Law governing advertising practices in China: Best practices and mistakes to avoid
Introduction Advertising Law in China
China’s Advertising Law was initially passed in 1994 and was revised in September 2015. Read the revised version here is twice as long as the 1994 original. It was implemented to increase consumer protection and impose stricter rules on advertisers.
Three examples of brands sanctioned in China for violating advertising legislation
Procter & Gamble
In 2015, Shanghai fined P&G 6 million RMB for misleading advertisements for Crest toothpaste. This record fine, according to Xinhua, was applied due to the company making exaggerations and producing touched up images on the whitening effect of its products. This shows how consumer protection is tightening up in China, calling for more careful advertising.
Canada Goose
The Chinese market regulator imposed a fine of 450,000 yuan (approximately 70,000 USD) on the Chinese subsidiary of Canada Goose for false advertising, after finding that the jackets contained mainly duck down instead of the goose down as claimed by the company. Additionally, the regulator determined that Canada Goose’s claims about Hutterite down, claimed to be the warmest Canadian down, misled consumers.
Estee Lauder
Chinese authorities fined Estée Lauder 2,381,671 RMB for false advertising in China. The brand claimed that its “Advanced Night Repair Essence” product offered substantial benefits, such as a “Youth Index of +77%” and improvements in skin texture, without providing sufficient evidence for these claims. This case highlights the importance of companies providing solid evidence for their advertising claims in China.
How is advertising regulated in China?
Below is a summary of the main measures governing advertising in China. To take a more detailed look, read the full text here.
1 – Veracity and legality of advertising
One of the pillars of advertising regulation in China, set by the new law of September 2015, concerns the veracity and legality of advertising messages. This measure aims to create a healthy and transparent advertising environment, where consumers can make informed decisions based on reliable and verifiable information.
The law clearly defines four main categories of advertisements considered as misleading, as explained below by the Administration for Industry and Commerce (AIC):
Advertisements for fictitious products or services:
Any advertisement promoting goods or services that do not exist or are not available for sale is strictly prohibited. This practice aims to eliminate any attempt at deception aimed at attracting consumers with illusory offers.
Major non-compliant declarations:
Information regarding crucial aspects of the product or service, such as price, origin, ingredients, manufacturer, functionality and performance, must be accurate and must not mislead the consumer. These items are often decisive in the purchasing decision process, and their accuracy is therefore essential.
Use of falsified data:
The use of data, scientific research results, surveys, falsified statistics, or any information that cannot be verified is prohibited. This rule ensures that advertisements based on empirical or scientific evidence are authentic and reliable.
Use of false performance related information:
Fabricating information regarding the performance of a product or service from scratch is also prohibited. This includes exaggerations or unsubstantiated claims about the capabilities or effects of a product or service.
2 – Ban on “Absolute Terms” in Advertising in China
Chinese advertising regulations aim for transparency and prohibit the use of “absolute terms” to prevent exaggerations. These terms, such as “the best” or “incomparable,” suggest superiority without hard proof. The law seeks to protect consumers from unsubstantiated claims about product quality or effectiveness.
3 – Sectors of activity subject to very strict advertising regulations in China
Chinese advertising law imposes specific and rigorous controls on certain categories of products and services. These detailed rules, which are aimed at protecting consumers and promoting ethical business practices, are divided into the following sectors:
- medicines and medical equipment (art. 16, 17 and 18)
- tobacco and’alcohol (art. 22 and 23)
- education and training (art. 24)
- products and services promising a return on investment (art. 25)
- L’real estate and related advertisements (art. 26)
- seeds and animals (art. 27)
If you wish to advertise in one of these sectors, make sure you consult the details of the special rules subject to these industries.
4 – Advertising spokesperson
The law imposes rules on advertising spokespeople to ensure the authenticity of advertisements. Article 38 requires that their recommendations be based on facts and consistent with the law. They should not promote products they have not used or services they have not received. Minors under the age of ten cannot be spokespersons. Those sanctioned for false advertising are prohibited from becoming so for a defined period.
5 – Other clauses
Many other clauses are present in the law for advertising, such as the the following:
- Ban on’use or’use in disguised form the national flag, national anthem, national emblem, military flag, military song or military emblem of the People’s Republic of China
- Ban on’hinder the protection of the environment, natural resources or cultural heritage through advertising
- When an advertisement concerns a patented product or a patented method, it must indicate the number and type of the patent
- Many more
What sanctions are applied in the event of non-compliance with advertising rules in China?
The Advertising Law of the People’s Republic of China provides various penalties for non-compliance, targeting advertisers, advertising agents, ad publishers and endorsers. Here is a summary of possible sanctions:
Fines for false advertising:
For publishing false advertising, the market regulation department can impose fines ranging from three to five times the advertising spending. If the spending is incalculable or negligible, fines can range from 200,000 Yuan to one million Yuan. In severe cases or if the advertiser has committed three or more violations within two years, fines can increase by five to ten times the advertising spending, or between one million Yuan and two million yuan.
Corrective actions:
Entities involved in illegal advertising activities may be ordered to take corrective action. This includes stopping advertising, reviewing advertising content for compliance, and publishing fee rates and fee collection methods in accordance with relevant state provisions.
Confiscation and increases in penalties for endorsers:
If endorsers violate specific provisions, such as recommending or certifying medical services, medicines or dietary supplements without due verification or endorsing goods or services that they did not use or receive, authorities may confiscate their illegal income. Fines can range from one to two times the illegal income.
Suspension and revocation of activities:
In the event of serious violations, the Market Regulation Department has the authority to suspend or revoke the business license or advertisement publication registration certificate of the violating party.
Public liability:
Advertisers, advertising agents and endorsers may also bear civil liability for any harm caused by false advertising, especially if it affects the lives or health of consumers. This includes joint and several liability for damages caused to consumers.
Criminal liability:
In cases where violation of advertising laws is criminally punishable, the law will hold violators criminally liable.
These sanctions are designed to enforce compliance with the law, protect consumers, and maintain the integrity of China’s advertising industry.
Best practices for advertising in China
Know the platforms and follow the latest trends:
The Chinese digital world is very specific, with giants like WeChat and Douyin at the heart of daily interactions. It is therefore crucial to understand not only these platforms but also the different trends in terms of advertising in order to make your advertising campaign a success.
Do not simply copy the content from another country:
China has a unique culture, requiring specific marketing content. Successful campaigns incorporate local cultural aspects. They are addressed to Chinese consumers in their own language and context. Additionally, China has strict advertising regulations. Advertising tailored to another Asian market may not comply with Chinese laws.
Do not hesitate to get support:
The Chinese market is complex due to its strict regulations on advertising and censorship. Specialized local agencies are often necessary. They help to understand regulations and cultural nuances. They also optimize campaigns for success.
Brands succeed in China by adapting their approach. They must engage deeply with the Chinese market and culture. This maximizes the impact of their advertising efforts.
Call HICOM today to set up your next advertising campaigns in China!
