Access to Justice for the Chinese Consumer

Handling Consumer Disputes in Contemporary China

Ling Zhou

• Publisher: Hart/Beck
• Year: 2020
• ISBN:
  9781509931071
• Edition: 1
• Topic: Derecho
• Subtopic: Derecho del consumo

This book offers a socio-legal exploration of localised consumer complaint processing and dispute resolution in the People's Republic of China – now the second largest consumer market in the world – and the experiences of both ordinary and 'professional' consumers. Drawing on detailed analysis of an impressive body of empirical data, this book highlights local Chinese understandings and practice styles of 'mediation', and identifies in popular consciousness a continuing sense of reliance on the government for securing consumer rights in China. These are not only important features of consumer dispute processing in themselves, but also help to to explain why no ombudsman system has emerged. This innovative book looks at the nature of China's distinctive dispute resolution and complaints system, issues within that system, and the experiences of consumers within it. The book illustrates the access to justice processes locally available to aggrieved consumers and provides a unique contribution to comparative consumer law studies in Asia and elsewhere.

1

Introduction

I.Introduction

This book is addressed mainly to readers interested in one or more of the following fields: consumer protection, dispute resolution, the Chinese legal system, and more generally, comparative legal studies. For students of consumer protection, this book offers an ethnographic exploration of the local organisation of consumer complaint processing and dispute resolution in a selected area of the People’s Republic of China (‘PRC’, or ‘China’), and how consumers – both ordinary and ‘professional’ – experience the local system. The China case is neglected in the general and comparative consumer protection discourses, which hitherto have been based almost exclusively on the situation in Western societies. It is hoped that the book will also provide insights for those who are interested in the relationship between culture and dispute resolution through its examination of local Chinese understandings and practice styles of ‘mediation’, as well as identifying a continuing sense of reliance on the government for securing consumer rights and the associated failure as yet of an ombuds-type system to emerge in China, both generally and for the handling of consumer complaints. For analysts of the Chinese legal system, the book offers, inter alia, a new account of a much neglected dimension of the system namely, consumer issues. The field of Chinese studies continues to be dominated by concerns with economic reform, economic growth and production, and the book brings together and analyses an area of social life which is highly significant but also one given only limited attention by many Western researchers: the consumer dimension of Chinese society. Indeed, China specialists will find that the study of consumers throws light on more general social and political processes in the People’s Republic. Shopping malls, online shopping, and so on increasingly have significance on the lives of Chinese citizens. It is also hoped that in exploring these issues, the present study of consumer dispute resolution in the PRC will interest many readers in the wider fields of comparative legal studies and regulatory studies.¹

In the course of the post-Mao reforms, the ‘consumer’ has emerged in China as a distinct social category, and one worthy of legal protection. As Croll has emphasised, China’s transition into a ‘socialist market economy’ (shehui zhuyi shichang jingji)² has altered the lifestyle of people in terms of their working, purchasing, consumption, education and so on. As a result, the socio-economic and political classification of the general public as ‘comrades’ in every aspect of life, has gradually given way to the perception of the public as ‘consumers’.³ This status has increased in importance as business is planned less by the state but, rather, run by entrepreneurs in a more competitive market. By 1992, China’s transformation had generated a perceived need for economic law making, where law is called for to regulate commercial transactions and market competition. The regulatory framework for what was now a socialist market economy included (and still includes) not only the Law on the Protection of Consumer Rights and Interests (hereinafter, Consumer Protection Law) 1993, last revised 2013 but also a Company Law 1993, last revised 2018, a Law for Countering Unfair Competition 1993, last revised 2019, a Product Quality Law 1993, last revised 2018, an Advertising Law 1994, last revised 2018, a Law on Negotiable Instruments 1995, last revised 2004 and so on.

A complicating issue in the development of consumer protection is that the state has, despite its support of the growth of market forces, continued to be closely involved in the ownership and management of the economy. Although concerned to promote economic efficiency and growth through allowing a greater role for market forces, the state has largely retained a monopolistic control over China’s most profitable industries – telecommunications, transportation, banking and insurance, both in order to retain its power, and because the state is not altogether convinced of the value of market forces. In the resulting unequal market conditions, China’s private sector struggles to assert itself.⁴ There has been an imperfect embrace of market forces.

In recent years, some sensational cases have arisen where consumers’ rights have been infringed and consumers’ health has been put in danger. Victims’ attempts to secure compensation have been made difficult by problems in the justice system. One important reason for such difficulties has been the misconduct of a number of large businesses. Subsequently many scholars within China and other countries have called for better regulation of the market, improvements in the conduct of producers and sellers, and higher industrial – especially product quality – standards. Several new laws have been introduced and older legislation revised in order to tackle these issues. Developments include the Anti-Monopoly Law 2007, Food Safety Law 2009, Tort Liability Law 2009, and revisions to the Consumer Protection Law in 2013 and to the Food Safety Law in 2015.

It is against such a backdrop that the book asks, how are consumer disputes resolved in China today, and in particular, in what ways do Chinese consumers pursue their grievances and secure resolution to their disputes? We need not only to consider the ways the consumer is protected in law, but also the manner in which consumers are able to bring complaints and resolve their disputes with sellers and others. To date, however, there is only limited research on China’s consumer dispute resolution systems, including extra-judicial processes. In particular, there is no empirical research on consumer dispute resolution practices and the role that various actors, including judges, lawyers, consumer disputants, businesses and the regulator play in the consumer dispute resolution systems. Many law firms working within China offer short news items from time to time on some of the key developments and issues in consumer law and procedures, but no major academic research project has been carried out on consumer issues in the past few years. Even if we focus on the existing English-language studies that do exist, we find that these are for the most part nearly a decade old.⁵ My interest is in how dispute resolution practices in China impact on and serve the interests of aggrieved consumers. This is an important question in its own right, given China’s recent emergence as the second largest consumer market in the world, but in answering it we are also likely to be able to throw new light on the significance of legal development, more generally in post-Mao China.

The book focuses on one local area (Shenzhen, China), and explores the day-to-day handling of consumer disputes, rather than trying to offer a broad coverage of the national law and macro-level analysis of consumer protection in China. A locally-focussed study is needed because law on the books in China diverges significantly in many areas of social life from actual legal practices. To address the central research question identified above, this book has employed qualitative research methods – in particular, participant observation in key local agencies. I spent over one full year continuously in the field, and during this fieldwork conducted participant observation and in-depth interviews through internships in a number of important local organisations. During my time in these organisations, I was able to collect a large amount of data on such matters as the ‘insiders’ perspectives’ on consumer issues and had the chance to experience directly a number of key events. I was able to observe consumer disputes closely and to obtain detailed accounts of individual experiences.⁶ On the basis of such qualitative data, this book attempts to depict a realistic and contextualised picture of consumer disputes and their resolution in China today.

II.The Market, State and Consumer Law

The growing importance of consumption and consumer markets in China raises the question of choice of appropriate legal framework for markets, and the role and limits of consumer law and policy in addressing consumers’ needs. Let us explore briefly the various rationales offered by scholars for protecting consumers in a market economy (to which China now aspires).

Academic discourse on consumer policy and law in market economies has centred on the nature and extent of the government’s role in the market. A libertarian model of the role of markets and government, within which economic freedom is the most important value, holds that the government is encouraged to play a modest role, primarily coping with situations where the market system fails.⁷ Milton Friedman, for example, viewed market competition as the best consumer policy. He did not favour extensive consumer regulation.⁸ Friedman argued that so long as effective freedom of exchange in the market is maintained, the central feature of the market – competition – will protect consumers from unfair dealing and coercion by sellers. The existence of other, alternative, sellers who the consumer can deal with will protect the consumer from malpractice.⁹ In Friedman’s view, the state should do no more than enforce the ‘rules of the game’, which is to maintain a competitive market. It is not the role of the state to intervene so as to shape individual and community lifestyles, including consumption behaviour.¹⁰

On the other hand, for example, John Rawls argues that market outcomes depend on arbitrary factors such as ‘natural’ talent and ability and fail to protect the least-advantaged groups in society in the long run. Thus, the government has a duty to rectify market failures and to redistribute income.¹¹ Another important critique of Friedman’s position is found in the work of the economist, Galbraith, who points to the fact that in certain sectors of the modern consumer economy, large corporations have gained excessive power over the market by means of advertising, marketing, packaging, and so on. As a result, the idea of the market responding to individual choices and the notion of the market as a mechanism fulfilling consumer’s needs is unrealistic. Individuals’ preferences for particular products and their consumption desires, more generally, may be created through the marketing activities of large firms rather than rational decision-making by the individual.¹²

To a large extent, Friedman’s analysis of the market is infused with the beliefs of consumer sovereignty – that ‘consumers are … sovereign economic actors, with stable preferences that have been formulated rationally and autonomously, and who have the potential to exercise power in the economic system by their purchasing choices’.¹³ In this model of consumer sovereignty, consumer regulations mainly aim to ensure that producers and sellers respond to consumers’ preferences. Therefore, the role of consumer protection in this model lies in creating an environment in which consumers can make choices effectively, and directing market production to meet the demand of consumers so that the competitive market will achieve an efficient allocation of resources.¹⁴ However, the arguments of scholars such as Rawls and Galbraith against this free-market perspective show us that consumer wants and needs are to a significant extent ‘socially created’, largely because of the dominant power that large producers can exercise over the market. Influenced by the marketing strategies and techniques of large corporations, consumers may be persuaded to buy things that are neither urgent nor necessary.¹⁵ Furthermore, consumer desires may not be solely created by influential producers. Rather, the desire to consume may derive from a social value system where individuals are evaluated in large part by what they consume.¹⁶ In the classic study of ‘conspicuous consumption’, Thorsten Veblen has shown how the value system of a consumption culture works, with individuals purchasing and using luxury goods in order to display their social status and economic power, rather than for the intrinsic value or worth to them of such goods.¹⁷ The idea that markets are simply a mechanism responding to individual demands is thus an unrealistic characterisation. Consumer wants and needs do not exist in a vacuum, but, rather, are socially created. As Rawls argues, ‘an economic system is not only an institutional device for satisfying existing wants and needs, but a way of creating and fashioning wants in the future’.¹⁸

This debate on the function of the market has inspired a rethinking of the role of the state in relation to the market, and the ways in which the government regulates activities concerning consumers. Expanding the government’s role to include policies that ‘manage the subject of consumption – the consumer – through education, expert advice and knowledge’, is seen by many as necessary.¹⁹ This means that a government would step in to correct the imbalances in bargaining power between consumers and producers by offering consumers direct protection, rather than relying on market competition alone to safeguard them.²⁰

Ramsay has identified two crucial potential market fail...