The new Chinese Advertising Law comes into effect on 1 September 2015. In summary, the New Law imposes much stricter controls on advertising than in the past. Below are some of the noteworthy changes:
- The New Law is applicable to all forms of commercial advertisement, including free or ‘disguised’ advertisements. Furthermore, a new statutory fine of up to RMB 1 million could be imposed on various violations where advertising is free or the cost is obviously too low. For example, an ad without explicit indication of "Advertisement" (in Chinese) may be subject to a fine of RMB 0.1 million.
- More kinds of advertisements are now vulnerable to be scrutinized for false advertisement and a higher burden for substantiating truthfulness of all claims and statements by advertisers to avoid non-compliance is now required. In particular, the use of "technical/digital methods" to fabricate or "improve" the real effect of the product / service in advertisements is punishable as false advertising.
- There are now tighter regulation on endorsements, including personal experience of using an endorsed product or service and the use of spokesmen for medical, pharmaceutical, medical devices, health-care food, and other health related products/services is now prohibited. In addition, children younger than the age of 10 can no longer serve as an endorser of a product or service.
- Changes regarding the advertising of specific products and services. For example, advertisements related to tobacco products are now generally banned; advertisements related to health foods must not contain medical-treatment claims.
- More restrictions on ways of advertising with explicit penalties for non-compliance. The New Law prohibits unsolicited advertisements to be sent electronically or to a private address. Additionally, under the New Law, pop-up advertisements must be able to be closed with a single mouse click. Perhaps more importantly, the New Law places the burden on Internet Service Providers to monitor and shut down illegal advertising shown on their software platforms.
- Claims containing superlative words, or advertising off-limits products /services are generally restricted under the New Law with penalties starting from RMB 0.2 million.
- In addition to increased power in regulating advertisements with larger prescribed punishments for violating the New Law, the authorities (State Administration of Industry and Commerce and its local offices) will be looking to more actively enforce the New Law. Specifically, under the New Law, not only can anyone file a complaint against a particular advertisement, but those officials responsible for investigating violations of the law may be punished for non-performance of their duties if it is determined that they failed to properly investigate said violations reported by a third party.
As there may be additional areas requiring further explanation or clarification, it is recommended that businesses conduct thorough compliance reviews of their advertising activities in China.