China Internet E-Commerce FAQ

What are the most popular search engines in your country? How does a U.S. manufacturer submit sites to those search engines?

http://www.baidu.com is the most popular search engine in China. For information on submitting sites, please contact:

Mr. Well Chen
Product Manager of Baidu.com,Inc.
Tel: 8610-82621188 ext.620
Fax: 8610-82607007
Email:chenhui@baidu.com

In addition, Google (which has a Chinese language version ) is also a popular search engine.

Is it necessary to have the site in the local language for the website to be indexed?

No. You can use English language search words on Chinese search engines to find English and Chinese language websites (if the English word is used in the Chinese language site).

Is it necessary for the site to have the domain of the country? If so, is it possible for a U.S.-based site to obtain the local domain?

It is not required for a site to have a '.cn' domain. Case in point, Google maintains its www.google.com address in China (it does have a Chinese language version, but it is “.com”). Regarding “.cn” domains, as of July 2004, the total number of domain names registered under .cn was 382,216 by categories such as ac, com, edu, gov, net, org, aadn, and sld (.cn). SLD (second level domain) means names that are registered directly under '.cn', no generic third level domains exist. The number of 'WWW' websites (.cn, .com, .net, .org) is estimated at 626,600. According to the China Internet Domain Name Regulations (Order No.24, the Ministry of Information Industry of the People’s Republic of China), domain name is the stratum structure-mode letter used in Internet corresponding to the IP address in Internet. It is the important basis for visiting web sites on the Internet. The Chinese domain name is the domain name containing Chinese characters and it is an important constituent of China's domain name system. To positively encourage the development of Chinese Internet information resources, facilitate the application and common use of the Internet, and increase the use of Chinese domain names, and with the approval from upper administration, China Internet Network Information Center (CNNIC) has opened up the testing system for Chinese domain name and provided registration service: (http://www.cnnic.net.cn/html/Dir/2004/08/13/2442.htm ).

Are there any popular online marketplaces or auctions, like Amazon.com or ebay.com in the U.S.?

eBay recently bought Eachnet (a Chinese on-line auction site) and now operates as eBay Eachnet, based in Shanghai. This is but one example. Taobao.com , a Chinese language auction site based in Zhejiang, resembles eBay and allows users to download chat software and makes buying on-line simple. This site features an enormous gallery of clothes, shoes, electronics, toys, cars, and even pets. Chinese Internet users have made Taobao.com the country's most popular site, with, according to Taobao.com, 50 million hits a day. Taobao.com has about 3.3 million product listings, which is about 14 times that of eBay Eachnet. Taobao.com guarantees secure transactions by avoiding credit cards; users pay and receive cash through local banks.

Other examples include dangdang.com and joyo.com , two on-line bookstores. Dangdang.com is the largest on-line book retailer in mainland China. These transactions are C.O.D and are delivered within 48 hours of ordering.

As referenced, China has many popular on-line marketplaces (in fact, e-commerce websites are booming in China). However, due to an immature Internet infrastructure and issues addressed in question # 7, below, Internet transactions are primarily paid for either C.O.D. or through local banks.

Can the exporter advertise its Internet site/product/service in pop up ads on the local ISP's networks? Are there any regulations on spam or privacy? Are there other e-commerce specific laws?

Generally speaking, the exporter can, but it depends on the ad content and contract with the ISP. There is no special regulation on spam and privacy, but some separate regulations, internal rules or laws may impact websites. The legislating of special regulations is under discussion by Chinese authorities.

Are there restrictions on advertising (for example, are comparative ads allowed? Are there restrictions on ads targeting children? Is it permissible to use lotteries, competitions, contests, games or bets as part of a promotional offer?)

There is a law covering advertisement in China, including “anti-unfair competition.” There is no nation-wide law over ads targeting children, but in some provinces, there are rules issued by local government units to regulate the ads targeting children. For example, in Zhejiang province, it is prohibited for ads to suggest or imply children’s disrespect to elders. As a market promotion offer, the permissibility of lotteries, competitions, competitions, games and bets varies by situation. As with many laws and regulations in China, there is sufficient “gray area” that makes it difficult to understand the application of the law or regulation.

To what extent can a buyer in this market pay for an order over the Internet by use of a credit card or other Internet-based financing vehicle, such as PayPal?

Two of the biggest problems with e-commerce in China are:

1) China is primarily a cash-based society where the use of credit cards is very limited. While more and more affluent Chinese are obtaining credit cards, most vendors, other than Western-oriented outlets and 5 Star hotels/restaurants, do not accept credit cards.

2) Internet security is a major issue in China. Most people with credit cards use extreme caution when providing card information for domestic internet transactions. Not even eBay Eachnet uses PayPal in China. For international transactions (e.g., a buyer in China purchasing from an overseas site), there are fewer problems and security concerns.

Are Internet transactions recognized as legal sales contracts? Is there a digital signatures law that recognizes digital signatures?

The Electronic Signing Law will take effect on April 1st,2005 in China.

Would there be any Customs or related delays incurred on Internet-transacted sales?

Yes, there will be. The entry of Internet-transacted sales will encounter the same importation processing as other merchandise. Given the problems encountered by any number of U.S. companies shipping goods into China, it is unlikely that goods purchased through Internet transactions would receive any type of preferential treatment.

Is there a national web seal or trust mark program in this market that increases consumer confidence? E.g., BBBOnline in the U.S.

Not yet, but ebay.cn is trying to set up and perfect its own system.

If disputes arise between seller and buyer, is there a timely and low cost dispute resolution mechanism available?

Other than regular dispute resolution mechanisms (e.g., judicial proceedings, offline mediation and arbitration), there are no special mechanisms in place for e-commerce. Some on-line vendors are considering internal mechanisms such as online dispute resolution (ODR).

Can U.S. manufacturers participate in local government procurements via Internet based tenders? If so, how are these tenders publicly advertised?

China promulgated a new government procurement law in January 2003. For certain items like software, the implementing regulations are still being drafted. Since China is not a signatory to the WTO’s Government Procurement Agreement, they do not have to follow WTO standards. China’s new government procurement law basically stipulates that Chinese government entities (not including State-Owned Enterprises) must purchase domestically produced product when commercially available. Therefore, for many products, the government market is temporarily not open to foreigners, but there is a provision in the Law of Government Procurement stating that in some situations, the foreigners may be vendors. In such cases, it may be easier to sell through a third party.