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In recent months we have been encountering more and more companies receiving complaints and fines for advertising non-compliance by China’s Administration of Market Regulation (“AMR”), the market regulation authority in China. As enforcement is becoming more prevalent, we thought it would be useful for companies to know what to expect.

To some extent, the AMR is relying on complaints filed by individuals and companies. Sometimes, these complaints are made by competitors for strategic reasons and at other times by consumers who are annoyed by the content on the advertisement. Companies operating in China should take this issue very seriously as the fines are substantial. After receiving a complaint, the AMR may notify the company with a call or even an on-site visit. It is important to understand that this is only the beginning of the process and that companies would be given an opportunity to submit documentation and evidence for clarifications. If the AMR considers the evidence and clarification to be satisfactory, the AMR will not impose any fines or sanctions against the company.

For example, the PRC advertising related laws prohibit the use of “extreme expressions” or superlatives (e.g. “bestseller in the market”). After an investigation was initiated against a company for allegedly using extreme expressions, we assisted the company in preparing evidence based on third-party reviews which corroborated the so called “extreme” claim. In parallel we modified the language used in the ad so that it was acceptable to the officer in charge by narrowing the scope of the claim (limit the scope in a specific industry, geographic location and time) and citing the sources for the claim. The AMR accepted our clarification and no sanctions were imposed on the company.

Over the past few years, China has tightened its regulation in advertising, putting compliance pressure on both foreign-invested and domestic companies. On 29 April, 2021, China launched the revised Advertising Law. On March 20, 2023, China’s State Administration of Market Regulation, introduced the Enforcement Guidelines for Absolute Language Enforcement in Advertisement (the “Guidelines”) to help market regulators enforce China’s advertising laws and regulations. Violations of advertising related laws could lead to fines, stripping of business licenses and other sanctions. Abbott, a foreign-invested enterprise, was levied a fine of RMB 1.94 million for publishing advertisement without official inspections on 12 Oct, 2020. 

We should note that following the law is not always easy if you are unfamiliar with the trends. While some prohibitions are pretty clear (e.g. using the name or image of any state authority or its staff member or using “state level”, “extreme” or “superlative” expressions is prohibited) others could be rather ambiguous (e.g. advertising disturbing social stability or damaging the public interest is prohibited).

To mitigate risks associated with advertising compliance, we have the following recommendations:

  1. Understand the requirements on advertising content to make sure you do not violate the law;
  2. Have compliance checklists and guidance in place to mitigate compliance risks for advertising materials;
  3. Enter into agreements with your advertising agents and relevant parties which address this issue (we encountered a company who received an AMR complaint due to the negligence of its advertising agent and translation company);
  4. Timely resolve official complaints with the AMR;
  5. Provide advertising compliance training to your employees;
  6. When in doubt, seek legal advice.

We are happy to provide support with any of the measures above.

Sep 7, 2023 by Equasia

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About Equasia

Equasia is an expert corporate advisory and business services firm with offices in Hong Kong, Shanghai and Singapore, helping clients to access, operate and grow in China and other Asian markets. We partner with entrepreneurs, investors, corporates, financials, startups and private clients.