"Taxation would aggravate our miseries," Hong said. "Online retailers can bypass sales intermediaries and avoid regional price differences and sell their wares at nearly producer prices. As a result, our original margins have already been threadbare."

Likewise, some online shoppers are not happy about the new licensing requirement. Li Na, an accountant at Samsum (China) Investment Co. Ltd., considers herself an online shopping addict, buying almost all her apparel, handbags and cosmetics on the Internet. Li said online shopping is more economical than buying goods at shopping malls, which she considers to be only showplaces for fashion.

The most popular online auction sites are doing their part as well to protect buyers. Taobao.com and Eachnet.com now offer an escrow service to ensure buyers are satisfied with what they purchase online before their payments go through. If sellers do not deliver purchased items or send substandard goods, they will receive a black mark on their credit records. Their fraudulent acts also may be exposed publicly on the Internet to warn other prospective buyers not to do business with them.

"Although the existence of ‘black' traders cannot be ruled out, it does not pay for them to encroach upon online price advantages," Li said. "After all, that's what we come for."

According to a survey of 10,000 online buyers conducted by Sohu.com, nearly half of the respondents indicated they had experienced fraudulent online sales practices. Yet, only 22 percent of those surveyed said they supported the new licensing regulation. The other 78 percent suggested temporarily shelving it, saying that the new regulation could hinder the growth of the country's emerging online trade industry. Meanwhile, 90 percent of the respondents said the new order would be a disincentive for them to open a shop on the Internet.

Industry experts are split on the issue. Wang Jing, Director of the Supervision and Management Division of Special Transactions at the Beijing Administration for Industry and Commerce, is one of the regulation's advocates. He told Securities Daily that the country's tax law naturally has a binding force for e-commerce transactions. All citizens, including online businesspeople, have an obligation to pay taxes according to the law, he said.

"In the western countries with developed e-commerce, it's common to levy taxes on online shops," Wang was quoted as saying. "Taxation marks the maturing of the country's e-commerce."

But Wu Jinglian, a renowned economist, is of a different mind. Wu told Securities Daily that even though China's e-commerce marketplace is subject to taxation, it is far from a mature one. Although C2C e-commerce has enabled about 1 million people to become online retailers through auction sites such as Taobao.com, the new regulation would add to their costs and end up dampening the country's endeavors to expand employment, he said.