(Yicai) May 26 -- Chinese regulators are planning to tighten fee regulations on digital platforms to better safeguard the rights and interests of small and medium-sized enterprises.

Platform fees should follow the principles of fairness, legality, and good faith, according to a draft released by the State Administration for Market Regulation yesterday.

The draft guidelines advocate reducing the burden on merchants and encourage platforms to adopt flexible and diversified pricing strategies. They also recommend offering discounts or exemptions, particularly aimed at supporting SMEs.

China’s platform economy comprises tens of millions of businesses, over 900 million consumers, and numerous flexible workers, forming a broad, inclusive, and highly open ecosystem, an SAMR official noted in a related article. Platforms typically generate revenue through commissions, membership fees, technical service charges, and marketing promotion fees.

However, some merchants have reported issues such as excessive fee categories, complex calculation methods, and a lack of transparency in platform fee structures. The new guidelines aim to address these concerns, the official added.

The guidelines focus on regulating fee practices and protecting merchants’ rights, Chen Liteng, a digital lifestyle analyst at the E-commerce Research Center of 100EC.cn, said to Yicai. Specifically, the rules prohibit eight types of illegal practices, including double-charging, passing platform operating costs onto merchants, and forcing merchants to participate in paid promotional campaigns.

To improve transparency, the guidelines require platforms to clearly display fee items, rules, and historical information on their websites. Moreover, any changes to these rules must be publicly announced at least seven days in advance to allow for public comment, the analyst added.

This represents a long-term improvement in the regulatory framework for China’s platform economy, per Chen. However, in the short term, it may present challenges for the internet industry. Smaller platforms, in particular, may face survival pressures due to rising compliance costs, which could lead to further polarization within the industry, he concluded.

Editors: Dou Shicong, Emmi Laine