China: Amendments to the Law on Advertising

On 24 April 2015, the Standing Committee of the National People’s Congress issued amendments to China’s Advertising Law (the “New Law”) which came into force on 1 September 2015.

Content

Main Amendments

The State Administration for Industry & Commerce (“SAIC”) has stated that the New Law is much more comprehensive, detailed and practicable than the previous legislation. The key amendments can be summarised as follows:

1. the New Law broadens the existing definition of false advertisement to encompass advertisements which deceive or mislead consumers. The New Law also specifies the circumstances in which an advertisement will be considered to be a false advertisement;
2. the term advertisement endorser is defined and their responsibilities set out, for example, the advertisement endorser may not make endorsements or testimonials for products or services that they themself have never used or accepted;
3. restrictions are placed on adverts which target minors. Such adverts must not induce minors to ask their parents to buy the products or services advertised and should not be likely to cause minors to imitate unsafe acts. Furthermore, minors under the age of ten shall not be used as advertisement endorsers;
4. requirements for online adverts are also set out. The true identity and contact information of the sender should be indicated along with a method to refuse subsequent receipt of the advertisement;
5. the regulatory scope of the old advertising law is expanded to include public service advertising; and
6. the responsibilities of SAIC and other relevant authorities such as the consumer associations and China Food and Drug Administration (“CFDA”) are clarified.

Detailed Guidelines for Specific Industries

In comparison to the advertisements of the 1990s when the Advertising Law was first enacted, contemporary adverts are far more varied in their content. The New Law therefore sets out detailed and specific requirements for the following industries in order to allow the legislation to fulfil its protective mandate:

• Medical Products As medical products such as drugs and other medical devices are closely related to human health and life, the PRC government realised early that the advertising of medical products should be strictly controlled. In 2007, SAIC alongside the China Food and Drug Administration issued ‘Measures for the Inspection of Drug Advertisements’ which detailed drug advertising requirements. Similar requirements dealing with medical devices were published in 2009. The New Law further develops the measures outlined above and prohibits advertisements which promote narcotic, psychotropic or radioactive drugs and other specific products for medical use. It also makes clear that the advertisement publisher may not publish adverts relating to medical treatment such as advertisements for pharmaceuticals, medical devices and healthcare food in disguised form. Furthermore, aside from the advertisement of medical products, no other advertisements shall concern functions of disease treatment or use medical or otherwise confusing wording.
• Tobacco As tobacco is an exceptional kind of regulated product, the New Law further limits the already exacting restrictions on its advertisement. It prohibits tobacco adverts in mass media communications or in public places, via public transport or outdoors including tobacco products’ names, trademarks, packaging and decorations. It also prevents advertising indirectly via advertisements on other products. Notices of relocation, change of company name and recruitment messages are also proscribed.
• Alcohol Like tobacco, the regulation of alcohol is sensitive. In comparison with the old Advertising Law which only required that such advertisements be in compliance with content approved by the Health Authority, the New Law places more onerous restrictions on advertisers. It stipulates that adverts should not use wording that may cause confusion. The New Law focuses more on content and strictly requires that advertisements should not do any of the following: seduce or instigate drinking, promote excessive drinking, show the act of drinking, show activities conducted under the influence of alcohol such as driving a car, boat or aeroplane or include statements which imply that drinking has the effect of eliminating stress and anxiety or enhancing strength.

The New Law also sets out specific requirements for health food, infant dairy foods, education, products and services with anticipated investment returns, real estate and requirements the crop seed industries.

SAIC may, in the future, publish more detailed guidelines to accompany the amendments as there are fears that the terminology adopted by the New Law is too general. SAIC also emphasised that it will cooperate with the relevant authorities across various industries in order to build a strong administration system to implement the requirements of the New Law.

Advertisers, Advertising Agents and Advertising Publishers

The amendment states that the Advertising Law applies to advertisers, advertising agents and advertising publishers. The liabilities for breaching the New Law by engaging in advertising activities which deceive or mislead consumers and cause damage to the consumer’s legitimate rights and interests are as follows:

The advertiser bears civil responsibility for the breach.

The liability of the advertising agent or advertisement publisher may vary:

• Advance compensation - they may be required to provide advance compensation to the consumer for a failure to provide the true name, address and valid contact information for the advertiser. The old Advertising Law was stricter on these entities as they bore civil responsibility alongside the advertiser for the breach.
• Joint liability - if they design, produce, provide agency, publish or make endorsements or testimonials for advertisements when they know or should know that the advertisements are false, or are involved in false advertisements relating to the life and health of the consumer and damage is caused to the consumer, the agent, publisher and advertiser will share joint and several liability.

The New Law introduces a wider range of sanctions including the introduction of fines of up to RMB1,000,000, the revocation of business licences for serious infringements and the potential imposition of criminal liability.

Conclusion

It is thought that around 30% television advertisements, 90% of radio and newspaper advertisements, and 60% of internet advertisements are likely to be affected by the New Law. The amendments show a focus on strengthening consumer protection and protecting vulnerable parties. Those working within the advertising industry and other associated industries may have to consider reviewing their business practices as China moves to ensure compliance with the amended legislation.

Practical Suggestions

When reviewing the compliance of adverts, including their content and method of publication, besides following the requirements listed in the New Law, the overarching principles of consumer protection and safeguarding vulnerable parties should also be borne in mind. This should be taken into consideration if the boundaries of the law are not clear. Meanwhile, industry authorities such as the CFDA may also have specific requirements that should be followed. If there is anything inconsistent with the various requirements, the stricter should prevail.