Chinese Business and the Internet: The Infrastructure for Trust

By Fort, Timothy L.; Junhai, Liu | Vanderbilt Journal of Transnational Law, November 2002 | Go to article overview

Chinese Business and the Internet: The Infrastructure for Trust


Fort, Timothy L., Junhai, Liu, Vanderbilt Journal of Transnational Law


ABSTRACT

Although the Internet and E-commerce revolutions have clearly taken hold in the United States and Europe, the Chinese culture has been slow to adopt the Internet as a marketplace. The Authors cite a lack of trust on the part of both potential consumers and potential merchants as the primary obstacle to a robust Chinese E-commerce community. To remedy this lack of trust, the Article proposes the nation seek a middle way between reforms guided by Western rule of law and Eastern rule of ethics, thus incorporating effective regulatory strategies and the philosophical resources already within the Chinese cultural consciousness. The Authors propose a framework based on three distinct varieties of trust, and apply that framework across the specific policy problems that impede vibrant E-commerce in China--namely, the development of a workable regulatory regime, and the particular problems of privacy and defamation that seem to be related to the growth of E-commerce. Ultimately, the Authors suggest that to successfully navigate this dramatic shift to an Internet-enabled economy, China should embrace its past but recognize that the new E-commerce context also may demand new solutions.

 
TABLE OF CONTENTS 
 
  I.   INTRODUCTION: THE STATE OF E-COMMERCE 
      IN CHINA 
 II.  THE ROLE OF ETHICS AND LAW IN TRUST-BUILDING 
      A. Hard Trust, Good Trust, and Real Trust 
      B. Toshiba in China: A Case Study of Trust 
      C. The Fundamental Role of the Rule of 
         Law in Trust-Building 
      D. The Role of the Rule of Ethics in the 
         Trust-Building Process: Confucianism 
III. LEGAL FRAMEWORK OF E-COMMERCE IN CHINA 
      A. Access and Registration 
      B. Application of Traditional Legal 
         Principles to E-Commerce 
      C. Hard Trust, Security, and the Regulation 
         of Encryption 
 IV.  PROTECTION OF E-COMMERCE CONSUMER PRIVACY 
      IN CHINA 
  V.  REGULATION OF DEFAMATION ON THE INTERNET 
      A. Statutory and Judicial Framework 
      B. Max Computer Station Inc.: The First 
         Internet Defamation Case in China 
      C. Assessment of Max Computer Station Inc 
 VI.  CONCLUSION 

I. INTRODUCTION: THE STATE OF E-COMMERCE IN CHINA

Although the fervor of Internet communications has diminished over the past two years, there is little doubt that electronically modulated communications are here to stay, including those that involve business transactions. (1) This may be more true of emerging markets, where Internet technology was in its infancy at the time of the dotcom bust. (2) This Article looks specifically at some of the issues necessary for the development of the Internet and E-Commerce in China where, in the last decade, they have gained a foothold and grown rapidly. (3)

In 1997, there were only 670,000 Internet users in China. (4) In 1999, that figure jumped to 2.1 million. (5) A survey report released by the China Internet Network Information Center (CNNIC) showed that in 2000 there were 8.92 million computers with access to Internet; 22.5 million Internet users in China; and 265,405 "www" sites with suffixes such as .cn, .com, .net, and .org. (6) The Chinese Academy of Electronic Information Industry Development estimated that the number of Internet users in China would grow to 27 million by the end of 2001. (7) Some sources are even more optimistic. One publication predicts China will have 374 million users by the end of 2005, making it the largest Internet market in the world. (8) The growth of Internet culture has been so rapid and influential that a very popular greeting--"have you hooked-up to Internet?"--has replaced the traditional greeting of thousands of years--"Chi le ma?" (have you eaten?). (9) In 2000, Chinese E-commerce revenue reached 77.16 billion yuan (U.S. $9.32 billion), of which business to business (B2B) trade accounted for 76.77 billion yuan (U. …

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