What Constitutes Unfair Competition Behavior in China?

Written by Dr. Jian Xu, IP Expert and collaborator of the China IP SME Helpdesk.

China’s Anti-Unfair Competition Law (“AUCL”) provides a broad framework to address market conduct that harms fair competition, including the misuse of unregistered trademarks, trade names, get-ups, or commercial identifiers that cause confusion in the market.

With significant revisions to the AUCL taking effect on October 15, 2025, the law has been updated to better respond to both traditional unfair practices and emerging digital economy challenges, strengthening protections for rights holders and increasing regulatory and enforcement tools.

Under the AUCL, a claimant must typically show that the product or business identifier in question enjoys a certain degree of reputation or influence in China and that the defendant’s conduct is capable of causing consumer or operator confusion regarding source, affiliation, endorsement, or commercial connection.

Core Unfair Competition Behaviors

China's AUCL prohibits a wide range of conduct that undermines competitive order. Rights holders and practitioners should be familiar with the following seven common categories:

1. Confusion and Misleading Commercial Identifiers

Unauthorized use of another’s trademarks (registered or unregistered well-known marks), trade names, business identifiers, social media account names, application names, icons, or other influential commercial signs may constitute an act of confusion. This expanded definition aligns AUCL protections more closely with trademark principles and expressly prohibits setting another’s products, enterprise names, or trademarks as search keywords when such use misleads the public.

2. Reverse and Unauthorized Use of Marks

Conduct involving the removal of legitimate branding and replacing it with another mark or selling products under misleading signage or packaging may be actionable under the AUCL. While some behaviors previously treated under unfair competition (e.g., reverse counterfeiting) may now overlap with trademark infringement, unauthorized use that causes confusion remains subject to AUCL scrutiny.

3. Unbranded or De-Branded Trade

Selling genuine products after removing or obscuring brand identifiers may still constitute unfair competition if it creates confusion or misleads business partners or consumers regarding origin or affiliation.

4. Online Unfair Competition and Platform Misconduct

The AUCL expressly regulates online conduct. It prohibits operators from using data, algorithms, technology, or platform rules to manipulate user choices, disrupt competitors’ normal operations, or engage in false transactions, fake reviews, malicious returns, and other data-driven unfair tactics.

5. Trade Secret Misappropriation

Misuse, theft, or unauthorized disclosure of trade secrets remains a core unfair competition category. The AUCL now encompasses a broader set of electronic intrusion and inducement conduct that harms competitive order.

6. Misleading Commercial Activities and Defamation

Deceptive practices such as misleading advertising, forging certificates or awards, and spreading false information that damages another operator’s reputation are prohibited. The AUCL broadens the scope of commercial defamation to include acts that harm not only competitors but also any “other operators.”

7. Commercial Bribery and Dual Liability

The AUCL strengthens anti-bribery provisions by prohibiting both the offering and acceptance of bribes in commercial contexts, imposing potential fines on both entities and individuals involved.

New and Strengthened Regulations

Several notable improvements in the AUCL reflect China’s focus on fairness, digital economy integrity, and platform governance:

- Online platform responsibilities are now explicit: platforms must adopt fair competition rules, complaint mechanisms, and promptly rectify detected violations.

- Low-price competition practices that coerce below-cost selling are prohibited.

- Supervisory authorities may interview responsible persons of non-compliant enterprises and demand corrective action.

- The AUCL has expanded penalties, increasing maximum fines for serious violations such as online unfair competition and commercial defamation, providing stronger deterrence.

- The law now includes extraterritorial application provisions, potentially extending reach to overseas conduct that harms competition in China’s market.

Practical Implications for Rights Holders

Pursuing an unfair competition claim remains evidence-intensive. In Chinese courts, notarized evidence or documents legalized via apostille carry significant probative weight. Where possible, obtaining and relying on registered rights (e.g., trademark registrations) usually offers stronger protection and clearer enforcement pathways than unregistered claims.

Nonetheless, China's AUCL equips rights holders with enhanced tools to combat confusion-based acts, digital unfair practices, and other competitive abuses that may not be neatly addressed under sector-specific IP laws.