China

社交电商步入合规深水区：应对传销与税务风险的实战攻略

AnJie Broad Law Firm | Local Language | AcademicThink | Jan. 23, 2026 | Regulation

Social e-commerce in China has grown rapidly over the past decade, driven by models based on social networks and user trust, such as Pinduoduo's group-buying and Yunji’s membership platforms. This growth has created dynamic business forms but has also raised significant compliance concerns, particularly around pyramid selling and tax risks. In response, the State Council has prioritized revising regulations on pyramid selling and direct selling in 2025, signaling intensified enforcement and clearer regulatory standards. Concurrently, new tax regulations have redefined platform responsibilities, transitioning from voluntary assistance to statutory agency roles for tax reporting and collection.

The social e-commerce ecosystem primarily involves platform enterprises, individual promoters, and consumers, with some models including institutional service providers managing promoters. While multi-level marketing elements raise suspicions of pyramid selling, criminal law sets a high threshold for such liability, generally exempting compliant platforms that base compensation on actual sales without coercion or deception. However, administrative regulations have broader criteria and have become a key risk area, with penalties including hefty fines, operational suspensions, and potential license revocation. Legal debates focus on how to define hierarchical layers in the distribution chain and the compliance value of structuring intermediate tiers as independent legal entities, which is not a guaranteed safeguard.

Since 2025, enhanced tax regulations mandate internet platforms to act as statutory agents for tax collection related to flexible-employment income, requiring robust compliance systems. Individual promoters must provide truthful identity and income declarations and choose between platform agency tax declaration or self-declaration, while institutional service providers are required to maintain complete and transparent tax and accounting records to avoid risks.

To navigate the tightening regulatory environment, social e-commerce entities must adopt a comprehensive compliance framework. This includes defining platform roles strictly as compliant e-commerce operators, designing profit models aligned with legal standards for platforms, suppliers, promoters, and service providers, and implementing detailed internal controls over membership rules, compensation, and hierarchical structures. Firms are urged to standardize external marketing and user compliance management, coordinate legal and fiscal processes, and embed compliance into ongoing governance rather than one-off projects.

The industry faces a “double strengthening” regulatory approach with ongoing revision of anti-pyramid selling laws and the introduction of data-driven tax supervision systems. Success in this environment depends on firms’ ability to align business models with legal requirements, embrace transparent operations, actively engage with regulators, and promote self-discipline within the sector. The shift away from uncontrolled growth toward compliance-focused development is positioned not as a restriction but as an opportunity to restore social e-commerce to its core value of efficient consumer empowerment and sustainable market growth.

Peoples Daily | English | News | Jan. 23, 2026 | UndeterminedBizdev-Partnering

During the 14th Five Year Plan period (2021-25), China attracted over $700 billion in foreign investment, ranking first among developing countries. Foreign-funded enterprises have significantly contributed to China's high-level opening up and high-quality development, according to Ling Ji, vice minister of commerce, who spoke at the China Association of Enterprises with Foreign Investment New Year Reception held in Beijing.

Ling Ji emphasized the stability and certainty of China's rapid economic growth, foreign investment policies, and trade relations, which create a favorable environment for foreign companies operating in China. The upcoming 15th Five Year Plan (2026-30) presents a development blueprint and an "opportunity list" for foreign enterprises, encouraging them to continue investing and expanding their presence in the Chinese market to share in growth opportunities.

Representatives at the event, including Sean Stein from the US-China Business Council and Jens Eskelund from the European Union Chamber of Commerce in China, expressed their commitment to supporting China's sustainable development and fostering mutually beneficial cooperation. Foreign-funded enterprises attending the reception also voiced confidence in China's market vitality and business environment improvements, indicating a willingness to increase long-term investment aligned with China's high-quality development goals.

JunHe LLP | English | AcademicThink | Jan. 23, 2026 | Regulation

On January 20, 2026, a practical seminar on the World Bank’s newly revised "Integrity Compliance Guidelines" was successfully held, supported by the Expert Committee of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products and jointly hosted by JunHe Law Offices and Tianjin University's International Engineering Management School. The seminar concentrated on the World Bank’s December 2025 updates to the guidelines and common compliance errors among Chinese companies, gathering key representatives from the World Bank’s core investigation and compliance departments, compliance leaders from Chinese enterprises, and senior lawyers from multilateral development banks. The event aimed to provide a precise, in-depth compliance empowerment platform for Chinese companies involved in World Bank-financed projects.

The seminar was chaired by JunHe partner lawyer Zhou Xianfeng and featured welcome speeches from JunHe director Hua Xiaojun, China Chamber of Commerce deputy chairman Zheng Chao, and Tianjin University professor Zhang Shuibo. They collectively emphasized that multilateral development bank compliance standards form a critical foundation for improving Chinese companies' compliance levels in the current international market environment.

Key highlights included authoritative presentations from three core World Bank departments. Anthony Pan from the Integrity Compliance Office detailed critical updates in the new guidelines, including management responsibilities, technology usage compliance, accessibility of policies and records, anti-retaliation protections, and regulations on donations and sponsorships. Xuan Luo from the Integrity Vice Presidency addressed frequent compliance risks faced by Chinese companies in World Bank projects such as conflicts of interest, commissions, subcontracting, key personnel changes, and fraudulent disclosures, clarifying standards for collusion and corporate liability for employee misconduct. Chang Liu from the Office of Suspension and Debarment explained the World Bank’s sanctions framework, covering prohibited misconduct, recent case data, sanction measures, aggravating and mitigating factors, and cross-sanctions, providing a comprehensive overview of the system.

In a practical sharing session, JunHe partner Liu Zhen highlighted seven common misconceptions Chinese companies have about World Bank compliance requirements and offered actionable advice informed by recent policies and case examples. The closing session featured in-depth analyses on compliance system establishment and implementation from Yang Songlin, Chief Legal Counsel and Chief Compliance Officer of China Power Engineering Corporation, and Liu Yufei, Deputy Director and Acting General Manager of Compliance Management at China Power Construction Group International Engineering Company, enriching attendees with valuable insights.

JunHe’s experienced legal team continues to provide comprehensive compliance legal services to Chinese companies engaged in multilateral development bank projects, including risk assessments, internal investigations, audit cooperation, compliance system construction, and sanction lifting. The seminar reinforced JunHe’s commitment to supporting Chinese enterprises with multi-level compliance solutions as they expand globally.