An ICP license (Internet Content Provider) is a license granted by the Ministry of Industry and Information Technology of China (MIIT). The ICP regulations have been in play since September 2000 when they were instituted by the MIIT.
So it has at least been 18 years. Why is there still so much confusion and uncertainty around the subject?
For the international market, it has a lot to do with the ambiguous language that is associated with the topic. Secondly, these regulations change and get amended on a regular basis, making the information out there either incorrect or outdated.
So let’s get started with the basics, there are two kind of ICP licenses:
- ICP 备案 or ICP Bei’an (also called “ICP filing” or “ICP recordal”)
- ICP 证 or ICP Zheng ( “Commercial ICP” in English)
ICP Bei’an
An ICP Bei’an is mandatory for any website with your own domain name hosted in a datacenter located in Mainland China and usually displayed at the bottom of a website.
If you are hosting your website with your own domain name outside of Mainland China you are not required to acquire a ICP Bei’an. In relation to the referenced subject, Hong Kong and Macau are not considered to be part of Mainland China.
That sounds like a great way to avoid dealing with ICP licenses, but your website will load much slower or possibly not at all within Mainland China. This is all related to the Great Firewall of China, which monitors and slows down international internet traffic. Chinese consumers are very accustomed to fast websites and have, just like any fellow human, a low tolerance for slow loading websites or apps.
So consider your priorities and determine where you want to host your website.
Without an ICP Bei’an it will be impossible to display a website on your own domain name hosted from within Mainland China. Chinese hosting providers have the responsibility of monitoring any website you put online and if that website has acquired an ICP Bei’an. Your website will get detected and blocked within several days if you try hosting it without acquiring the ICP Bei’an.
Beside the fact your violation will be detected within days, an ICP Bei’an is increasingly required for additional services such as payment integrations (WeChat / Alipay) and Baidu advertising (PPC) solutions. Lastly, it shows Chinese customers that you are a legitimate business, which increases your brand trust.
The full process of acquiring an ICP Bei’an takes about 3 to 4 weeks and there are no government fees associated with the ICP Bei’an. However there might be agency fees when using one to assist you with the application.
The following requirements and conditions must be met for a successful application:
- Only Chinese businesses can apply for an ICP Bei’an.
(Domestic, WFOE or Joint Venture business entities can apply) - Must appoint person who takes legal responsibility and must appoint a webmaster. They can be the same person or they can be different persons. They can be non-Chinese nationals, Chinese nationals or a mix.
- Website must be hosted in a Mainland Chinese datacenter.
- The websites content must match the business category on your Chinese business license¹.
- Domain name must be registered within China by a Chinese company and must be a .cn, .com or .com.cn domain name².
- Website must be empty; nothing is allowed to be shown on the website for the duration of the application.
When you are able to meet these conditions you have all the ingredients to start the ICP Bei’an application process.
This article is a high level overview of the two main ICP licenses and we will not go into details of the application process. In a future article we will go into those details and clarify the full application process.
Commercial ICP (Theory)
There is a lot of confusion between both types and that is not surprising when reading the regulations and information available for a commercial ICP. While an ICP Bei’an is mandatory for every website in China, the commercial ICP may or may not be needed depending on your specific case.
The regulations states that websites with commercial activities are required to obtain a commercial ICP.
Commercial services are defined as types of value-added telecom services, including any website that derives direct income from providing online advertising, texts, images, audio, video, and apps. Providing an information search service, information community platform, instant message service, and information protection services are also considered commercial services.
If going by that definition, that would include nearly every (business) website, unless it’s just a website for branding and promotion activities.
However, in reality few businesses do acquire a commercial ICP for their website.
This is not only true for international businesses participating on the digital market in China, but even for domestic Chinese businesses. Very few of them go through the troubles of a commercial ICP application. As an example:
In 2017 fewer than 100 commercial ICP licenses were granted in the province of Sichuan.³
The process for a commercial ICP is much more complex and time consuming compared to an ICP Bei’an. The requirements to qualify are much higher as well. Each application is different depending on the business and the local implementation of the regulations. The final application is reviewed locally, and each supervising office has tremendous discretion. Below is some key basics to start with:
- Only Domestic Chinese business can apply for a commercial ICP
(Since 2015 Chinese incorporated WFOE’s can officially apply, but there are very few success stories) - Minimum registered and deposited capital ≥ 1 million RMB for most businesses. In certain cases, if proposed business is nationwide, i.e. telecommunication, the registered capital needs to be ≥10 million RMB
- The company has professionals who are experienced in providing services that are relevant to the business activities
- Meet the ability to provide long term services to the public
- Key personnel and investors have no violations within the most recent 3 years according to telecommunication supervision and management rules
- A technical proposal document must be produced on why and how you will apply the commercial ICP license
So as an international business this is pretty daunting. As the chances as a WFOE for applying a commercial ICP successfully are slim. Many determined international businesses set up a secondary domestic business entity with the help of a Chinese partner.
This standalone domestic business is then controlled by strict contracts between the WFOE and the domestic entity. This is often setup as a shareholding entrustment or as a VIE structure.
Commercial ICP (Practice)
So with that in mind, how do businesses deal with the commercial aspect of their online business?
As the regulations are (purposely) vague, this provided leeway to both businesses and the regulators in the past to fly under the radar and be able to conduct their online business without a commercial ICP.
But as of early 2018 regulation have started to get much stricter and enforcement has been increased. There are signs on the horizon that the regulators are implementing automatic monitoring and checks on websites to see if you comply with the updated regulations.
So where in the past you might have gotten away without acquiring a commercial ICP license, this might start to change in the future.
I’m not saying you should or should not look into acquiring a commercial ICP, but to weight the rewards and risks.
How much of an upfront investment can you afford for your business case? What are the consequences if your website (temporarily) gets shutdown?
But if your serious about entering the China market and running your own e-commerce website, we highly recommend to get in touch with experienced people on the ground. Regulations change often and staying on top of that for your China business as an international business is hard.
And as last, I wanted to share the following:
3. Everything is possible in China.
¹ If your business category is related to a high-tech product, you can not run an e-commerce store selling pencils and if your business category is consulting you can not run a website about furniture manufacturing.
² A limited set of other extension are possible, but .com, .cn or .com.cn are most commonly used.
³ Unofficial but very connected source
⁴ Image used with permission from TMO Group
