The existing PRC Advertising Law (“Existing Law”) entered into force on 1 February 1995 and until recently had not been amended since. The 20 years that have passed since the initial law have seen the exponential growth of the Internet, including pervasive use of social and online media and a massive change to the advertising landscape as a result of this. Legislators around the world, not just in China, are playing catch up. The recent amendment to the Existing Law in the PRC seeks to modernize the legal framework for advertising and address particular issues which exist in modern day China.
The amended PRC Advertising Law (“Amended Law”) was officially approved on 24 April 2015 and came into force on 1 September 2015. Retailers need to get to grips with the revisions and the practical implications of the Amended Law.
Key criticisms of the existing law are that it is very short and too vague. The Amended Law is almost double in length and much more prescriptive, with one of the key aims being to reduce the number of gray areas that New PRC advertising laws what you need to know By Edward Chatterton (Hong Kong) exist in the advertising space in China, making compliance, and the imposition of sanctions for non-compliance, much more straightforward.
The key changes that were introduced by the Amended Law are in relation to “Misleading Advertising”, which provides specific examples of what constitutes misleading advertisements and provides further detail on the scope of what is otherwise a very broad and un-prescriptive definition. Specifically, advertisements that provide incorrect information in relation to the performance, function, origin, uses, quality, size, composition, prices, manufacturers and expiration dates of products will be considered misleading.
\The Amended Law also introduced more controls on advertising aimed at children. All advertising in schools is prohibited, as is advertising in textbooks, exercise books, on school uniforms and school buses. Additionally, children under the age of 10 cannot be used to endorse products or services, although this does not mean children under the age of 10 cannot feature in advertisements, they just must not specifically endorse the products or services being advertised. Advertisements targeting children under 14 must not contain content which persuades their parents to purchase the goods or services being advertised. It is however unclear at this stage what constitutes “content which persuades” but this will hopefully be made clear when the implementing regulations are published later this year. The Amended Law also prohibits the advertising of cosmetics, medicines, medical apparatus, online games, alcoholic beverages and tobacco to children.
Advertisements must not be sent to home addresses without prior consent. In addition, other forms of electronic direct marketing are also prohibited unless an individual’s consent is first obtained. Any advertisement must also not interfere with people’s normal usage of the internet, meaning care needs to be taken when using pop-up advertising. Under the Amended Law, a pop-up advertisement must be capable of being closed in one click. Furthermore, an electronic advertisement must also include the sender’s true identity, contact details and information as to how to un-subscribe from receiving further advertisements.
In addition to the above, the Amended Law also imposes liability on service providers (e.g. telecoms companies) responsible for communicating advertisements which breach the Amended Law if they were aware of the content and did not take action to stop the advertisement. Anyone who endorses a product may be held jointly liable for infringement of the Amended Law if they ought to have known the advertisement infringed the Amended Law. Anyone found guilty of endorsing a false advertisement can be banned from endorsing other products or services for a period of three years.
Finally, the Amended Law introduced wider ranging sanctions including fines of up to RMB 1,000,000 (circa USD 150,000) and the imposition of criminal liability and revocation of business licences for serious instances of infringement. The Amended Law introduced much more stringent controls on the advertisement of pharmaceuticals, medical devices, health foods, alcohol, tobacco and agricultural products and introduces new controls in relation to the advertisement of breast milk substitutes, educational services and financial services.
There is definite intent by PRC authorities to police advertising more stringently, specifically in those areas outlined above. Businesses operating in these sectors should ensure they are fully cognizant of the Amended Law in these areas and should make any changes to their operational processes that are required to ensure they don’t fall foul of the Amended Law.
The Amended Law also introduces much tighter control around online and social media advertising and businesses who engage in this type of advertising in China should review their online and social media operating procedures and guidelines to ensure they comply with the Amended Law.