Revision to the Consumer Rights Protection Law of the People’s Republic of China

By Richard Hoffmann, ECOVIS Beijing China

After two decades without changes, Consumer Protection Law will be strengthened by Chinese authorities. As the consumer retail landscape is changing quickly, being also a result of the growing e-commerce in China, consumer demanded certain protections when making purchases. Chinese customers are becoming more sophisticated and experienced in terms of product quality and safety. These are still two of the biggest advantages foreign companies have and so it might be a good idea to bring your products to China, if you can deliver what people expect.

The “Revision to the Consumer Rights Protection Law of the People’s Republic of China” is the reaction from Chinese Authorities to new challenges caused by the enormous growth of domestic consumer good sales and the increase in online trade. Being probably the biggest online market of the world, more consumer power and stiffened punishment for companies, who mislead their customers, are huge changes that you should pay attention to, when you are planning to sell your products in China. This also implies that next to mouth to mouth reference by customers, the new regulations might improve selection of today’s flood of non performing online seller.

It also seems to be part of the plan to increase domestic consume and therefore improve “homegrown” products quality. This might be a hypotheses, but more trust from the buyer’s side into products “Made in China”, might be honored with rising demand for products produced in China.

According to the State Administration for Industry and Commerce (SAIC), goods of bad quality worth $624.79 million had been sold between 2010 and 2012. This shows how necessary customer protection really is.

As Chinese consumers often have more trust in foreign companies’ products than in Chinese products, it might be a good idea to enter the Chinese market soon. Nevertheless it’s necessary for every company to consider the new regulations and make sure to comply with all duties and obligations. Some of the most important changes are shown in the graphic. As you can see return policy will change to give customers the chance to evaluate the product and send it back on their own costs if they don’t want it. Supplier can also have individual terms of contract which could for example include free return policy. Consumer protection also includes the confidentiality of their personal data. That implies stricter rules for marketing strategies like spamming as well. Furthermore, online platforms will have to provide compensation if it can’t provide the true name, address and contact method of the service provider or seller. Another quite dangerous change from the perspective of a company is the possibility of “public interest” lawsuits. This can occur if a large number of customers who have claims against the same product. In this situation the China Consumers’ Association (CCA) might file such lawsuits.

It’s of high importance that you have a plan of action when the above-mentioned situations occur to you in the future. If you need further information or help on the new consumer protection regulations in China, please contact us at ECOVIS Beijing. We can provide legal advisory for all aspects of doing business in China. If you are interested in current changes of tax and legal regulations you can subscribe to our newsletter.