As reported by China’s Ministry of Commerce, in 2023 whole on-line retail gross sales amounted to fifteen.4 trillion yuan ($2.1 trillion), a rise of 11 p.c, marking China’s eleventh consecutive yr because the world’s largest on-line retail market. In the meantime, the fast growth of e-commerce has facilitated the adoption of assorted misleading methods to focus on a broader buyer base, giving rise to important considerations.
Misleading Practices on China’s On-line Retail Platforms
The prevalent misleading practices on China’s on-line retail platforms primarily fall into two classes: the sale of pretend items and misleading promoting.
The sale of pretend items entails presenting counterfeits (i.e., unauthorized replicas of real merchandise or manufacturers) and knockoffs (i.e., low-cost or inferior copies of genuine merchandise or manufacturers). Along with model counterfeiting, the net sale of pretend items additionally consists of the substitution of low-cost or inferior objects for his or her dearer or superior counterparts. For instance, duck meat was offered as a counterfeit for beef.
Promoting faux items permits on-line shops to decrease their costs whereas attaining greater search rankings and revenue margins. Consequently, inferior items are inclined to displace superior ones, resulting in a decline in product high quality, which displays the financial idea of “Gresham’s Law.”
Misleading or false promoting, was known as a “malignant tumor” by Individuals’s Day by day. Within the on-line market, deceptive or false claims have lengthy been utilized in promotional supplies to magnify merchandise’ perform and/or efficiency.
“Brushing” (刷单), or amassing faux transactions, is one type of misleading promoting. To make alternatives amongst a lot of various merchandise, web shoppers rely closely on present sale quantity and buyer evaluations. By sending empty packages, on-line outlets generate faux orders and evaluations to spice up their gross sales figures, and therefore obtain greater retailer rating in shoppers’ search outcomes.
Throughout livestreaming classes, it’s common for hosts to rent a “water army” (水军) to click on “like,” grow to be followers, place orders, and put up favorable suggestions. To lure prospects, livestreamers additionally undertake a “deceptive pricing” technique, providing faux reductions by fabricating the unique costs.
For actual orders, based on China Day by day, a “cash back for positive reviews” scheme has been broadly applied to encourage shoppers to go away optimistic feedback by providing small money returns or reductions on future purchases.
It is usually noteworthy that each the sale of pretend merchandise and misleading promoting contain endorsements from celebrities, influencers, and faux consultants. For instance, influencer Li Jiaqi promoted a non-stick pan regardless of eggs clearly sticking to it throughout his livestreaming session. What turned dubbed the “rollover incident” has raised doubts amongst shoppers about his credibility. Fake doctors, counting on replicating real medical doctors’ content material, can rapidly achieve reputation after which begin promoting low-quality and even faux health-related merchandise on these platforms.
Countermeasures on China’s On-line Retail Platforms
The Chinese language authorities has applied a number of measures to fight misleading practices on e-commerce platforms. Within the battle towards piracy, counterfeiting, and misleading promoting, a number of legal guidelines and rules have been developed, refined, and enacted.
For instance, the revised Anti-Unfair Competition Law requires e-commerce operators to chorus from falsifying merchandise’ capabilities, efficiency, high quality, gross sales quantity, or person evaluations. The E-commerce Law defines “brushing” as an criminality, and likewise makes retail web site operators “directly liable” for faux merchandise offered on their platforms. The Measures for the Supervision and Administration of Online Transactions prohibits on-line companies from participating in misleading business practices.
For regulation enforcement, in 2022, the State Administration for Market Regulation (SAMR) deployed a nationwide enforcement action towards unfair competitors, which investigated and dealt with a complete of 9,069 instances, with 739 instances regarding “brushing” and fines amounting to roughly 48.68 million yuan. The 2023 “Iron Fist” action plan additionally highlighted counterfeiting and misleading promoting as key focus areas.
In recent times, China Customs have carried out “Dragon Motion,” “Clear Web Motion,” and “Blue Web Motion” to implement mental property proper (IPR) safety. In 2023, a complete of 62,000 batches of products suspected of IPR infringement have been seized, totaling 82.899 million objects for import and export.
In the meantime, extra focused measures have been adopted by on-line retail platforms. For instance, on the finish of 2015, Alibaba established the Platform Governance Department to safeguard a wholesome e-commerce ecosystem. In January 2017, the Alibaba Anti-Counterfeiting Alliance (AACA) was established to boost IPR safety by collaboration amongst a number of stakeholders. Over time, Alibaba additionally regularly innovated its IPR safety know-how system, incorporating synthetic intelligence and blockchain applied sciences.
In accordance with its latest annual report, by the tip of 2022, Alibaba’s mental property safety platform had safeguarded over 730,000 international logos, assisted public safety authorities in fixing 2,123 instances, and apprehended 2,737 prison suspects.
Among the many e-commerce platforms, Pinduoduo was the first one to introduce a “refund solely” coverage in 2021, permitting customers to obtain a refund with out returning objects that don’t align with sellers’ descriptions. Taobao, JD.com, and Douyin adopted with comparable refund policies, prioritizing shopper rights over service provider pursuits.
It is usually noteworthy that self-employed skilled assessors are additionally rising on numerous platforms, combating towards faux merchandise and misleading promoting. Nevertheless, their motivation for exposing retailers’ misconduct could be questionable: Is it pushed by a pursuit of justice or by a want for elevated consideration and community site visitors, which, ultimately, might grow to be revenue by product promotion? Xin Jifei, often called “China’s most outspoken food influencer,” additionally began selling products online.
Challenges and Potential Options
Regardless of the efforts made by the federal government and e-commerce platform operators, these countermeasures nonetheless face constraints that restrict their effectiveness as a result of numerous challenges.
First, the substantial quantity and scale of operation make it nearly not possible to watch the outline and high quality of every product offered on-line. In accordance with Taobao, the variety of merchandise on the market on a single day has exceeded 800 million, with a mean of 48,000 objects offered each minute. On Pinduoduo, the variety of retailers had reached 8.6 million by June 2021.
Second, some sellers are adopting new methods based mostly on loopholes, and leveraging new applied sciences and platforms to advertise faux items and conduct fraudulent actions. For instance, “brushers” might simply avoid detection by using totally different accounts and IP (Web Protocol) addresses.
Large information and synthetic intelligence are more and more being adopted to create customized advertising and marketing methods and to generate extra interesting content material to deceive shoppers. New digital financial system codecs, reminiscent of second-hand buying and selling platforms and livestreaming e-commerce, are hotbeds for misleading practices as a result of regulatory gaps.
Third, shoppers’ consciousness of IPR and self-protection must be additional improved, as their perspective towards faux merchandise and different misleading practices considerably influences the market. In accordance with the White Paper on Insights into Chinese Consumers’ Attitudes towards Trademark Protection, which was launched in August 2022, 80 p.c of shoppers had a sure understanding of logos, whereas solely 69 p.c of them agreed with the significance of safeguarding logos and would guarantee their safety when making purchases.
Shoppers, particularly susceptible teams reminiscent of older adults, minors, and rural shoppers, might simply fall sufferer to buying counterfeits and/or inferior merchandise in the event that they lack consciousness of preventive methods and self-protection measures. In accordance with the Annual Report on the Status of Consumer Rights Protection in China (2022), within the context of on-line promotional actions, shoppers exhibited indifference and default acceptance towards behaviors infringing on shopper rights.
Final however not least, some faux items offered on China’s on-line retail platforms are produced or distributed abroad. The buying and selling of counterfeit items has advanced into a world situation, involving a number of nations throughout manufacturing, gross sales, distribution, and consumption. The disparities in numerous nations’ regulatory frameworks and enforcement capacities amplify the strain and complexities confronting China’s customs in defending IPRs.
To deal with these points, the related authorities departments ought to swiftly handle rising regulatory gaps, broaden, and improve worldwide collaboration, and additional strengthen supervision over on-line retail platforms, livestream hosts, sellers, importers, exporters, and producers by clarifying their obligations and conducting extra frequent random checks.
On-line retail platforms ought to actively cooperate with authorities supervision, and additional enhance their evaluation mechanisms, impose stricter person authentication, carefully confirm orders and evaluations, and rigorously crack down on livestream hosts and sellers engaged in misleading practices.
To mitigate the monitoring and compliance challenges, the federal government and platforms must also collectively improve the authorized comprehension of sellers and shoppers, strengthen shopper rights safety consciousness, deepen their understanding of channels for safeguarding their rights, rebuild their confidence, and supply extra proactive help to shoppers looking for recourse.
Shoppers ought to elevate their vigilance, chorus from blindly trusting promotional supplies and present evaluations, improve consciousness of IPR and self-protection, and keep away from buying infringing merchandise. Victims ought to actively search authorized recourse, not condone unlawful behaviors, and preserve a zero-tolerance perspective towards fraudulent actions.
As acknowledged within the Annual Report on China’s Combating of IPR Infringement and Counterfeiting (2022), “Lengthy because the journey is, we’ll attain our vacation spot if we keep the course.”
