Like any other fast-growing market, online retail in China is facing many problems regarding integrity and safety issues. However, as the country is formulating regulations for it, online retail market will step up into a better future.
The Ministry of Commerce together with other government departments, is drawing up regulations on companies entering and exiting the online retail market, improving market rules, and clarifying the rights, responsibilities and obligations of all players, according to ministry spokesman Shen Danyang.
This is the first time that the government is stepping up efforts to provide regulation of the online retail market.
After a few years of rapid development, China has become the world's second-biggest online retail market after the United States. It is expected to overtake the US by 2015, according to a report isssued by Credit Suisse Group earlier this year.
Online retail sales in China reached 515.1 billion yuan (80.7 billion U.S. dollars) in 2010, three percent of the total value of retail sales and nearly doubling that of 2009, according to a report released by Chinese e-commerce giant Alibaba last month.
Despite its fast growth, the online retail market is relatively new in China, and that's why there isn't any specific regulation until problems crop up.
The recent online protest against the e-commerce giant Alibaba Group Holding Ltd. is an example. The company had attempted to raise the fees it charges vendors on its business-to-consumer site, Taobao Mall.
Taobao Mall said that, next year, it will increase service fees by up to 10 times, plus a maximum 15 times increase in the cash deposits it collects from vendors.
After a massive amount of complaints and pre-planned "malicious buying" operations on large Taobao Mall vendors, Alibaba on Monday placated the vendors with a number of measures including a grace period for regular vendors and a reduction in their deposits.
The protest revealed "a weak legal framework in the online retail market", Shen Danyang said, which makes more stringent regulation a must, he added.
Jack Ma, president of Taobao Mall's parent company Alibaba Group, said the fee hike is part of the group's efforts to bring order to the country's growing e-commerce sector. Cracking down on fraud and the sale of fake products is essential to the healthy e-commerce development.
According to Ma, one third of the total transaction value of Taobao Marketplace and Taobao Mall comes from small businesses from third-tier cities.
E-commerce might be the best way to boost domestic demand and create job opportunities, said Ma.
The Taobao incident certainly serves as a warning to the relevant departments: since the e-commerce is soaring, they had better quicken their steps to establish a proper legal environment based on the interests of the platform enterprises, sellers and consumers for the development of the e-commerce.
Moreover, they also had better tighten the market supervision of the e-commerce under the network background, maintain the order of the e-commerce and build up an outstanding environment for the development of the e-commerce.
In addition to the incident which happened between the platform enterprises and sellers, there are also disputes arising between sellers and consumers. All in all, to ensure the safety of buying online, regulations are imperative, and integrity is indispensable.
Online retail has the absolute advantage for its convenience and diversification. If we can improve the online retail operation, ensure its safety and standardization, the market has a bright future to look into.