China passes first law against fake goods sold online

China has passed the country’s first-ever e-commerce law that would hold online retailers accountable for the sale of fake goods and liable for a fine of up to RMB 2 million (US$291,000).

The new law passed on 31 August would hold big e-commerce companies such as Alibaba, JD.com and the discount goods-driven platform Pinduoduo accountable if products sold on the platforms are found to have violated intellectual property rights, the country’s parliament has announced.

Previously only merchants caught selling knock-offs could be held responsible.

The law is the latest effort by the country to clean up the country’s image as a main source of knock-off goods.

Giant e-commerce companies such as Alibaba and JD.com previously have been criticized by for being lenient towards merchants selling knock-offs, and lax about law enforcement.

Recently the discount-driven e-commerce platform Pinduoduo became the latest subject of investigation when its platform was found to be awash with counterfeit and copycat products from shavers to lookalike Penfolds and Château Lafite Rothschild.

The law will also ban online platform operators from deleting negative comments regarding products and services offered through their platforms.

As a response to criticism over counterfeit goods, companies such as Alibaba and JD.com have introduced their own anti-counterfeit coalitions to protect intellectual property rights.

A total of 240,000 online stores on Alibaba’s Taobao were closed last year for selling fake goods, according to Alibaba, the country’s biggest e-commerce company.

Tencent, shareholder of JD.com and owner of the country’s largest messaging app WeChat, penalised over 72,000 WeChat accounts involved in selling counterfeit products.

The e-commerce law will take effect on 1 January, 2019.