Beijing hints at harsher penalties over online fakes

Beijing hints at harsher penalties over online fakes

CHINA'S market regulatory head has hinted at tougher penalties to tackle the proliferation of counterfeit goods sold online, amid the country's plans to develop the e-commerce sector and boost domestic consumption.

Mr Zhang Mao, head of the State Administration of Industry and Commerce (SAIC), made the remarks on the sidelines of the annual session of the National People's Congress yesterday, less than two months after the SAIC accused the online malls of e-commerce giant Alibaba of accepting bribes and selling fake goods.

"The reason why there are so many market violations is that the cost of breaking rules is too low," Mr Zhang said.

"If the costs are made unaffordable, to the extent of crippling business operations... only then will the market fundamentally improve," he added, without elaborating on possible penalties.

He emphasised that the Internet is not a "lawless heaven" and that regulators will take more measures to protect online shoppers, such as proposing new legislation and building up an online database to record firms that break rules for stricter supervision.

But Mr Zhang acknowledged that with the e-commerce sector growing faster than regulations and laws can keep up with, companies and the government must co-operate more to tackle the issue.

China's online sales volume jumped 50 per cent year-on-year to reach 2.79 trillion yuan (S$614 billion) last year, accounting for about 10 per cent of the country's total retail sales.

An SAIC report in January found that only 37 per cent of surveyed goods sold on Alibaba's online retail platform,, were genuine.

The SAIC played down the report after a meeting with Alibaba chairman Jack Ma.

Mr Zhang's comments come ahead of the first anniversary of the country's Consumer Protection Law, which imposes harsher punishments on errant retailers and expands the protection of online consumers.

China wants to get its people, often wary of product safety and quality, to spend more, turning domestic consumption into a new engine of growth for its erstwhile investment-heavy economy.

Mr Zhang, whose agency oversees business registration, trademarks and competition issues, yesterday also outlined China's plans to liberalise the private sector by easing business registration.

He said the country will further simplify the process for entrepreneurs to register or nullify their businesses, and give firms more decision-making power to choose their business scopes.

"The authorities will continue to streamline administration and delegate more power to lower levels so as to give the market and society more play in economic development," he added.

This article was first published on Mar 10, 2015.
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