The so called “Internet Sword Action” is the special action which is operated for Internet market regulation within Shanghai on November and December of 2020 aiming to deal with those highlighted problems of the network market, further stimulate the vitality of market entities, promote a healthy development of the Internet economy and protect legal rights of consumers and operators according to E-Commerce Law of the People's Republic of China and other laws and regulations. There are four main tasks of this special action as follows:

1. Standardize e-commerce accesses and create a good access environment

• E-commerce business operators shall apply for market entity registrations and obtain relevant administrative licenses in accordance with E-Commerce Law of the People's Republic of China. Real-name management shall be strictly enforced and the leading guide for social network e-commerce and cross-border e-commerce shall be strengthened.
• Centralize the regulation for unlicensed business operations especially for foods and pharmaceuticals. For those illegal network entities whose severs are overseas, there should be a warning system for dangerous websites under the cooperation with browsers.
• Strengthen the supervising management on the publication for business information of e-commerce operators, all relevant information like business license, administrative permission and exemption registration shall be shown in a prominent location on the home page, or the link of which above shall be tagged.

2. Increase technical and human input and strengthen the monitoring and management in key areas and periods

• Put more attention on the monitoring for network transaction information and keep the efficiency and timeliness of the discovery for illegal clues, especially for online searching for Yangtze River arrest ban, illegal network catering services, infringement and counterfeiting, illegal advertising and prohibited products.
• Both online and offline special selective examinations for product quality of network transactions would be implemented, targeted on products which relate with health safety like virus-protected tools, food, cosmetics, clothing, shoes and hats, household appliances and measuring instruments.
• During the spreading of COVID-19, Internet advertisement examination and supervision need to be strengthened specially for those illegal advertisements and information on Internet as websites, searching engines, e-commerce platforms, mobile apps and new media accounts which may cause big social influences in the field of medical treatment, pharmaceutical, health foods, real estates and financial investments.

3. Strictly punish different kinds of illegal behaviors and continually purify online market environment.

• Punish acts of unfair competition, unfair limitations, unreasonable conditions and false online propagandas especially for exaggerating or faking the effects of products, or declaring common foods to be disease-preventions or treatments which may mislead consumers during COVID-19 period.
• Focus the punishments on online sales of counterfeit and shoddy goods combined with hot topics like food (including health foods), pharmaceuticals, medical devices, virus prevention products, cosmetics, children's products, clothing, shoes, hats, and home decorations. Enhance the protection for intellectual property rights in trademarks under the requirements of China International Import EXPO.
• Enforce the special action for Yangtze River arrest ban and illegal trades in wildlife and its products, as false propagandas for precious and endangered aquatic wildlife in the Yangtze River Basin, selling of aquatic products without legal origin and videos and live broadcasts about wildlife on social media.
• Improve the management for prices and personal information and protect rights and benefits for online consumers. Prevent illegal online prices and abuse of personal information by big data technology focusing on the key points as virus prevention products and household necessities.
• Renovate social hot issues and create a good network market environment. Implement national environmental protection requirements and investigate excessive packaging of foods and cosmetics.

4. Strictly determine responsibilities of e-commerce business operators and create a business environment with good faith.

• Use various ways to implement the responsibility of e-commerce operators as administrative guidance, interview, warning, public exposure. Supervise e-commerce operators to fulfill their obligations to protect the rights and interests of consumers, intellectual property rights and personal information, and assume responsibility for the quality of products and services according to law.
• Urge e-commerce platform to improve self-discipline management level, guide e-commerce platform operators to establish and improve platform rules, strengthen information content auditing, improve credit evaluation system of goods (services), and upgrade online dispute resolution mechanism.

If you want to read the complete article, you can refer to the below link (in Chinese only):  http://www.shanghaiinvest.com/cn/viewfile.php?id=15559

If you have any question, please contact me.

Mr. Mike Chang (Partner)

TEL: 0086-21-68868321

Email: mikechang@shanghaiinvest.com