China’s e-commerce market is the world’s largest and most dynamic, now rapidly evolving to extend beyond traditional marketplaces to include third-party platforms such as Tmall and JD.com, brand-owned stores, and fast-growing domains of social and livestream commerce on platforms like Douyin (TikTok) and Xiaohongshu, often facilitated through mini-programs.
Jeanette Wang
Partner
Shihui Partners
Shanghai
Tel: +86 21 2043 7577
Email: wangjy@shihuilaw.com
Navigating compliance in this environment is multi-faceted, beginning with obtaining market access, governed by a range of licensing and registration requirements. These include:
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- Market entity registration with the State Administration for Market Regulation, which distinguishes between self-operated sellers and platform operators;
- ICP filing with the Ministry of Industry and Information Technology (MIIT) for any website providing free online information services of an informational or public disclosure nature;
- Public Security Bureau filing for internet access for all websites; and
- Value-Added Telecoms Services licences issued by the MIIT, such as the ICP licence (B25) for commercial internet information services, or the EDI licence (B21) for third-party online marketplace and transaction processing operations.
Next, stringent consumer protection and advertising regulations mandate transparency and fairness across promotions, pricing and return policies. Key related domains encompass competition law, cross-border payment settlements, IP and sector-specific products, as well as intricate logistics, customs and tax obligations, particularly involving cross-border trade.
Third, data security regulations – the Personal Information Protection Law (PIPL) and Cybersecurity Law (CSL), under the Cyberspace Administration of China (CAC), along with algorithmic recommendation rules – impose strict data handling and personalised content obligations.
These developments signal the evolution of China’s e-commerce governance from a growth-first approach to a targeted regulatory model emphasising platform accountability and consumer protection.
Consumer rights protection
China’s consumer rights protection regime has developed into a comprehensive and sophisticated system responding to the country’s rapidly expanding digital economy.
Anchored in the Consumer Rights Protection Law, E-Commerce Law, Adver-tising Law and related regulations, the framework ensures access to safe, high-quality goods, refund pathways, clear complaint handling mechanisms, and protection against deceptive or misleading practices.
These guarantees extend across traditional retail and digital marketplaces, and operators should align with core obligations including:
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- Transparency and accuracy. Platforms and merchants must provide accurate, complete and accessible product and seller information. Merchants are prohibited from publishing false advertising, concealing product defects, or adopting misleading sales tactics. E-commerce platforms also have a duty to monitor and address merchant misconduct, maintain content review mechanisms and merchant traceability systems, and take necessary remediation actions.
- Fair pricing and freedom of choice. Tie-in purchases cannot be pre-selected, and any personalised pricing based on user profiling must be disclosed with a “non-targeted” alternative option provided. Ranking algorithms in search results and product displays must clearly label paid placements and sponsored adjustments.
- Return and refund policy. Online retailers are subject to the mandatory “seven-day no-reason return” policy. Merchants must honour refund requests within statutory timeframes unless exceptions apply. Merchants and platforms are required to establish clear return instructions, maintain logistics co-ordination processes, and ensure timely refund processing.
- Increasing supervision on livestream e-commerce. Paid promotional content must be clearly labelled. Influencers, livestream hosts and key opinion leaders may also bear joint liability for unsubstantiated claims. This addresses a growing enforcement focus on livestreaming e-commerce.
Competition and pricing controls
To address competition challenges, China is strengthening its regulatory framework for competition and pricing, with a sharpened focus on algorithmic fairness, pricing autonomy and platform accountability.
Recent revisions on the Anti-Unfair Competition Law (AUCL), effective since 15 October 2025, aim to establish a transparent, predictable market environment, strengthening liability for digital competition abuse, introducing executive accountability, and reinforcing brand protection and data integrity standards.
The revised AUCL introduces critical “anti-involution” measures, including explicitly prohibiting platforms from coercing merchants to sell below cost, targeting harmful price wars often initiated by major platforms. They also restrict large enterprises from abusing their advantageous position to deliberately delay payments and impose other unreasonable terms on SMEs, requiring platforms to establish and publicly disclose clear internal fair competition rules.
Concurrently, the draft Internet Platform Price Behaviour Rules provide granular guidance on emphasising transparency in all pricing and promotional activities. Enforcement has intensified, with authorities actively prosecuting violations like price fraud, trademark infringement, and fake transactions.
The new rules create specific obligations for all market participants in three key areas:
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- Pricing autonomy. Platforms are forbidden from using traffic restrictions or other punitive measures to force merchants into promotions or price cuts.
- Transparency. Merchants must clearly display all costs, promotional rules and the basis for any differential pricing.
- Prohibited practices. Fake transactions, fabricated reviews and “click farming” are strictly prohibited, as is algorithmic “big data killing” (price discrimination based on user profiles).
Privacy and cross-border transfer
Yun Bi
Partner
Shihui Partners
Beijing
Tel: +86 10 8514 7566
Email: biy@shihuilaw.com
China’s data protection framework, anchored by the CSL and complemented by the PIPL and Data Security Law, imposes stringent requirements for data processing, storage and transfer, with a dedicated focus on personal information security.
The PIPL serves as the primary legislation for personal data protection. Given its extraterritorial reach, the law applies not only to domestic entities but also those outside the country processing the personal information of individuals within China.
To comply with the PIPL, operators must adhere to the key obligations, namely:
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- Consent. Explicit consent must be obtained from users prior to any collection, processing and transfer of their personal information. Operators must provide clear information regarding the purpose, method and scope of processing, and the rights and mechanisms available to data subjects, as stipulated in the privacy policy.
- Separate consent. In addition to general consent, if sensitive personal information is involved during the data processing, separate consent is required. Additionally, separate consent is also required for provision of personal information to third parties, public disclosure of personal information, cross-border transfer of personal data, and automated decision-making involving user profiling.
- Cross-border data transfer. To transfer personal information outside China, network operators shall satisfy one of three pre-requisites:
- pass a CAC security assessment;
- obtain certification from a CAC-accredited institution; or
- sign a standard contract that follows the CAC template with overseas recipient. The applicable path depends on several factors including the type of data; whether the data processor qualifies as a critical information infrastructure operator; and the data volume. These criteria determine eligibility for each mechanism.
Algorithms and AI
As AI technologies are increasingly integrated into e-commerce – including personalised recommendations, virtual try-ons and AI-generated marketing content – China has issued a series of sector-wide rules that impose transparency, fairness, safety and accountability obligations on providers and operators of algorithmic and generative-AI systems.
Key measures including the 2022 Algorithmic Recommendation Provisions, which require personalisation algorithm providers to maintain transparency, avoid discriminatory outcomes, and offer users opt out options.
In 2023, the Generative-AI Interim Measures expanded oversight to large-scale content-generating models, introducing requirements for lawful training data, output quality control, bias mitigation, and user complaint mechanisms.
The Minor Network Protection Regulation further reinforces content moderation and protection for users under 18. E-commerce businesses must prioritise these compliance obligations when deploying algorithms and customer-facing AI solutions.
Tax and reporting reforms
China also strengthened tax oversight for online transactions in 2025, increasing scrutiny of e-commerce platforms, digital service providers and cross-border sellers.
Under recent State Council and State Taxation Administration (STA) notices, internet platforms (including overseas platforms with users or transactions in China) are required to assume broader tax reporting, data collection and withholding duties. These measures aim to standardise digital economy tax compliance, improve transaction visibility, and align with global platform-based tax enforcement trends.
The new rules require platforms to collect and submit merchant identity and income information, facilitate tax registration, and in some cases withhold and remit taxes on behalf of merchants. Platforms are also expected to upgrade data systems, revise onboarding procedures, and implement ongoing monitoring to ensure compliance.
For multinational and non-resident operators, these measures introduce a shift towards the “platform as tax administrator” model, which is applicable even to entities with no physical presence in China that enable China-linked transactions.
Key takeaways
To prepare for heightened tax and regulatory reporting expectations ahead, companies are advised to begin evaluating potential exposure and reviewing contractual terms with merchants and service providers.
Shihui Partners
8th Floor, Aurora International Building
No. 99 Fucheng Road, Pudong New Area,
Shanghai, 200120, China
Tel: +86 21 2043 7500
Email: shanghai@shihuilaw.com
www.shihuilaw.com
