submitting electronic certificates of origin, custom declaration, and other documents. The E-Commerce Law also recognizes that electronic invoices have the same legal effect as paper invoices and e-commerce operators may issue electronic invoices or other proof for the sale in accordance with the law.

Under the Chinese E-Commerce Law, cross-border e-commerce platform operators may provide warehousing, logistics, customs declaration, entry-exit inspection and quarantine declaration, and other services for other businesses. Small and micro enterprises in cross-border e-commerce especially need such comprehensive services.

China has improved the administrative systems for customs, taxation, entry-exit inspection and quarantine, payment, and dispute settlement, etc., in line with the needs of cross-border e-commerce. Apart the E-Commerce Law, business operators engaging in cross-border e-commerce shall comply with the other laws, administrative regulations, and other relevant State provisions on the supervision and administration of import and export.

1. Digital Single Window Mechanism

According to the definition provided by the United Nations Agency, “Single Window” is a facility that allows parties involved in trade and transport to lodge standardized information and documents with a single-entry point to fulfill all import, export, and transit-related regulatory requirements; and if the information is electronic, then individual data elements should only be submitted once.¹⁴ Single Window offers a single point of entry and single submission of trade relevant data for traders, and a more efficient and faster processing in a paperless environment. A Single Window also allows the exchange of information between traders and government agencies, and amongst government agencies, for trade relevant procedures such as obtaining permits and licenses, certificates and necessary approvals, customs clearance, and port exit.

A Single Window is one of the important trade facilitation mechanisms. The WTO Trade Facilitation Agreement, which entered into force in 2017 in 165 Members of the WTO, requires the Member implement the single window mechanism.¹⁵ The difficulty for countries in digital transformation in implementing digital single window facilities stems from the need to integrate the regulatory mechanisms and measures of customs, taxation, entry-exit inspection and quarantine, and payment and settlement and to establish a multi-sectoral, multidisciplinary, multi-mechanism synergistic regulatory system, so as to achieve the ultimate goal of information sharing, mutual recognition of regulation, and mutual assistance in law enforcement among various departments and agencies. The journey towards cross-sectoral data-sharing and network interoperability necessitates a solid legal foundation and strong political will. It’s challenging to accomplish such a transformation in a short period of time and in absence of robust promotion at the national level.

China, as a Member State of the WTO Trade Facilitation Agreement, has committed to establish the Single Window facilities. Under the E-Commerce Law, the import-export regulatory authorities shall advance the building of the comprehensive service and regulatory systems for cross-border e-commerce in respect of customs declaration, tax payment, and entry-exit inspection and quarantine, etc. They shall also improve the regulatory process, promote information sharing, mutual recognition for regulation purposes, and mutual assistance in law enforcement to enhance the efficiency of the services for and regulation of cross-border e-commerce.

The following implementing cases show the significant development of Chinese Single Window facilities for cross-border e-commerce. China’s practical experience may offer valuable insights to other countries in digital transformation.

(i) International Trade Single Window (ITSW)

ITSW refers to the “one-stop foreign trade service platform” that is coordinated and promoted by the Cross-Ministerial Joint Conference on Port Work at the national level and built based on the public platform for the National E-Port. With the integration of commerce, customs, inspection and quarantine, foreign exchange clearance, customs duty and other import and export regulatory departments, China’s smart port construction and port digital transformation have simplified and improved the customs clearance process of cross-border e-commerce goods, effectuated the functions of trade entities and trading platforms in single window operation and fully enhanced the clearance efficiency.

In the framework of the national ITSW, Shanghai established big data platform on cross-border trade to enable data interconnectivity and the whole link and process monitoring, covering both goods trade and service trade. It enables information exchange and data sharing for cargo declaration, payment and settlement, financial services, and smart port inspection, etc., which earns global recognition in the World Bank 2019 Report. ITSW is also promoting the sharing of information related to customs clearance and logistics, encouraging relevant units such as water transportation, railways, aviation and highway ports to share with the Single Window the information on the entry and exit of goods to and from yards, the flow of operations and other logistics nodes, and providing enterprises with a full range of “one-stop” information services such as booking inspections, applications for transferring containers and inquiries on delivery and inspection. In addition, it has increased the information linkage between the certificate of inspection and quarantine of inbound goods, championed the utilization of the electronic certificate of container loading for dangerous goods.

(ii) Comprehensive Pilot Zones for Cross-Border E-commerce

Adapting to the unique demands of cross-border e-commerce, China has established comprehensive pilot zones for cross-border e-commerce in Hangzhou and many other places for pilot implementation of centralized declaration, inspection, and release of imported and exported commodities and other measures to facilitate customs process. The online integrated service platform of the comprehensive pilot zones implements the principle of “one-point access”, which enables cross-border e-commerce operators to fulfil the requirements of import and export supervision by making a one-time submission of ordering, logistic and payment data. Government departments such as commerce, customs, taxation, industry and commerce, inspection and quarantine, postal services and foreign exchange obtain data through the comprehensive service platform, exchanging and interconnecting data, implementing functional management, and feeding back the results of law enforcement to the operators via the platform. The Comprehensive Polit Zones generally realize cross-administration information sharing, mutual recognition for regulation purposes, and mutual assistance in law enforcement.

Integrated service platforms cross-border e-commerce enterprises to improve trade efficiency. For example, administrations of customs, commerce, taxation, foreign exchange and other departments in Shenzhen, Chengdu and Qingdao help enterprises solve financial, logistics, customs clearance and other problems in a one-stop manner, reducing costs and increasing efficiency for cross-border e-commerce and realizing digital transformation of compliance management.

China (Qingdao) Cross-Border E-Commerce Comprehensive Pilot Zone Public Service Platform 2.0 focuses on data services, optimizes data management, and strengthens the application of big data to promote the innovative development of digital foreign trade. It focuses on addressing foreign trade development issues and optimizing the capacity of intelligent government services by enhancing the collaboration between government and enterprises, unifying the certification system, and providing the one-stop whole-process services for cross-border e-commerce. Relying on the digital platform, it introduces innovative value-added services across the whole industry chain, launches special products such as financial services, overseas marketing and intellectual property, and boosts the quality improvement of foreign trade enterprises. Since the launch of the version 2.0, the platform has trained and guided more than 1,000 enterprises, assisted more than 200 enterprises in realizing the digital transformation and served cross-border transaction amount up to more than 20 billion yuan, more than 40 million orders, and more than 400 enterprises in the zone.

The enterprise service platform of Chengdu Global Cross-Border E-Commerce Service Resource Center, a one-stop integrated service online center in Chengdu Cross-Border E-Commerce Comprehensive Pilot Area, accurately and efficiently solves the problems encountered by Cross-border e-commerce enterprises through the model of online platform features plus offline resource services. By the end of 2023, the platform had successfully provided services such as data clearance, data verification and validation and subsidy application for 1,691 enterprises, assisted 735 local enterprises in Chengdu to carry out cross-border e-commerce business and provided