Website banner (7).png

Popular advertising techniques used by marketers may inadvertently break the law in China

When it comes to advertising in China, foreign companies often make mistakes that are in violation of the country’s advertising laws due to common misunderstandings. Many advertising techniques used by marketers and advertisers inadvertently break the law, either because they ignore it or simple misunderstand it.


In general, companies which need to promote their business will design advertising campaigns through TV commercials, newspaper ads, websites, or social media platforms such as WeChat. However, some advertisers may be unaware of the differences in China and the characteristics of the advertising regulations in the country.


According to Chinese laws, any “advertising activity” by sellers to promote their goods or services directly or indirectly through a certain medium or format is considered advertising, including objective copy in the company’s website.


Foreign entities should be careful when using their own website or public WeChat account to introduce their business. The promotion of products or services via a company website or WeChat (or any other internet platform) is counted as advertising activity and is governed by advertising laws.


In some cases, foreign companies do not consider advertising the description of goods and services posted inside their premises, such as store, office, or factory. Although these announcements are not directed to the public nor are on the internet, supervising authorities can investigate improper advertisements and show up unannounced to do a random visit to the premises. They may also do online searches and use reports from consumers.


Cultural differences can also lead to some misunderstandings regarding advertising, especially when using ambiguous or suggestive descriptions. Some advertisers use provocative language to get consumers’ attention and promote a product. However, Chinese law does not permit the use of suggestive wording (such as alluding to sex or sexual services).


Even if the suggestive information itself does not violate laws or core values, the ambiguous or misleading content may violate false advertising rules.


Another situation that may represent a level of risk for the company, is when customers post their pictures, profiles, or personal information on the business app. This can be problematic since it is an area not only governed by advertising laws but also by the Civil Code and the Personal Information Protection Law (PIPL).


If there is no contract between the entity and the customer agreeing on the licensing period, usage scope, and purpose of use, among other requirements for the provision of their image or profile, and their personal information continues to be used in advertising materials, the company could be reported by the customer, and they have the right to demand compensation or the immediate removal of their details.


If the advertising is related to medical services, the business may also be liable for an administrative fine by the advertising and medical regulatory authorities.


In 2918, the Advertising Law was amended, and since then fines for improper advertising have been reduced. This may be due to the impact of the COVID-19 pandemic, as authorities were focused on supporting the economic recovery of the country. However, the “costs” of violating advertising laws go far beyond administrative fines and can negatively impact a company’s image and destroy its reputation.


The Administrative Penalty Decision Database of the State Administration for Market Regulation (SAMR) has been publishing over the last decade information about administrative penalties imposed on entities. This has made the process more transparent and allows the public to have access to information about violations of the law.


The Administrative Penalty Decision Database of SAMR posts real-life cases on its website, which is open to the public and can be accessed by anyone.


Last year, SAMR revised the online advertising guidelines to regulate advertising online and promote its healthy development as well as protect the rights of consumers.


The fast growth of the internet has created concerns about the monopoly of big internet companies. The Chinese government has started to regulate the digital market by increasing scrutiny and penalties. Internet platforms are assumed to bear higher responsibilities in internet advertising compliance.


The Internet is currently the most influential mass media. Due to the characteristics of online information – quantity, rapid change, and wide influence-, identification is more important for internet advertising than traditional forms of advertising. In practice, it is common to see that relevant parties in internet activities fail to mark their advertising information as ‘advertisement’ or even deliberately mislead consumers by using the contents format of advertorial, appraisal, or recommendation.


According to SAMR, “advertising” should be clearly marked in the promotion of goods and services through the internet activities, such as bidding ranking, news reports, experience sharing, consumption evaluation, and additional shopping links.


Chinese authorities find out about improper advertisement through different channels, such as routine inspections by the authorities, reports by consumers and search tools on the internet, among others.


In general, investigators will evaluate several channels of advertisement, including indoor light box advertisements, company official websites, promotional boards and posts inside the office, WeChat public accounts, company’s official apps and E-commerce B2C store.


In the past few years, China has been focused on developing a healthy and trustworthy social environment and creating a better legislative framework to protect public interests. Experts believe that local authorities will continue strengthening and implementing existing laws on advertising activities, particularly in the technology sector.


In the near future, the compliance with advertising laws will become even more relevant. Companies and advertisers should make an effort to closely monitor their advertising campaigns and keep up to date with regulations and compliance requirement changes.


To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at kristina@woodburnglobal.com.




DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.


JOIN OUR MAILING LIST