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Beijing Introduces Tougher Regulations for Online Merchants

Beijing Evening News, 11/30/07

According to the Beijing "Promotion of Information Technology Regulations", which will take effect from tomorrow, Beijing online merchants who engage in B2C or C2C transactions will be required to have a business permit. The Beijing Administration for Industry and Commerce (BAIC) stated that more concrete details would be announced at a later date, however after today, the requirements for opening an online store would be quite strict. The most significant of the new regulations is that online businesses are no longer allowed to operate from home. An official from the Beijing Information Industry Office explained further, saying that the restrictions wouldn't apply to individuals using their weekends to sell things online.

LENS: The "Promotion of Information Technology Regulations" are applicable only to Beijing-registered online trade sites (e.g. Tom Eachnet), so are likely to have limited impact on the broader Chinese C2C e-commerce industry. While Tom Eachnet is among China's top three C2C sites, with Q3 2007 market share of 8.1%, the other two - Alibaba's Taobao (82%) and Tencent's Paipai (7.1%) - are registered outside of Beijing. In addition, unless similar regulations are applied on a nationwide basis, it is possible that merchants wishing to sidestep the additional requirements may simply move their online stores from EachNet to Taobao or Paipai.

Keywords: B2C C2C e-commerce Beijing regulation Internet BAIC MII

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