Compliance Guidelines for Blind Box Business

On January 19^th, 2022, the Shanghai Administration of Market Regulation published “Compliance Guidelines for Blind Box Business Activities in Shanghai” (hereinafter referred to as “Compliance Guidelines”, aiming to standardize blind box business activities and protect the consumers’ interests.

What Is Blind Box?

As mentioned in Forest Gump, “Life is like a box of chocolates. You never know what you are going to get.” The blind box is similar. The consumers of blind boxes cannot know what they are going to get when they buy a blind box.

Generally speaking, a blind box is a term to describe a category of toys – where different toys from the same collection are contained in a sealed box, and nobody knows what is inside the box. With the popularity of the blind box concept, they may also contain different kinds of food, clothes, cosmetics, 3C products and other items in addition to toys.

According to the Compliance Guidelines, the blind box business activities refer to the business mode that the business operator, without informing of the specific model, style or service content and method of supplying, sells goods (including services) under a specific scope to consumers by means of random selection through the Internet, onsite stores, vending machines or other forms.

Chaos in the Blind Box Market

With the popularity of blind boxes, chaotic actions have surfaced in this emerging market.

In the past years, blind boxes containing live puppies and kittens appeared in many cities, and many were found in severe health conditions after staying in express delivery boxes for hours.

Moreover, some operators have started the business of “loving” blind boxes, claiming that the consumers may get their “true love”. The consumers can pay 1 yuan to get the contact information of one person or put his/her own contact information in the blind box, with consumers taking the huge risk of their personal information being disclosed.

Recently, such chaos in the blind box market has brought about the concern of consumers and caused heated discussion on the Internet.

Guidelines of Blind Box Business

According to the Compliance Guidelines, business operators shall take care of the following points to avoid violation of laws and regulations. Meanwhile, consumers may also pay attention to the following points to check whether their blind boxes complies with the laws and regulations.

1. Types of Blind Boxes

Generally, the blind box shall be within the fields of living consumption and entertainment. For products that are forbidden to be sold in the market, they cannot be sold in the form of a blind box. For special foods, drugs, medical devices, toxic and harmful substances, inflammable and explosive substances, etc., which have strict requirements on sales qualification, storage, transportation and use conditions, they shall also not be sold in the form of blind boxes. Also, live animals cannot be sold through this means.

2. Price of a Blind Box

The actual value of goods in the blind box should basically match the sales price. The cost difference between ordinary goods and hidden goods should not be too large. If the same business operator sells the same goods both in the form of a blind box and through traditional sales channels at the same time, the selling price in the form of the blind box shall not be higher than through traditional sales channels

It is also suggested that the price of a blind box shall be low, with blind boxes may not be sold at prices more than 200 yuan.

3. Information Disclosure

The blind box operator shall disclose the key blind box information to the public, such as the type of goods, box selection rules, goods distribution, quantity of goods, probability of getting hidden goods, scope of goods’ value and so on, in order to ensure that consumers know the necessary information before purchase.

At the same time, operators are not allowed to change box results through data manipulation or adjusting probability.

4. Record Storage

In addition, the operator shall keep complete records of the setting of the selection probability and the selection results and take this as the basis for the actual market launch and distribution of blind boxes to consumers.

The operator is required to establish the tracking system to ensure that the consumers get the right goods. Consumers also have the right to supervise the system. The record needs to be kept for at least 3 years.

The Compliance Guidelines have provided very detailed instructions for blind box operators, and operators shall note, although the Compliance Guidelines itself is not considered as an enforceable law or regulation, actions in defiance of the Compliance Guidelines may still be considered as a violation of other laws, such as Anti-Unfair Competition Law, Law on the Protection of Consumer Rights and Interests, Advertising Law, etc.

Conclusion

The blind box market, as an emerging market in China, has attracted the eyes of individuals, companies and the government. To appropriately operate a blind box business, the operator needs to fully comply with different kinds of laws and regulations. The Compliance Guidelines can be considered as the summary of relevant provisions from such laws and regulations, so that operators can understand the requirements easily, which is also useful for operators not based in Shanghai. If you want to inquire for more information related to blind boxes, please contact info@dandreapartners.com.