China encourages more responsible advertising

A new law changes how brands can advertise in the world’s most populous country. Adam Gagen, WFA Director of Legal & Public Affairs, and Li Xiao, Director Training & International Affairs at the China Association of National Advertisers (CANA), explain how tighter regulation provides an opportunity for responsible brand owners. On 24^th April, China’s National People’s Congress adopted a revised Chinese advertising law that raised the bar in the region. Not only does it include robust provisions on some of the most challenging areas related to modern marketing (including protecting children, defining ‘misleading’ advertising and moderating potentially disruptive online ads), it also recognises the role of self-regulation and industry developed advertising standards for the first time. While the new law maintains some long-standing China-specific requirements (including restrictions on the use of the Chinese flag, or superlative statements such as the ‘most advanced’ or ‘best’) many new provisions include elements of international best practice which tighten the rules. For example, language now requires all advertising to be recognisable and marked as such in an effort to reduce the potential for disguised advertising in general media. Online advertising is also becoming more regulated with new requirements to have prominent marked signs to close pop-up windows. The inclusion for the first time of detailed provisions on what constitutes misleading advertising (Article 28) is a good example of the tougher approach. The language includes a range of criteria for defining ‘false advertising’, including any discrepancy between reality and the described performance, function, content, or composition of the product or service. It also challenges the use of any evidence which is ‘unverifiable’ and contains open language to capture other instances of when a marketer has done something to deceive or mislead. This shows a concerted effort to protect consumers and promote a clean market. One other key area of focus is minors, with detailed provisions building on the general requirement that advertising should not undermine the health of minors or the disabled (Article 10). For example, Article 38 stipulates a complete ban on endorsements from children under 10 years of age, and Article 39 introduces a restriction on advertising through school materials such as textbooks, teaching materials, school uniforms and school buses or other forms of ‘disguised advertising’. Article 40 lists specific products which cannot be advertised to minors and now includes medicines or pharmaceutical products, medical devices, cosmetics, alcohol and online games which threaten the physical or mental health of minors. In addition, following good practice in other jurisdictions, language has been included which prohibits advertising to those under 14 years of age which may lead them to imitate ‘unsafe behaviour’ or attempt to persuade their parents to buy certain goods or services (a pester clause). Other key changes include extensions of previous restrictions on advertising medical devices and pharmaceuticals (Article 16), health foods (Article 17), investment products (Article 25), alcohol (Article 23) and tobacco (Article 22). Given some of the language in the new provisions is relatively open, much will depend on the implementation. Therefore, while many of the principles being adopted would be generally supported by responsible advertisers, brand owners may still face challenges. The Chinese Association of National Advertisers (CANA) and WFA are working to understand and influence the planned implementation of the new law. Given the enhanced focus on children, one area brand owners may need to carefully review before the new law comes into force on 1^st September 2015 are any activations in schools (for example those involving branded materials). While there are certainly challenges, the new law also presents a great opportunity. For the first time Chinese law now recognises industry-led advertising standards as a tool to support the implementation of the law. This means that the industry can itself take responsibility to ensure the new act incentivises responsible advertising. The industry in China, led by CANA, has been working hard over many years to engage with lawmakers to demonstrate the value of industry-led advertising standards. The recognition in the new law for self-regulation shows that engagement has been successful, but the government now expects the industry to act. CANA has been working for over three years to bring all leading brand owners together to create a cross-industry self-regulatory body in China. Given the importance of the market (second largest in the world, estimated to grow more than 10% in 2015) ensuring the industry delivers in China is essential. On 6^th May, CANA held a workshop with brand owners and officials from the Advertising Supervision Department of the relevant government agency (SAIC). It was agreed that a committee on responsible advertising should be established. It is hoped a body may be developed in 2016. All brand owners who want to secure a future for responsible marketing in China are encouraged to get involved. The fast pace of change in China reflects the current momentum in the region on responsible advertising. The APEC Leaders’ statement agreed last year in Beijing, which endorsed action on developing advertising standards in the region and linked it to reducing the cost of doing business, has helped to demonstrate self- and co-regulation are legitimate policy options. The WFA is currently bringing together leading brand owners in the region to ensure we take maximum advantage of this great opportunity in China and beyond. UPDATE: CANA will hold a training on the new advertising law on 27th June in Beijing, during which senior experts involved in the revision process will deliver a lecture. More information about the training here.