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Foreigner's Guide How To Start E-Commerce in China

Dino Liu // Last Updated: 10 October 2016

1. Background

Even though China is still a developing country, the Chinese e-commerce sector is as developed as those in developed countries. There are many well-known Chinese e-commerce giants such as Taobao, Tmall, JD, and up-and-coming ones such as Feiniu and Suning. The Chinese consumers’ fervor towards e-commerce extends overseas as they shop online internationally. The Chinese market is large and portents endless business opportunities. For foreign companies wanting to participate in e-commerce in China, it is most important to understand how to establish and operate e-commerce, including issues related to brand development, product management, inventory management, sales, payment, logistics, and website and application development, etc. This article focuses on the procedures and basic matters relevant to the development of an e-commerce website in China. How does a foreign company or a foreigner, wanting to participate in e-commerce in China, set up such a website?

2. How to operate an e-commerce website?

To operate a website, you need to obtain a domain name, a stand-alone host server and a program source code for the e-commerce site. In addition to these, in China, you also need to apply for an ICP (Internet Content Provider) license in view of the Chinese government’s supervision on the internet.

2.1 What is an ICP license?

It is stated on the “Regulation on Internet Information Service” that there are two kinds of internet information services: commercial and non-commercial. Establishing a commercial website requires obtaining an ICP license while a non- commercial website requires obtaining an ICP record. It is forbidden to operate any internet information services without first obtaining the permission for a license or a record.

The “Regulation on record of non-commercial internet information service” came into force on March 20th, 2005. According to the regulation, any non-commercial internet information services provided in the territory of the People's Republic of China, shall follow an ICP record application procedure. It is therefore forbidden to operate a non-commercial internet information services in China without the record.

2.2 There are two types of ICP.

2.2.1 ICP record

For websites that are purely informational without direct sale activities, you need to apply for an ICP record.

2.2.2 Commercial ICP license

For online platforms or third-party sellers that sell goods or services, you need to apply for a commercial ICP license. You must have a valid ICP license service number before applying for the commercial ICP license.

Note: You must apply for ICP license within 30 days after the website is registered with the MITIT (Ministry of Industry and Information Technology).

The documents needed for the application of an ICP license may be different in different provinces. Please check Appendix A for the website of the Communications Administration of each province.

Please check Appendix B for the documents required for the application of the ICP license.

Relevant regulations: Order No. 33 of Ministry of Information Industry of People's Republic of China (http://t.cn/8FGWOm1).

2.3 Does the domain name need to be licensed?

Whether the domain is purchased domestically or abroad, it does not need to be licensed since it will be resolved to the IP address of the server, where it is the server that would be licensed. To connect to the Chinese market, you will need a sub-domain name or a new domain name to resolve it to the local server in China. Only ICP licensed websites can be accessed, otherwise the website will not be accessible.

2.4 Does the server need to be licensed?

To apply for the ICP license, the dedicated servers or VPS must be provided from a local ISP (internet service provider) in China, and not overseas. Foreign companies, including those based in Hong Kong, Macau, Taiwan, would also need to provide the business license of its branch in China including the registered Chinese address and telephone number. Individuals from Taiwan applying for license would need to provide a valid MTP (Mainland travel permit), while those from Hong Kong, Macau and other countries would need to provide passport information.

In summary, the server must be chosen from a mainland China web host. Companies applying for license need to provide business license, address and telephone number of its branch in China. Individual applicants need to provide passport information.

2.5 How to apply for the ICP license?

The documents to prepare depend on the type of application, if it is an individual or a company application.

2.5.1 For individual application, the documents and information to prepare are as follows:

  1. Verification form to authenticate information for website licensing. Details to be filled include: name of website owner, website type, website domain name, signature and date. Other information is to be filled by the ISP.
  2. Scanned personal ID card (both sides).
  3. Certificate of domain name.
  4. Headshot taken with the ISP’s official photo backdrop.
  5. Signed Information Security Management Agreement.

2.5.2 For company application, the documents and information to prepare are as follows:

  1. Company name
  2. Company valid certificate number
  3. Company type
  4. Company address
  5. Valid ID document type of person in-charge
  6. Name of person in-charge of the website
  7. Telephone number of person in-charge of the website
  8. Valid ID number of person in-charge
  9. Cellphone number of person in-charge
  10. Email address
  11. Name of website
  12. Website domain name

After filling out the information and submitting the application, you need to wait for the approval of the corresponding department. The approval will be sent to you by email and text message according to the registered information. The process of obtaining the ICP license is demonstrated in the diagram below.

Here is the procedure:

  1. Either the website builder collects information (certificates and documents with official seal) from your company or your company provides the relevant documents to the web host.
  2. The website builder photographs the person in-charge for the ICP license of your company on specific backdrop.
  3. The website builder scans, posts and uploads the collected documents to the host ISP.
  4. The host ISP inputs the information and verifies the contents listed above by phone.
  5. The documents will be sent to the corresponding provincial Communications Administration to be assessed on whether the contents pass verification or not. The documents will be returned to the website builder for correction if the contents fail verification. The host ISP will then re-verify the contents after correction and then re-submit.
  6. The Communications Administration processes the verified document for several working days. The duration of process is determined by the provincial Communications Administration.
  7. Upon approval of the application, the provincial Communications Administration will send the ICP license number and password to the person in-charge by text message and email.
  8. (same as (7))
  9. The procedure for ICP license is completed.

2.6 Recommended ISP (Internet Service Provider)

There are many good ISPs in China. We recommend the following ISPs to you based on experience and reputation from users.

2.6.1 Ali Cloud

Founded in 2009, as a Chinese cloud computing platform, Alibaba Cloud services cover more than 200 countries and regions. Alibaba Cloud provides the most secure and most reliable computing and data processing services to enterprises, governments and other organizations. It aims to make cloud computing a general technology and public service, with continued efforts to supply DT (Data Technology).

Website address:

2.6.2 Tencent Cloud

Built around sophisticated infrastructure, Qcloud brings many years of experience in providing various internet services. Qcloud provides mature products services for social, gaming and other areas. Tencent has outlined many plans on Qcloud to provide developers and enterprises cloud services, cloud data, cloud operation and etc. and other one-stop services.

Website address:

2.6.3 Baidu cloud

Baidu cloud is the public cloud platform provided by Baidu. It started operation in 2015. As a platform that accumulated 16 years of technology and resources, with a vision stating “scientific and technological forces promoting social innovation”, Baidu cloud continually provides the technology of cloud computing, big data, AI (artificial intelligence) to society.

In 2016, Baidu officially introduced the “cloud computing + big data + AI” trinity cloud computing strategy. It launched more than 40 kinds of cloud computing products and three intelligent platforms: Tiansuan, Tianxiang and Tiangong, which provides big data, intelligent multimedia and intelligent IOT (Internet of things) services respectively. It provides the most secure, high-performance and intelligent computing and data processing services to various industries. It makes cloud computing the new engine of social development.

Website address:

2.6.4 China Wanwang

Founded in 1996, China Wanwang is the leading internet ASP (Application Service Provider). Wanwang aims to provide complete internet application service to clients, covering basic services like domain name services, host services, company email, website construction, internet marketing, vocal communications and etc., and high-end services like e-commerce solutions and consultation for enterprise. It helps enterprise clients achieve e-commerce applications and improve their competitiveness. Alibaba Group took over Wanwang in 2009, and announced to merge Wanwang and Alibaba Cloud into the new Alibaba Cloud in January 6, 2013. The brand Wanwang was retained after merger and became the domain name service provider under Alibaba cloud.

Website address:

2.6.5 Xinnet

With 22 years of experience in providing basic internet services, Xinnet is a convenient and efficient one-stop internet marketing platform. Xinnet provides domain name registration, Chiyun cloud server, cloud virtual host, company email, cloud host, server rent and deposit services.

Website address:

2.7 Payment methods

There are now various payment methods in China. You can pay by a third-party payment platform like Alipay, or via online banking. Overall, Alipay is most recommended. Foreigners can apply for Alipay account as well.

Individuals applying for Alipay need to provide cellphone number and email address.

Reference: https://help.alipay.com/lab/help_detail.htm?help_id=215132

2.7.1 Applying for a Chinese phone number

Most of website security mechanisms are based on sending dynamic codes to mobile phones in China. Therefore, you need to apply for a Chinese phone number to receive the code from each website. It is quite simple to apply for a phone number. You can apply for it at any sales branch with your passport. You can also ask your Chinese friends to apply for you if you cannot do it personally. Your representatives need to provide their ID card and your passport.

3. Conclusion

This article introduces how foreigners build a website for e-commerce in China. First, it introduces what an ICP license is, how to establish an ICP license, and then explain relevant issues involving domain name and server. Then it recommends some ISPs. You need to prepare different documents according to the type of application, either as an individual or a company for the ICP license. The key thing is you can apply for the ICP license at the MITT website by yourself, or you can ask the ISP to apply for the ICP license after purchasing the server. This is a free service provided by the ISP with a delicate department for client enquiries. For company applying for ICP license, you need to provide valid certificates, address and telephone number of the branch company in China. For individual applying for ICP license, the recommended procedure is:

  • Apply for phone number at China Telecom, China Mobile or China Unicom, with your passport. The representatives need to bring their ID card and your passport if you ask your friends to apply for you.
  • Apply for Alipay with the phone number and your passport.
  • Purchase a VPS (Virtual Private Server) or virtual host from the ISP listed above. Ask them to apply for the ICP license for free.
  • Operate the website after getting the approval for ICP license.

Please contact us if you have any further questions on establishing and operating e-commerce in China. We will answer your queries with detailed research and analysis.

4. References

Appendix A: Website of Communications Administration for each province

Appendix B: Documents and information for ICP license application

For company

  1. Company name
    (Note: fill in name of person in-charge if it is a personal website; fill in the company name if it is a company website.)
  2. Valid company certificate number
    (Note: fill in the ID card number of the person in-charge if the company name is personal. Or fill in the business license number if it is a company.)
  3. Company type
    (Note: fill in enterprise, personal, public institution, government, or military)
  4. Company address
    (Note: detailed address containing number, street, district, city, province.)
  5. Valid ID document type of person in-charge
    (Note: fill in ID card, passport, military ID card, MTP (Mainland travel permit))
  6. Name of person in-charge of the website
  7. Telephone number of person in-charge of the website
    (Note: list the relevant telephone numbers separated by “;”. Format of telephone number should be: country code – city code – telephone number.)
  8. Valid ID number of person in-charge
  9. Cellphone number of person in-charge
  10. Email address
  11. Name of website
  12. Website domain name
    (Note: list all the domain names separated by “;”)

For individual

  1. Verification form to authenticate information for website licensing. Details to be filled include: name of website owner, website type, website domain name, signature and date. Other information is to be filled by the ISP.
  2. Scanned personal ID card (both sides).
  3. Certificate of domain name.
  4. Headshot taken with the ISP’s official photo backdrop.
  5. Signed Information Security Management Agreement.

Provide documents and information 1,2,3,4 to the ISP. The ISP will verify the material according to the description of the website. It is recommended to fill in the description of the website with the relevant personal information.

After the initial verification, the ISP will ask you to post the documents. Please make 2 copies of documents 1,2,3,4,5 and post them to the ISP. The content of the website must be the same with the description if the website has been completed. Otherwise, the ISP will ask you to edit the website and and this will be time consuming.

The ISP will pass the documents to the provincial Communications Administration when the documents are received and corrected. Under normal circumstance, you will get the ICP license number in 20 working days.

Appendix C: Regulations of e-commerce

General Office of the State Council: “Opinions on the acceleration of the development of e-commerce” (January 2005)

Ministry of Commerce: “Instructions on online trading (draft for discussing)” (June 2006)

Ministry of Commerce: “Instructions on online trading (provisional)” (March 2007)

Ministry of Commerce: “Opinions on the acceleration of the standardized development of e-commerce” (December 2007)

Ministry of Commerce: "The standard business model for e-commerce” (April 2008)

Ministry of Commerce: “Opinions on the acceleration of the development of circulation in e-commerce” (November 2009)

State Administration of Industry and Commerce: “Interim measures for the management of online commodity trading and related services” (June 2010)

Regulations of online shopping:

Standing Committee of the National People's Congress: “Law of the PRC on the Protection of Consumer Rights and Interests” (October 1993)

Standing Committee of the National People's Congress: “Trademark Law of the People's Republic of China” (October 2001)

Commerce Reform Division of Ministry of Commerce: “Code of online shopping service” (April 2008)

State Administration for Industry and Commerce: “Interim measures for the management of online commodity trading and related services” (May 2010)

Policy of electronic payment:

The People's Bank of China: “The measures for the organization and administration of payment and clearing (Draft for comment)” (June 2005)

The People's Bank of China: “Guidelines for electronic payment (No.1)” (October 2005)

The People's Bank of China: “Notice for the strengthening of security management of bank cards, prevention and fight crimes involving bank cards” (April 2009)

The People's Bank of China: “The measures for the administration of payment services provided by non-financial entities” (June 2010)

ABOUT THE AUTHOR

Dino
Liu

Dino is a very experienced backend developer specializing in ASP.NET, E-commerce and complicated web application projects for SEIRIM and helps lead SEIRIM projects focused towards Chinese users.

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