By Maarten Roos
In recent weeks, Shanghai’s market supervision bureau (AMR) announced that it has penalized one of China’s leading domestic dairy companies, Bright Dairy & Food Co., Ltd., for an advertisement video on its website that did not show China’s “complete and correct territory” of China. According to Bright Dairy, the video was produced by a third-party developer, but it would avoid similar mistakes in the future by strengthening the screening of its promotional materials.
Because Bright Dairy cooperated in the investigation it was fined only CNY 300,000, which is in the bottom range of the CNY 200,000 to CNY 1 million under Article 9 of the PRC Advertisement Law. The video’s producer was fined CNY 300,000 as well, and the advertisement fee earned for this project was confiscated.
Compliance in advertisement is an important topic in China. In recent years, numerous international companies have been reprimanded and penalized for breaches of China’s strict and detailed advertisement laws. Most cases that reach the news involve well-known international companies that violate official positions on China’s territorial integrity. In fact, by law all maps published within its borders should be submitted for review by the relevant authorities.
However, domestic heavyweights face the same risks; while we also frequently see smaller international businesses fall foul of the rules. Moreover, this is not just about politically-sensitive topics such as the legal status of Taiwan, Hong Kong and Tibet; the use in advertisement of statements on health functions, or the use of terms that are misleading almost by default (e.g. “world-leading, “top”), can equally lead to complaints, invasive investigations and fines. For more information on legal compliance in advertisement, see our article China’s Strict Rules on Advertisements: Foreign Companies Be Prepared.
This case serves as a reminder to all businesses operating in China that the local government departments are aggressively enforcing its laws on advertisement. Businesses that are promoting their products or services in China and to the Chinese market must have screening processes in place to avoid legal issues, even for content developed by an experienced third party.
R&P China Lawyers is a full-service law firm with a strong compliance practice. The firm assists clients to screen advertisements and advise on compliance risks; and it supports companies that are the target of a complaint or government investigation. For more about our practice, please email Maarten Roos at [email protected]), or your usual contact at R&P China Lawyers. The firm can also assist with general compliance matters.