Sifting past and present requirements for operating an e-business

China’s booming e-business industry is one of the key areas foreign investors focus on. Many e-business enterprises are backed by private equity funds. Before the release of the Circular on Removing the Restrictions on Foreign Equity Ratios in Online Data Processing and Transaction Processing (Operating E-commerce) Business in China (Shanghai) Pilot Free Trade Zone, (FTZ Circular) on 13 January 2015, businesses engaging in e-commerce operations were often classified as the second category, “information services”, according to the Catalogue of Classified Telecommunications Operations 2003.

E-business enterprises, according to their business models, can be classified into “e-malls” and “online stores”. E-malls refer to the third party that provides a platform for online stores to be set up, and the e-business is responsible for maintaining and managing the platform. “Online store” e-businesses run their own online shops to sell the products they manufacture or own in store.

According to the Circular of the General Office of the Ministry of Commerce on Some Issues Concerning the Approval and Administration of Foreign Investment Projects of Sale through Internet and Automat, issued on 19 August 2010, foreign e-business enterprises selling their products through the internet are required to do record filing as an internet content provider (ICP). Since then, the basic opinion in the industry has been that the requirement for operating an online store is ICP record filing. On the other hand, operating an e-mall requires obtaining an ICP licence.

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