Recently, the “E-Commerce Law of the People’s Republic of China” (hereinafter referred to as the “E-Commerce Law”) has officially come into effect. How online travel agencies (OTAs) such as Ctrip have cooperated with and implemented the relevant regulations of the E-Commerce Law has attracted much attention, and media oversight has confirmed that non-compliant behaviors have been corrected.
We believe that, overall, the relevant provisions of the E-Commerce Law will safeguard the regulated and orderly development of the online travel market.
E-commerce activities now have clearer legal basis
According to a survey by the National Bureau of Statistics on e-commerce trading platforms, the national e-commerce transaction volume in 2017 reached 29.16 trillion yuan, of which the transaction volume of goods and service e-commerce was 21.83 trillion yuan, and the transaction volume of contract-based e-commerce was 7.33 trillion yuan. What does this figure mean? Compared with the Gross Domestic Product (GDP) of that year, the proportion of e-commerce transactions to GDP has exceeded 35%, or is very close to the GDP proportion of the secondary industry.
Since the internet wave in the early 1990s, and then with the rapid acceleration of mobile internet after 2010, the penetration of e-commerce activities in daily life has risen sharply. The sales activities of merchants, the purchasing behaviors of consumers, and the payment processes during transactions increasingly occur online. The implementation of the E-Commerce Law provides detailed regulations on the rights and responsibilities of natural persons, legal entities, and unincorporated organizations engaged in selling goods or providing services through information networks such as the internet, including e-commerce platform operators, platform-based operators, and e-commerce operators selling goods or providing services through self-built websites or other online services. This gives all participants in digital commercial activities a comprehensive, dedicated law to refer to.
From the provisions of the E-Commerce Law, it can be seen that this law further clarifies the scope of legal regulation over e-commerce activities, ensuring the fairness of e-commerce transactions while emphasizing consumers' right to choice and right to know when consuming online.
Ctrip is the earliest Chinese internet platform to engage in online travel services and has now accumulated 300 million users globally. Of course, after Ctrip, many other OTAs have also entered the field, providing various travel products and services to users through e-commerce. Therefore, the introduction of the E-Commerce Law provides a clear legal benchmark for Ctrip and all OTAs.
Non-compliant OTA Behaviors Have Been Rectified
In the OTA industry, Ctrip has always been a leader in various models and technological innovations. We also pay attention to the healthy and coordinated development of the entire industry ecosystem, and have always maintained a high level of attention and alignment with industry-related laws, regulations, and policy guidance. In fact, even before the implementation of the E-Commerce Law, we had never stopped close communication and cooperation with the relevant guiding departments. Regarding how to optimize the e-commerce environment through legal means and promote the sustainable development of the OTA industry, we are not only witnesses but also hope to be strong promoters.
Since the second half of 2018, Ctrip has been conducting self-inspections and optimizations across its platforms and product lines, monitoring, following up on, and re-optimizing corresponding feedback, eliminating any situations that violate the E-Commerce Law. We promise not to engage in any form of default sales and will continue to provide consumers with clear, visibly priced services and products. We will also maintain stricter supervision of products on the platform to effectively protect consumers’ rights to know, to choose freely, and to fair trade.
After the implementation of the E-Commerce Law, several major media outlets have also conducted oversight reports on the compliance status of Ctrip and other OTAs. These reports have confirmed that all non-compliant behaviors have been rectified. For example, with the protection of consumers’ legitimate rights as the premise, the ticketing products on the Ctrip platform and the train ticket booking channels now only retain options that allow users to make autonomous choices based on their needs and preferences on the booking interface.
We also note that the E-Commerce Law requires platform operators and platform-based operators to disclose business licenses and operating permits, distinguish between self-operated and agency products, and differentiate between the joint and fault liabilities of the platform. This regulation helps OTAs operate more compliantly and places higher demands on OTA operations, requiring OTAs to conduct stricter reviews and regulations of suppliers and their products on the platform. This helps reduce or even eliminate some of the mixed-quality situations in the market, allowing consumers to more confidently choose professional and regular OTAs and suppliers and avoid substandard products. At the same time, it also helps better distinguish the responsibilities of platforms and suppliers, protecting the legitimate rights and interests of both consumers and operators.
Intellectual Property and Services Should Both Generate Value
Those who follow the online travel market know that Ctrip leads the industry in innovation, whether in quantity or quality. We have business, service, and technological innovations every year, many of which have ultimately driven innovations across the entire industry. In a fully competitive market, corporate innovation is about survival, but such innovation also needs to be properly protected.
The content of the E-Commerce Law regarding intellectual property protection is very beneficial for travel e-commerce companies like Ctrip that particularly rely on innovation. Ctrip has innovatively launched a series of pioneering products and services in the market, such as transparent group tours, private group tours, diamond-tier standards, major disaster protection, micro-leaders, SOS global rescue, local guides, local experiences, and online visa systems. Ctrip has also applied for numerous technical patents in the fields of artificial intelligence, big data, and cloud computing. As the use of trademarks and brands such as Ctrip and Ctrip Travel has become more widespread across the country, the implementation of the E-Commerce Law provides a better legal basis for Ctrip to protect the intellectual property of its exclusive products.
The E-Commerce Law places great emphasis on protecting the equal status and rights of consumers in e-commerce transactions, which is fully aligned with Ctrip’s core value of “customer-centricity.” Our services such as advance compensation, flight and hotel guarantees, and six-fold protections are all services that significantly tilt benefits toward consumers.
Ctrip has always been committed to service and believes that service can bring value to both customers and businesses. We have made a commitment that, before openly charging service fees, even if revenue is somewhat affected, high service standards will not be compromised in the slightest. But we also hope, as industry professionals and economists have called for, that in a mature market economy, tourism businesses should be allowed to charge agency commissions from suppliers and service fees from consumers. This is something we see in many countries around the world: when the value of service is reflected in the form of consumption, it will further drive service providers to strive for excellence.
Whether it’s large platforms like Ctrip and BAT or the small and medium-sized operators within the platforms, they all coexist and thrive in the e-commerce environment and are beneficiaries of the e-commerce dividend. But we must also realize the principle that “water can carry a boat, but it can also capsize it,” and together use self-discipline and regulation to maintain a healthy e-commerce ecosystem, continuously injecting momentum into business and the economy.