China’s Draft E-Commerce Law Imposes Three-Year Records, 1 Million Yuan Fines on Platforms
BABA•China’s draft e-commerce law would require platforms to verify all merchants, retain transaction records for three years and localize data storage, subjecting Alibaba to new oversight and compliance costs. It also introduces fines up to 1 million yuan for unfair competition and unauthorized cross-border data transfers.
1. Expanded Regulatory Scope
The draft law broadens oversight to include all digital platforms, mandating merchant identity verification, product labeling standards and retention of transaction records for at least three years. Non-compliance could lead to administrative sanctions or criminal liability for senior executives.
2. Data Localization and Privacy
Platforms must store user data and transaction information within China’s borders and seek official approval before any cross-border transfers. This requirement is likely to drive substantial infrastructure upgrades and increase reliance on domestic cloud services.
3. Penalties and Implementation Timeline
The proposal introduces fines up to 1 million yuan for unfair competition, false advertising and unauthorized data transfers. A public consultation period runs until mid-August, with full enforcement expected to begin in early 2027.
