Review of Administrative Structure & Laws- Regulations The Advertising Industry in China

Presented by: Richard L. Wageman Lehman Lee & Xu Beijing, China

Overview of China’s Advertising Regulatory Structure

Business Revenue of China’s Advertising from Unit: a hundred million Yuan (RMB) Resource ： State Administration for Industry and Commerce

Global Advertising Market Share 2004

Functions of Advertising Administrative Organs Administration, Law Execution and Supervision Formulate Administrative Rules Administrative Investigation and Disposal of Illegal Advertising Prior Examination of Special Advertising Qualification Examination and Approval of Operation of Advertising Development Planning for the Advertising Industry Guide the Organizations within the Industry

Advertising Administrative Structure …… State Administration for Industry and Commerce Municipal AIC AIC of Counties AIC of Provinces and Municipalities directly under Central Government ……… …….. ……… …… AIC of Counties Dept. of AIC Municipal AIC Dept. of AIC

Prior Examination of Advertising By Chinese Government Departments Ministry Of Health General Admin. Of Press & Publication Propaganda Dept. Of Communist Admin. of Radio, Film & Television VI VII MOAMOA III I II Food & Drug Admin. Supervision over Advertising Market State Administration for Industry & Commerce Local AIC V IV

Review Certificate on Advertising Consulting Product Agreement on Production Notice on Preliminary examination Advertisement Production Idea Certifying Documents Advertisement Presentation Examination of the characters & images Advertising Agency Media Advertiser Comments & notice on preliminary examination China Advertising Association Consulting Procedure

Advertising Standards

 Standards set out in the Advertisement Law of the P.R.C. and other related regulations:  no pornography, superstition, terror, hideousness or violation contents  contents discriminatory to ethnic groups, race, religion and gender are prohibited  contents impairing physical or mental health of youth and the disabled are prohibited

Advertising Standards  tobacco advertisements are forbidden  no description of sexual activities, provocative sexual activity, or inappropriate focus on sexual characteristics  contents describing articles, and pharmaceuticals related to sexual matter are prohibited  contents in opposition to China's public interest and social stability are prohibited

Advertising Standards  contents shall be good for the people’s physical and mental health and enhance national spirits and cultures  Effective August 1, 2006, ads for pharmaceuticals, medical devices, breast enlargement, heightening and weight reduction were suspended on television.

Advertising Standards  Effective November 1, 2006, the following types of ads will not be allowed in newspapers and periodicals:  medical ads related to sexual diseases, cancer, abortion, HBV and other types of infectious diseases  ads promoting gambling skills  ads introducing anesthesia types of drug/technology that can be used in criminal activities

Advertising for Children

 Advertisements of products whose target consumers are children  Advertisements that use child actors

Review Standards  Shouldn’t use child actors in advertisements for product that are not suitable for children  Use language that can be understood by children  The advertisement must not have the effect of lowering moral standards for children and must not show activities that may be dangerous for children to perform

Review Standards  Prohibits advertisements that may have a negative impact on education  Prohibits medical advertisements that use child actors, or that targets children consumers

Comparative Advertising

 Term “Comparative Advertising” is not specifically noted in the Advertising Law  Advertising Law and regulations do have related provisions  Article 12 of the Advertising Law of the P.R.C. - “An advertisement may not belittle the commodities or services of other producers and manufacturers or operators”

Comparative Advertising  Article 14 of the Unfair Competition Law of the P.R.C. - “A business operator shall not fabricate or spread false information to injure his competitors’ commercial credit or the reputation of his competitors’ commodities”

Comparative Advertising  State Administration of Industry and Commerce calls for:  definite comparative subject with verified scientific evidence  non-belittlement of products or services of competitors noted  approval of any person whose name or image is to be used in the advertisement

Ambush Marketing

Ambush Marketing in China  No specific laws or regulations on ambush marketing.  Laws that have some applicability:  Article 21 of the Advertising Law of the PRC  Article 2 of the Law Against Unfair Competition of the PRC

Ambush Marketing 2008 Olympics  Beijing Regulations on the Intellectual Property Protection of Olympics-related IPRs  Regulations on the Protection of Olympic Symbols  Beijing 2008 Olympic Games Sponsorship Program  Regulations on the Protection of Olympic Symbols

Ambush Marketing 2008 Olympics  Regulations on the Protection of Olympic Symbols  “Implied commercial purpose”  Item (6) of Article 5  Significant amount of discretion with AIC  Strict enforcement

Ambush Marketing 2008 Olympics  Beijing 2008 Olympic Games Sponsorship Program  Most comprehensive sponsorship package  To consolidate, enhance and protect the rights and privileges of the sponsoring corporations  Anti-ambush marketing program of BOCOG

Richard L. Wageman Lehman Lee & Xu Chinese Law Firm with a Global Perspective Beijing, China