Goverment guidelines

"There is no need to criticize either party for this incident. We have learned from this that laws and regulations need to be amended and improved to regulate retail business on the Internet. Honesty should be set as a principle of doing online business," Chai Yuejin, a professor specializing in e-commerce from Tsinghua University, told Economic Information.

His view is echoed by the MOFCOM. The ministry's spokesperson Shen Danyang maintained that lack of a supervision mechanism over online markets was one of the reasons for the incident.

To foster a more regulated and sound e-commerce business atmosphere, Mo Daiqing suggested the government establish a special agency to address consumers' complaints arising from online shopping. For online sellers, they should also insist on honesty as the prime principle of doing business and perfect after-sales service.

Taobao Mall also needs to play its role in guaranteeing the mall merchants are qualified, sell authentic products and provide good customer service.

"In this sense, Taobao Mall's move of increasing its technical service fee is a step to guide the online market in the right direction," Mo told ChinAfrica.

On October 18, the MOFCOM issued guidelines for e-commerce development during the 12th Five-Year Plan period (2011-15), focusing on creating a more trustworthy e-commerce credit system to ensure online merchants remain honest. The guidelines include encouraging the establishment of separate agencies to evaluate and approve a merchants' credit line.

Such a credit system requires the joint efforts of government and trade associations, according to Jin Linbo, a professor from the Institute of Finance and Trade Economics of the Chinese Academy of Social Sciences. "The government plays the role of guiding the establishment, while the trade associations take the responsibility of supervising e-commerce businesses like drafting relevant industry norms and establishing a credit rating mechanism," Jin told Economic Information.