Back in 2017, the Australian vitamin and health supplement provider Blackmores was subject to an unarguably hefty fine of USD 50,000. But this penalty didn’t result from a serious offense as you might think. In fact, it was a result of poor word choice in the company’s advertising campaign in China, which didn’t comply with the local Advertising Law.
What is China’s Advertising Law, why is it important, who should be mindful of it and how to market in China legally – all the answers below.
China’s Advertising Law in a nutshell
Who is bound by the law, and why?
It would be wrong to assume that only advertising companies who publish digitally in China must abide by China’s Advertising Law. So let’s be clear – Regardless of your industry, company’s size, ownership, time of entering the Chinese market, location, or marketing channels – ALL companies doing business in China, including B2B companies, are bound by China’s Advertising Law.
The law’s broad applicability stems from the Chinese definition of “advertising activities.” According to the law, any content, digital or printed, promotional or objective, used by sellers to promote or describe their goods or services is considered “advertising”. Practically speaking, this definition covers content published online (e.g., the company’s website, WeChat business account, and other social media platforms), in e-commerce websites (e.g., Tmall), and even physical marketing materials (e.g., content posted inside offices, stores, brochures, product labels, etc.).
What are the traps?
The Chinese Advertising Law is long, complex, and oftentimes vague. However, we listed here the three most common pitfalls you should definitely try to avoid:
1 – False advertising: Above all else, the Chinese Advertising Law forbids the publishing of misleading information and ambiguous words. It sounds straightforward, but there is more to it. “Truth in advertising“ doesn’t refer only to authentic and accurate information about the product, its function, quality, price, etc. Companies also have to be cautious about how they present themselves. For example, in November 2022, a Shanghai company was fined 5,000 RMB for publishing an advertisement on its WeChat account containing the words “over the years…”, even though it was only six months after the company registration in China.
2 – Superlatives: While using extreme terms such as “the best,” “the lowest price,” and “national level” is an acceptable sales technique in Western countries, in China, it’s prohibited. In the Blackmores case mentioned above, part of the heavy fine was due to the company’s claim of being Australia’s top nutritional supplement brand. Read more on how to Optimize Content on WeChat.
3 – China’s Advertising Law & PIPL: Using customers’ names and pictures as a marketing move, in testimonials for instance, puts the company at a double risk, since such an act is governed both by China’s Advertising Law and the Personal Information Protection Law (PIPL). Customers whose information was used without explicit consent may report the company to the authorities and demand compensation.
What are the consequences of violating the law?
Financial penalties are one measure by the government to sanction companies that don’t comply with the Chinese Advertising Law. In addition, and as part of China’s effort to facilitate a more transparent business ecosystem, any event of violation or wrongdoing is publicly announced and recorded. With databases such as China’s Administrative Penalty Decision Database, and the National Corporate Credit System, information about incompliant companies is accessible to the public and other professional third parties (suppliers, distributors, investors, etc.). In practice, this episode becomes part of the company’s reputation in China and may damage its image in the long term. Some would consider this ramification as worse than a fine…
How to advertise in China legally?
The more the Chinese government expands the national legislative framework, the more it is expected to increase its scrutiny and supervision of business activities. Experts predict that additional advertising regulations are on the horizon, so familiarity with the law and its clauses would be more relevant, yet complex.
International companies already doing business in China, and those strategizing their China market entry, are advised to be extra careful when drawing their first marketing plans for the Chinese market. As already established, China’s Advertising Law is intricate and abiding, and sadly, we’ve encountered too many incidents of companies violating the law even without being aware of it.
To start, keep in mind the three common pitfalls discussed earlier. They are relatively easy to monitor and identify. More importantly, consult with local experts who can help you share your messages in line with the law’s requirements. Remember that in China, almost everything is considered advertising, so attention to detail is critical.
PTL Group offers extensive marketing services for international B2B companies in China. One of the most desirable services lately is our workshops about China’s Advertising Law. For more information about the workshop and to know more about B2B marketing localization in China, get in touch.
