ecommerce regulations HKFEC

After speaking with a variety of industry professionals operating ecommerce businesses in China, Thailand, the Philippines and Vietnam, trust makes its way into each conversation. Customers don’t trust merchants, business owners are weary of government power, citizens don’t trust banks, so on and so forth.  

eIQ spoke with Joseph Yuen, the Board Chairman of The Hong Kong Federation of Ecommerce (HKFEC), at Last Mile Fulfillment Asia to understand his ambitions to standardize ecommerce regulations.

The federation composes of members from Lazada, UnionPay, PwC, Shopline, etc. and exists to bridge the ecommerce associations between Europe, Russia, Dubai, and Thailand to create a stable foundation for future ecommerce businesses to land on.

“Governments didn’t have any laws in place that could govern new technology such as Uber,” says Joseph. “This shows that governments need to work with organizations like ours to fill in  gaps between booming industries and out of date regulations.”

Creating trust in a trustless Asia

It’s not surprising to learn that Southeast Asians have doubts about product reliability and safety of payment methods when news about counterfeits and financial fraud hang in daily headlines.

Reasons why consumers in Hong Kong do not shop online. Source: Consumer Council 2015

One of the initiatives HKFEC is moving towards is the creation of a “Hong Kong Trust Mark”. Much like food labels in the US – USDA Organic, Non-GMO Project Verified, etc. – ecommerce sites would have to be vetted before being granted a badge that certifies them as trustable for customers to shop.

Companies that meet all criteria agree to work with HKFEC to provide customers with a safe and reliable shopping experience.

If a sold product doesn’t meet guidelines, the idea is that the customer has the right to an investigation and refund – even if that means going to court.

“There’s been a lot of talk but no action,” comments Joseph. “We want to assume that every one is a good player so HKFEC will act as the middleman to clear this black hole and make ecommerce transparent.”

Ecommerce requires standardization

Joseph believes that there are four major areas that need to be addressed in order for ecommerce to grow healthily in Hong Kong and China.

  1. Trust – Chinese citizens fear that all online goods are counterfeit items
  2. Payments – simplified, cashless payments open up opportunities for hackers
  3. Privacy – smart data versus big data, how can businesses use their data to grow?
  4. Cross border – tax policies differ across markets, how can we align the cross-border policies?

Hong Kong, a country of over 7 million people, is an important transit point between vendors and Chinese consumers as a free port. The French Chamber in Hong Kong quotes it as “suitable for low-volume B2C ecommerce, goods for personal consumption with low cargo value and low tax rate items”.

The Trust Mark sounds good in theory, an online business gains the badge after a thorough investigation by HKFEC, customers identify badge on site and are more willing to shop knowing they will be protected. The main question then becomes, how long will this take?

Ecommerce companies in all parts of the world, especially Asia, are already moving quickly to grab market share. Consumers aren’t familiar with any badges or certifications that aim to protect them so education would also add time to the process.

“Our committee has legislative influence to give us a line to the government,” says Joseph. “The one thing that will get them acting is social pressure from our friendly alliances. We will act as the judge.”

“Guandong Electronic Commerce Association, Russia, India, Europe and the UAE are all invested in making the Trust Mark a reality.”

The effects of the Trust Mark

Joseph believes luxury brands are weary of selling online in Asian markets because customers, especially the Chinese, prefer to fly abroad to purchase goods they know are real. The goal is to keep the business within the country.

“The government should facilitate access to financing sources and terms in order to enhance competitiveness of local ecommerce operators,” said Pawoot Pongvitayapanu, president of the Thai Ecommerce Association and ASEAN Market Advisor of HKFEC.

If the badge were to come into effect, HKFEC hopes to see an increase in cross-border trade and growth in the brand.com trend. For example, companies would be less concerned about damaging their brands and sell on platforms like Tmall to reach Chinese customers if it was certified. Or they would open their own webstores to sell directly to customers.

“In every single fast moving industry, regulations and government cannot catch up,” says Joseph. “Someone has to stand in front of the court as an alliance and agree on a set of rules before standardization can happen.”

By: Cynthia Luo

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