Permits Necessary for E-commerce / Internet-based Business in China

source:  date:2016-12-13  author:

Types of Permits for E-commerce / Internet-based Business

Commonly-used value-added telecommunication business permits include the ICP permit (internet content provider permit), the SP permit (service provider permit), the ISP permit (Internet service provider), the EDI permit (electronic data interchange), etc. applicable according to the type of business.


The widely used permits and examples

1)       Online Data and Transaction Processing Business (the EDI permit)

a)      Definition and Subcategories

According to the Classification Catalogue of Telecommunication Business (2015), Online Data and Transaction Processing Business refers to a business providing online data and transaction processing services through public network or internet on the related platforms. It includes transaction processing service, electronic data exchange service, and internet/electronic devices data processing service.


b)      Examples

Transaction processing service: Tmall, Joybuy, Taobao, eBay, Baidu Take-away, Ctrip, group-buying, Didi Taxi, crowdfunding, P2P online lending, housekeeping applications, and so on.

Electronic data exchange service: Custom Declaration EDI.

Internet/electronic devices data processing service: Data processing and management platforms including M2M, wearable devices, and consumer electronic devices. Examples are Ali Smart Series, Jingdong Smart Series, and Huawei Smart Series.


c)      Tips

(1)     If the online sale is only an extension of its physical stores, this online sale does not fall in this category which means not all the online retailors need EDI permits. For instance, on Meidi’s website you can only find the products made by themselves and sold also in their physical stores, instead of a third party. It is an extension of the selling channel instead of a platform for the transactions. Thus, it falls out of the category.

(2)     The platform provider only charges a commission fee like a third party instead of charging directly on the buyer’s payment of goods or services.

(3)     For Shenzhou tailored taxi service, all the drivers have signed labor contracts with the company, so the company itself is not a third party providing platform service like Didi Taxi, which makes it fall out of the category.

(4)     The internet finance can be categorized into internet payment, P2P online lending, equity crowdfunding, internet funds, internet trust, and internet consuming finance. Among them, P2P online lending and equity crowdfunding are specifically required to apply for a EDI permit.


2)      Internet Service Business (the ICP permit and SP permit)

a)        Definition and Subdivisions

Information service business refers to a business, providing services to the public through public network or internet in the way of collecting, developing, and managing information and building information platforms. It can be categorized into information posting platforms and delivery services, information searching and querying services, information community platform services, information instant interactive services, and information protecting and processing services.


(1)    Information Posting Platforms and Delivery Services

It refers to a service, which builds an information platform for other entities or individuals to post information, including text, pictures, videos, audios, and apps.

Examples: 58 City, Sina, Youku, Baidu Wenku, Apple Store, amap, P2P videos, and discount websites.

Tips: 1. Online-payment is not a standard we use to categorize such business.

     2. P2P videos’ common patterns are live-broadcasting.


(2)    Information Searching and Querying Services

Based on internet or public network, it provides information searching and querying services, including web information, text, pictures, videos, and audios in the way of information collecting and searching, data organizing and storing, classified index, and information sorting and sequencing.

Examples: Baidu, Sougou search engine.

Tips: Searching services planted in some websites which only provide a vertical and localized searching service does not fall in this category.


(3)    Information Community Platforms Services

Based on public network or internet, it provides information interactive platforms with socialized features for it registered users to communicate in the forms of text, picture, videos, and audios.

Examples: Sine Weibo, QQ Zone, Renren Net, Wechat friend circle, Lai Wang Zha Dui, Zhihu, and Douban.


(4)    Information Instant Interactive Services

Based on public network or internet, it provides instant information delivering and receiving services (including text, pictures, videos, and audios) through the applications or browsers set in the users’ phones or computers. It includes instant messaging, interactive voice response services, and bidirectional real-time voice services.

Examples: QQ, Wechat, Lai Wang, and Momo.


(5)    Information Protecting and Processing Services.

Based on a public network or the internet, it provides anti-virus and spam blocking services through public service platforms and applications in the users’ computers or phones.

Examples: 360 Total Security, Tencent PC/Cellphone Manager, Baidu Shoujiweishi, spam blocking services, and online encrypted communication services.


b)        Difference between the ICP Permit and the SP Permit

These two permits fall in the same category (internet service business) and the only difference is that ICP permit only involves services based on the internet and the SP permit involves services based on other channels (normally on mobile network)


(1)    The Difference of the Expression on Their Permits

The biggest difference on their permits is the clear declaration on their permits, stating that “only allowed in the internet information services” or “internet information services not included”.


(2)    The Difference of the Business

If a company only runs its business only on internet information services instead of using mobile network (like SMS verification, MMS services), it only needs a ICP permit.

If a company uses both channels (internet and mobile network), it shall be qualified with ICP permit and SP permit together.

Tips: An application on the cellphone does not equal to using the mobile network. An online company may have both a website and an application on the phone which provides internet information services and Zhihu is an example.

Not all the SMS verification equals to an SP permit because the verification may be sent by a qualified third party commissioned by the service provider.


This essay has been produced and made available by JLCD Law Firm and is strictly for informational purposes only.

No client or other user should act or refrain from acting on the basis of any information contained herein without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue.