The first edition of the Advertising Law of the People’s Republic of China took effective on February 1, 1995 and the amendment to Advertising Law was revised and came into force as of September 1, 2015.

The amendment of the Advertising Law is significant and this means, for example, that it specifies rules on the content of advertisements of some particular products such as drugs, pharmaceutical precursor chemicals and other we will mention later and it also clarifies the definition of false advertising and listing typical instances, regulating electronic advertising, etc.

To offer you a complete information, we must also add that, on July 4, 2016, the State Administration for Industry and Commerce (“SAIC”) released the Interim Measures on Administration of Online Advertising and it became effective in September 1, 2016; these measures mainly regulate the advertising activities by means of the Internet (promotion that use websites, web pages and Internet application programs in the form of texts, pictures, audios, videos or other forms), but we will talk about this specific topic in details, in a future contribution.

Going back to the New Advertising Law, it includes 75 articles: compared to the original law, the New Advertising Law adds 33 articles, deletes 3 articles and revises 37 articles.

The amendment can be summarized as follows:

a.Specifying Rules on the Content of Advertisements. Based on the seven products and services regulated in the original law – pharmaceuticals, medical devices, agricultural pesticides, tobacco, food, alcohol and beauty products – the New Advertising Law adds a number of specific rules regarding ads for the following items: narcotic drugs or other specific drugs, pharmaceutical precursor chemicals, drug addiction treatment medicines, treatment methods, healthcare foods, veterinary medicines, livestock feed and feed additives, crop seeds and cultivation, infant dairy products, beverages and other foods, education or training, investment products or services with anticipated investment returns, and real estate. So it is pretty clear that all the industries closely related to the daily lives of consumers and which attract consumers attention are all reflected in the New Advertising Law;

b.Clarifying the definition of false advertising and listing typical instances. False advertising includes advertisements which deceive or mislead consumers, as well as advertisements which contain false or misleading information;

c.Strictly regulating the publication of tobacco advertisements. Tobacco advertisements are prohibited in mass media communications, in public places, on public transportation, or outdoors. It is also prohibited to display tobacco products in advertisements or public service advertisements for other products;

d.Adding rules for the protection of minors. It is prohibited to carry out advertising activities within elementary schools, secondary schools, and kindergartens as well as using teaching materials or stationery for advertising (including disguised advertising) at elementary schools, secondary schools, and kindergartens, with the exception of public service advertisements. It is prohibited to publish advertisements for medical treatment, pharmaceuticals, healthcare foods, medical devices, cosmetics, alcohol, beauty products, and online games detrimental to the physical and mental health of minors in mass media communications which target minors. Advertisements for products or services which target minors under the age of 14, shall not induce such minors to ask their parents to buy the products or services advertised, nor shall be likely to cause such minors to imitate unsafe acts;

e.Further regulating electronic advertising. The New Advertising Law sets out several general principles for advertisements transmitted electronically and via the internet. Advertisements published or distributed electronically will be restricted, such as those found in SMS messages, e-mails, and pop-up advertisements on internet pages. On July 1, 2015, the State Administration for Industry and Commerce promulgated the Interim Measures for the Supervision and Administration of Internet Advertisements (Draft for Comment) (the “Draft for Comment”). When the Draft for Comment is formally adopted, there will be special provisions for advertising published on or distributed online;

f.Strengthening supervision of mass media advertising. Mass media advertising through outlets such as radio stations, TV stations, and newspapers, which represent the main means of advertising, are further regulated in the New Advertising Law. Radio stations and TV stations shall, when broadcasting advertisements, comply with the provisions of the relevant authorities under the State Council on the length of time and means of broadcasting, and provide a clear indication as to the length the advertisements. Radio stations, TV stations, newspapers, periodical and audio-visual publishing entities, and internet information service providers shall not carry disguised advertisements for medical treatment, pharmaceuticals, medical devices and healthcare foods by way of introducing knowledge on health or health maintenance or by other means;

g.Expanding the scope of the New Advertising Law by including public service advertisements.

h.Clarifying the advertising supervisory and administrative responsibilities of the Administration for Industry and Commerce (“AIC”). There are certain new responsibilities entrusted to AIC authorities; among them, the authority to conduct on-site inspections, to make inquiries, to require the production of documents, and to review and copy those documents;

i.Strengthening legal liability. There are relatively severe legal liabilities for distributing false advertisements and for using advertisements to promote products or services which are prohibited; in serious circumstances, these penalties might result in the revocation of business licenses and advertising registration certifications. Any illegal act as set out in the New Advertising Law shall be recorded in the advertiser’s credit files by the AIC authorities and will be disclosed to the public;

j.Adding to the responsibilities and liabilities of advertisement endorsers. The New Advertising Law clarifies the definition, responsibilities and legal liabilities of advertisement endorsers.

During last year, there have been a few cases related to advertisements. The most famous are for sure the one about those of “Cheyipai” (车易拍), Honest Loan (诚信贷).

In the first one, the car auction case, the content of the advertisement was not in accordance with the actual situation (Art. 28 of the Advertising Law, about false advertisement). In the advertisement, it was committed to the consumer that the auction was transparent, however, the actual situation, the price and the process of the auction was not transparent. In addition, in the advertisement, merchant commit that there was no difference of prices between seller and buyer of the car, but actually, it required the commission.

Following what is mentioned in the Advertising Law, if there is no such advertisement, the consumer will not buy the product or service (substantial influence). In this case, the merchant violates its commitment to charge the commission and the price and process of the auction are not transparent to the consumer. It was fined 2 million RMB by AIC.

In Honest Loan (诚信贷) case, the advertiser uses lots of words and phrase such as “one hundred percent”, “brand rank No. one”, etc. but, according to Article 9 of the Advertising Law, Any advertisement shall not involve any of the following circumstances: … 3. using “state-level”, “the highest-grade”, “the best” or other similar words;… It was fined 200 thousand RMB by AIC.

In summary, the current advertising laws and regulations impose much stricter controls on advertising than in the past.

Many 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.

Therefore, the consumers are more protected in this is absolutely a great advantage for them and their safety.

For more information about the new Advertising Law, write to info@dandreapartners.com