New rules improve e-vendor supervision

Shanghai’s first regulation governing the rapidly developing online food-ordering market requires online platforms to display vendors’ latest operating licenses on their web pages.

It is an important way to put the vendors under public supervision and to let consumers know whether vendors are providing food products that are beyond their authorized scope of business, Yan Zuqiang, head of the Shanghai Food and Drug Administration, told a media briefing on Wednesday.

The new regulation takes effect on Sept 1.

Under the regulation, which was drafted by the Shanghai FDA and Shanghai Communications Administration, online platforms must verify the qualifications of vendors and take original photos of their operations.

“The online platforms used to require the vendors to submit their pictures via the internet in most cases, which saved time but left loopholes for fake photos,” Yan said.

Once the platform discovers a vendor is violating the regulation, it must suspend the relationship and report the violation to the food market watchdog, the regulation said.

Food ordering and delivery apps on smartphones have been popular in recent years. Statistics from Analysys International, an internet consultancy based in Beijing, showed that online transaction for food ordering and delivery in China amounted to more than 45 billion yuan ($6.7 billion) in 2015, triple the previous year.

The online platforms used to require the vendors to submit their pictures via the internet ... which ... left loopholes.”

Yan Zuqiang, head of the Shanghai Food and Drug Administration

The largest players in the sector— Ele.me, Meituan Takeout and Baidu Takeout — are backed respectively by internet giants Alibaba, Tencent Holdings and Baidu Inc.

In the first half of 2015, 200 complaints about the services were received. The complaints mainly involved food quality and false advertising, according to the Shanghai Consumer Rights Protection Council.

Fu Weiqiang, division head for laws and regulations at the Shanghai FDA, said a national law will take effect in October.

“The regulation in Shanghai focuses more on supervision in advance, while the national law will pay more attention to punishment afterward,” he said.

Yan said more than 17,000 unlicensed vendors had been driven out of the online market since the Shanghai FDA held discussions with Ele.me in March, when it found hundreds of unlicensed vendors on the platform.