China’s Advertising Law and new regulations
China’s advertising industry is facing rigorous reforms at the moment. China introduced a new advertising Law on 1st September 2015 and following this there have been over 24000 cases of advertising breaches with 400 million CNY (about 44 million GBP) worth of fines issued to date.
“China’s current Advertising Law came into force on 1 September 2015 and introduced significant changes to advertising regulations, particularly in relation to the use of celebrity endorsements and the advertising of specific goods and services, including health foods, education and investment products, dairy products and pharmaceuticals. The Advertising Law also introduced higher fines and additional powers for the regulatory body, the Administration for Industry and Commerce (AIC).
The new Interim Online Advertising Regulation Measures (Advertising Measures) were published by the AIC on 4 July and will take effect on 1 September 2016. The Advertising Measures clarify how the existing law applies to online marketing activities and confirms that it also applies to online advertisements promoting goods or services in the form of texts, pictures or videos which contain links, email advertisements, paid search advertisements and commercially displayed advertisements.
Products and services affected
Advertisements for products or services which fall under the categories of medical treatment, pharmaceuticals, food plans for medical purposes, medical devices, pesticides, veterinary drugs and health food products will need to be reviewed and approved by the relevant authorities before they can be published online.
The design and production of online advertisements
Companies or individuals will not be allowed to design, produce, act as agents for or publish on the internet any advertisements for goods or services that are prohibited by law.
In addition, all online advertisements must be clearly distinguishable and explicitly marked with the label “advertisement,” and online advertising publishers, agencies, client-side platform operators, media-side platform operators, advertising information exchange platform operators and members of media-side platforms will be placed under strict supervision.
Penalties and the AIC’s powers
The new Advertising Measures confirm and detail the investigative powers of the AIC over online marketing activities. They include the power to conduct on-site searches, issue questionnaires, produce documents, and review and copy agreements, bills, books, advertising works and relevant background data.
The penalties of conducting illegal advertising are significant. The maximum fine for false and misleading advertisements, or advertisements of ordinary food products claiming disease prevention or treatment functions, is up to five times the total advertising fees. A company may also have its business license revoked or be prohibited from publishing any advertisements for a period of one year if the AIC deems that the company’s conduct is a serious violation, including where the company has not cooperated with the authorities’ investigations and in the case of multiple offenses.”