Interview: Lin Junqiang, of the Chinese Central Government

As the online commerce market in China is rapidly expanding, businesses and consumers are demanding an update of the country's complex regulatory framework. A range of decrees, regulations and provincial frameworks are currently in place, regulating issues such as domain names, internet surveillance and monitoring, electronic signatures, telecommunications, online content control, contract law, IT security, internet access and copyrights.

Although the need for an update to the existing rules, and one central law, is rapidly growing, the complex legal framework that regulates e-commerce activities in China will not be updated “for another five years”, according to LIN JUNQIANG, Deputy Director of the Information Centre at the Industry and Commerce Ministry, part of the Chinese Central Government in Beijing. JUNQIANG spoke exclusively to Michiel Willems in Shanghai.

How are e-commerce activities in China regulated?
Although there is no specific e-commerce law, other laws are suitable and provide a framework for e-commerce. The Government and the provinces have the right to make different regulations for different provinces. The most difficult aspect of monitoring online business is being able to get evidence to prove an online business is providing fake products, as people can easily withdraw their site and online registration. 

Copyright is a big issue in China, and the rest of the world, indeed. What action has been taken to tackle copyright infringement?
Let me give you an example, the illegal Beijing market has been closed so there are no fake products being sold there now, although there are still fake products online.

Are internet service providers responsible for the websites they offer?
Providers of internet connections have a duty to assist the Government, to close websites if the Government asks them to, but internet service providers cannot do the job alone as it is very difficult to monitor the whole online space.

What does the Chinese Government monitor?
That is the most difficult issue right now. We are currently trialing an approach in a number of different provinces. The approach is aimed at making sure that all citizens’ online registration details are correct. We will then spread this approach across the nation gathering correct online registration information to a central government database, at which point we will gather feedback on the approach.

Are there rules for online advertising in China? And what happens if an advertiser goes too far?
There is no law on this matter, but we do have e-commerce institute regulations that deal with these issues. If an advert goes too far then the advertisement law applicable to traditional ads will be applied to the online ad and the Government will get involved.

And what happens then?
There are several steps to take: a warning is given to pull the advert offline, a fine or penalty can be issued and if that does not work, the issue can go to court and the offender sued.

What about personal information being shared and sold to advertisers?
China is different than the UK. Information protection is not a duty of the Chinese Government. Banks and similar institutions are responsible for protecting consumer data and the technology to do so is advanced. The Government has two roles in protecting private information. Firstly, it develops laws to protect private information, and secondly, the Government will take action against companies that disclose private information, which occurred recently on a national scale.

How does the Government deal with cyber crime?
The Chinese Government does not have a duty to protect personal information; third parties have that duty. Neither does the Government have a duty to guarantee the safety of a website.

If a product bought online is delivered to a consumer’s home and it turns out to be faulty, do any laws protect the consumer?
In China the payment method protects the consumer. A third party keeps the money during the transaction so if the product is faulty the money will not go to the supplier but back to the customer. There is also another way to pay, once a product is bought online a delivery driver brings the product to the customer who then checks the product and if they are happy with the item, they pay the delivery driver who then passes the money on to the supplier.

Is the spur for the new e-commerce legislation in China due to the rise in e-commerce or a reactionary move due to the problems faced by illegal online activity?
A bit of both. The Government wants to develop a new e-commerce law because of the fast increase in e-commerce and with that the increase in e-commerce related problems. Chinese businesses see a rise in law suits and there are more and more user complaints.

I understood you have been on a number of business trip recently, to learn from other countries?
That is right, China has started looking at other regulatory systems around the world to learn.

Which countries are you looking to learn from?
In the last twelve months we visited Japan, Germany, the UK and the US to research the approach to e-commerce regulation. E-commerce is more developed in Germany and the UK than elsewhere in Europe. The law systems are different, so we made sure we went to developed countries to learn from them.

And what were your findings? Are there lots of differences between the countries?
Certainly, we noticed a lot of differences. While the US has a very general, broad system, Japan is very detailed. There are common problems. Comparatively the US has a much more general framework than Japan and Korea, who have more detailed and strict legislation. Japan is very detailed, the US is more flexible.

So, would China lean towards a more strict or flexible model?
Related to our constitutional system we would go for a more detailed approach. China will opt for a more detailed framework, based on the Japanese model but then with a Chinese approach.

When do you expect to have the legislation complete?
Not for a long time. In China, we first make the regulations and then the law. It will take a long time, at least another five years. In the meantime the regulations can control the situation until the law is ready.

So the regulations will be temporary until you have developed the law?
We will keep the regulations until the law is made. If some regulations are in conflict with the new law, the regulations will be scrapped.

How do you see the future of the e-commerce market in China?
There is a developing trend in e-commerce across the globe. All countries are facing the same sudden increase, so it is necessary to develop nationwide regulation to control the illegal behaviour that comes with this increase. We are currently researching e-commerce and the regulations in countries like the UK to complete this business area. The Chinese Government is trying to find technical methods to solve these problems and that is why we are communicating with people in the UK who are doing the same job and who are facing the same problems.

Thank you for your time. 

Michiel Willems © 2012 CP Publishing Ltd.Pictures: Globalfirepower.com / Wired.com/images_blogs / ecommercesg.org / Socialnomics.net / Mozy.com

China in need of new laws as “monitoring the internet is very difficult”

SHANGHAI - The complex legal framework that regulates e-commerce activities in China will not be updated “for another five years”, according to Lin Junqiang, Deputy Director of the Information Centre at the Industry and Commerce Ministry in Beijing, who spoke exclusively to Michiel Willems in Shanghai. 

Junqiang said “it will take time” before China will have agreed on new legislation. Although the Chinese Government is planning to “bring in a new law, as there is currently no [central] law”. Junqiang stressed “this will take time” and any new “legislation will not be ready another five years”.

Currently, a range of decrees, central government regulations and provincial frameworks regulate issues such as domain names, data protection, consumer rights, electronic signatures, telecommunications, online content, e-contracts, IT security, internet access and copyrights. As the Chinese market is expanding rapidly, a growing number of businesses, consumers and investors are demanding an update and simplification of the country’s complex regulatory framework.

Junqiang said a new law is needed because “China is facing a range of challenges. The current regulations can not keep up with the rapidly evolving technology. Chinese businesses see a rise in law suits and there are more and more user complaints.”

Therefore, China has started “looking at other regulatory systems around the world to learn”. In the last twelve months Junqiang and a delegation of government officials have visited Japan, Germany, the UK and the US to research the  approach to e-commerce regulation. “We noticed a lot of differences”, said Junqiang. “The US has a much more general framework than Japan or Korea, Japan is very detailed.” China will opt for “a more detailed framework, based on the Japanese model but then with a Chinese approach”, Junqiang said, adding that this is necessary because “monitoring the internet in China is very difficult”. 

Junqiang stressed that “internet service providers have a duty to assist the Government.” Service providers in China “have to close websites if the Govermnent asks them to, but providers alone cannot do the job as it is very difficult to monitor the whole online space.”
Junqiang said that, until the new law is ready, “the [current] regulations can continue to control the situation”.

Michiel Willems © June 2012 CP Publishing Ltd. Picture: Chinese-flag.org

Cash payments in UK more common in 2011

Consumers are increasingly using cash to make payments in store in order to keep track of their spending, the British Retail Consortium (BRC) said on 8 June. 

“Customers are more likely to be paying with cash”, said Tom Ironside, Director Business and Regulation at the BRC. “They have less money. They are buying things only as and when they need them, and spending less each time.”

The use of cash in 2011 was up by 5.7% compared to 2010. The BRC based its figures on 9.5 billion transactions in British shops. Tom Ironside: “In 2010 financial worries were putting people off running-up debt and they turned away from cards. Now times are even tougher.”

The figures come only weeks after the Court of Justice of the European Union, on 24 May, rejected a legal challenge by MasterCard that the European Commission’s decision to classify cross-border transaction fees as uncompetitive. The fees are charged by a cardholder's bank to a merchant's bank for each card transaction. MasterCard had agreed to lower its charges in 2009 but the EU Commission believed Mastercard had not gone far enough. 

Michiel Willems © 2012 CP Publishing Ltd. Picture: News.bbc.co.uk

Interview: Norman Lamb - UK Minister for Employment Relations, Consumer and Postal Affairs

Norman Lamb MP

Following the adoption of new consumer rights rules in Brussels at the end of 2011, the British Government is preparing for a major overhaul of the country’s consumer rights regime. Countries have until late 2013 to implement the the new European Union guidelines. Michiel Willems spoke to Norman Lamb MP, the UK Minister for Employment Relations, Consumer and Postal Affairs and Member of Parliament for North Norfolk, about what the new consumer rights regime in Britian will look like. 

The European Union has ordered Britain to establish a new consumer rights regime. What are your plans and how will consumers’ rights be protected online?
Lamb: The EU's Consumer Rights Directive will be implemented as part of a broader package of reforms designed to clarify and simplify the consumer rights regime as a whole. The European rules will protect consumers online in numerous ways. For example, the withdrawal period, within which consumers can change their mind about an online purchase, will be extended from 7 to 14 days, any obligations to pay will be made clear and explicit, and there will be a ban on pre-ticked boxes and disproportionate surcharges for using specific payment methods like credit cards.
Premium rate telephone lines for consumer follow-up calls will be prohibited and there will be clearer and more up-to-date pre-contractual information requirements, ensuring that consumers know exactly what they are buying, and who they are buying it from, when shopping online.

What changes will there be to help customers with faulty goods?
Lamb: In addition to the changes imposed by the CRD, new amendments to the laws regarding faulty goods will also increase protection for consumers. The short-term time period for returning faulty goods will be clarified and, after that, the number of failed repairs or replacements that consumers have to put up with before receiving a refund will be limited. This will make the whole redress process clearer and easier for consumers to understand when faulty goods are bought in any context, including online.

How will the law change to accommodate buying digital content online?
Lamb: The law will also be updated to protect consumers when purchasing digital content online. Consumer rights in connection with digital content, such as music downloads or streamed video, are currently highly uncertain. The changes will clarify how the law applies to digital content, providing a clear set of quality standards and workable remedies, enabling consumers to get appropriate redress.

While reducing red tape, how will you ensure that consumer rights are respected and guaranteed?
Lamb: We need a really robust framework of consumer rights if we are to achieve the consumer confidence we need to support strong economic growth. That’s why maintaining a high level of consumer protection is at the heart of our plans so that the right laws are in place to tackle rogue practices. But confusing consumers and businesses about their rights and responsibilities can cause expensive and unnecessary disputes, which is why we also need to cut business costs by tackling the complex state of our current law. 

Thank you for your time.

Norman Lamb MP
Minister for Employment Relations Consumer and Postal Affairs 

Normanlamb.org.uk

Michiel Willems © 2012 CP Publishing Ltd. Picture: Norman Lamb's Office.

Changing the face of television

A row has erupted in the United States over a set-top box that allows viewers to skip adverts in recorded television programs. America’s three largest broadcasters – Fox, NBC and CBS – have filed individual lawsuits against Dish Network, America’s second largest satellite broadcaster and the maker of the set-top box, in a court in Los Angeles.

At the beginning of 2012, Dish Network launched its new digital video recorder called ‘The Hopper’, but only recently, on 10 May, an ‘auto hop’ application was added, which allows viewers to skip commercials that interrupt their recorded shows. The broadcasters claim ‘hopping’ is against the law because the device turns the recorded show into an unauthorised version of a program that is copyrighted. Fox said the legal effect of ‘The Hopper’ should be classified as ‘re-broadcasting’ and is therefore infringing the channels’ copyrights. Fox Spokesman Scott Goggin even added The Hopper could end up “destroying the fundamental underpinnings of the broadcast television ecosystem”. 

Dish on the other hand claimed in its countersuit ‘this case is about freedom of consumer choice; individual families’ choice to elect, if they want, to time-shift their television viewing and watch recorded television without commercials’. Around eight million Dish subscribers in the US currently have the ‘ad hop’ recorder, which represent only 6% of the broadcast market in the US. Industry experts, however, were not surprised by the broadcasters’ fierce reaction to The Hopper. Their biggest fear is the technology will spread to other operators.

Devices like these and the rise of online TV are seen as huge commercial threats for traditional television stations. If technology such as Dish’s top box were widely deployed, some industry experts believe that could mean the beginning of the end of advertising on non-live, prerecorded shows, which count – by far – for the most hours of mass audience television. It would send shockwaves through the advertising industry and broadcasters would lose millions, if not billions, in revenue. After all, who is going to pay for expensive television commercials if consumers can easily skip them?

Despite the broadcasters’ efforts, many television and media experts think it is safe to say that – in the long run – this development is inevitable. The Hopper has illustrated that technology is catching up with existing television advertising models and copyright lawsuits will merely delay, not halt, a new, more advanced era of watching television: what you want, when you want it, where you want it. Dish has shown us that the current television models will no longer hold. As a result, existing broadcasters will need to innovate quickly and efficiently if they want to keep up with the technological advancements transmitters, competitors and consumers are taking advantage of. 

The most logical solution for television networks might be to ‘saturate’ television shows with product placements and endorsements, instead of running separate advertisement slots. After all, even technology cannot ‘cut out’ those commercials. Although many countries, in particular European governments, are very reluctant to allow sponsored television, broadcasters are increasingly indicating advertisements in game shows and movies are necessary to make up for lost revenues. Otherwise, retransmission fees will rise and those costs will be ‘hopped on’ to the consumer. The competition from TV stations that operate solely online, the so-called ‘catch up’ services, movie websites as well as devices like The Hopper is simply too big. The District Court in Los Angeles is expected to make a decision in the next few weeks, so stay tuned for a case that may well change the face of television.

Michiel Willems © June 2012 CP Publishing Ltd. London, UK. Pictures: ColleenHammond.com / tvmediainsights.com / ScanToBuy.co.uk

Playing means paying

More and more Europeans turn to their mobile phone to play a game or – if their national laws allow them to – place a bet. Even guests of certain hotels in Nevada can place bets on their phone since last September, which is pretty unique considering online gambling is still strictly forbidden in the USA.

Undoubtedly, the rise in mobile gaming is being propelled by the popularity of smartphones. The entertainment value of mobile games has increased significantly, since mobile games evolved from simple, pre-installed games to challenging and visually attractive forms of entertainment. Gambling operators as well as mobile phone companies are currently making huge efforts to be at the forefront of what is considered to be the next commercial battle. Many are investing in mobile apps, innovative software and mobile phone technology to make sure they will be part of this growing market.

The increasing use of mobile games, however, does mean they will be subject to more scrutiny by regulators and other relevant parties, not to mention the rapid increase in lawsuits against businesses in the mobile gaming sector; legal cases that affect both developers and platforms. Until a year ago, patent infringement cases were mostly limited to legal battles between the biggest industry players, such as the ongoing battle between Samsung and Apple. This is, however, no longer a realistic assessment of the current legal situation in the market.

A growing number of companies are considering legal action against game and app developers, who are becoming more and more aware that intellectual property rights need to be taken into account when developing a gaming app. Copyrights, patents and trademarks are increasingly a headache for developers and businesses, not to mention the  data protection issues that have arisen as well as advertising and marketing rules and guidelines developers and businesses need to stick to. 

All this means a rapidly growing client base for many law firms, especially for those practices that offer gambling and gaming, data protection and TMT advice. And one is talking about some of the biggest companies in the world; mobile phone companies, banks, investors, gaming businesses and payments processors who see the opportunities and have recognised the commercial outlook. The market seems to be on a high, as one industry lawyer pointed out to me recently: “the more people play, the more our clients pay”.

Michiel Willems © May 2012 CP Publishing Ltd. London, UK. Pictures: Myfacetwit.com / Sodahead.com