EIF Asia Advisor Claudio Murri reports on China's new advertising rules

24 September 2015 Author: Claudio Murri, EIF Asia Advisor

Given the changes in the commercial landscape brought by advances in new media technologies, Chinese legislators updated the country’s advertising law. The new rules entered into force on September 1.

This overhaul is the first major revision since the Advertising Law was introduced in 1994 – before the internet era and the introduction of many Western brands into the Chinese market. The resulting new regime has been described as creating one of the world’s strictest sets of standards for advertisers to adhere to. Moreover, hefty fines are foreseen for violators. Any entity or individual may report suspected false advertising activities to the Administration for Industry & Commerce (AIC). The AIC is required to handle the case and notify both parties within seven working days and officials may be punished for failing their duties if they do not properly investigate the violations. The China Consumer’s Association and other consumer protection organizations will also be empowered to monitor false advertising activities which harm consumers.

Among the various provisions, some of the strictest rules apply to the protection of minors. While children can still perform or appear in a commercial, children under 10 years of age are not allowed to endorse products, as they lack independent judgement to validate the authenticity of the product or service they would promote. Furthermore, no advertising materials are permitted in elementary school, middle school or kindergarten, and severe restrictions have been introduced as to what ads can be targeted at young children.

The new rules also target specific industries. Baby milk powder, as well as drinks and food for infants in general, have always been a sensitive area in China due to a number of past scandals. Advertising of these products was already prohibited in the past, although the ban was not strictly enforced. With the amended law, companies will incur much heavier fines if their products claim to replace a mother’s milk, fully or partially. New restrictions also include the advertising of health related products such as health food, pharmaceutical products, and medical equipment under the guise of health information programs or columns on any media platform. Tobacco products also face a new ban for ads that are specifically targeting underage consumers, and even approved advertising can no longer appear in mass media or in public places.

The law even goes into the detail of regulating language, with a prohibition of claims containing superlatives such as “highest”, “best”, “first”, “national level”. Large ecommerce companies such as JD.com and Taobao have already taken steps of precaution by returning an error message when a search is made using superlative words.

When it comes to advertising in digital form, direct marketing to home addresses or in electronic format without the recipients consent or request is illegal – the Law now also requires advertisements sent in electronic format to display the sender’s real identity and contact details, as well as information on how to unsubscribe from further advertisements. Internet advertisements must not interfere with people’s normal usage of the internet and pop-up windows must be capable of being closed by one single click. The burden is not only on the company, but also on the internet service provider to monitor and shut down such ads on their software platforms.

In addition to companies, celebrities are now also held liable for what they endorse. They are required to have used the product/service personally, and thus can vouch that they perform as they claim.  In addition to monetary penalties, celebrities in violation will be banned from taking other endorsement deals for a period of three years.

Although it is uncertain how strictly enforced this new amended law will be, China definitely appears to be serious about cracking down on false advertising and is already bringing cases against a number of large companies, both local ones and multinationals.

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