The Advertising Law of the PRC (“Advertising Law”) sets forth the legal framework in connection with advertising and marketing practices in the PRC. The law has been amended three times in the last decade in response to the rapid development of the advertising industry. Provisions regulating advertising and marketing activities are found in various national laws and administrative regulations, including, but not limited to:

• the Civil Code;
• the Anti-Unfair Competition Law;
• the Food Safety Law;
• the Drug Administration Law;
• the Law on Protection of Rights and Interests of Consumers (“Consumer Protection Law”);
• the Administrative Measures for the Broadcasting of Advertisements on Radio and Television; and
• the Provisional Administrative Measures for Internet Advertising (“Provisional Internet Advertising Measures”).

The State Administration for Market Regulation (SAMR), and a local counterpart to the SAMR, an administration for market regulation (AMR), is the primary regulatory authority that enforces both the Advertising Law and the Anti-Unfair Competition Law.

While the SAMR is the key government authority responsible for overall market regulation, the Advertising Law also empowers other regulatory bodies to work with the SAMR to supervise advertising activities in specific industries. For instance:

• advertisements for medical treatment will be examined by the competent health administrative authority;
• internet advertising activities will be examined by the cyberspace administrative authority and industry and information technology administrative authority;
• advertisements for NFTs and the metaverse will be examined by the banking and insurance regulatory commission and securities regulatory commission; and
• advertisements for medical-related products will be examined by the drug supervision and administrative authority.

Under PRC laws and regulations, the persons or entities that can be held liable for false advertising include advertisers, advertising agencies, the publishers of adverts, and also, in certain circumstances, those who endorse products. Administrative penalties resulting from violation of the Advertising Law and the Anti-Unfair Competition Law range from fines, forced cessation of illegal acts, confiscation of illegal proceeds and revocation of business licences. Criminal liability for false advertising, when the violation amounts to a crime, may apply to advertisers, advertising agencies and the publishers of adverts (Article 222, the Criminal Law).

Advertisers

The advertiser, as the provider of the product/service, is in principle liable for false advertising with limited exceptions. The advertiser may be subject to fines or confiscations in an administrative ruling and compensations in a civil proceeding. If the false advertising constitutes a criminal offence and the advertiser (being a legal person) is found guilty of false advertising under the Criminal Law, the directly responsible individual or the individual taking primary responsibility for that false advertising may be held chargeable (Article 231, the Criminal Law).

Agencies and Publishers

Both the advertising agent and the publisher of an advertisement must take responsibility for verification in connection with an advertisement. They shall verify, among other things, the certificates and other types of files provided by the advertiser and also the content of the advertisement to ensure consistency between the claims therein and the qualification of the product. Liabilities similar to those applicable to the advertiser may also apply to an advertising agent and/or publisher if they knowingly produce or publish a false advertisement.

Endorsers

A person who endorses a product may be held liable for promoting falsely advertised products, if the endorser is, or should have been, aware of the fact of false advertising but they still recommended or otherwise endorsed the product or service. In such cases, the AMR may confiscate the illegal income and impose a fine on the endorser. In addition, if the subject product or service of a false advertisement concerns the life or health of consumers and causes injury or damage to the consumer, the endorser shall take joint liability with the advertiser, advertising agent, and advert publisher.

Third Parties

Other participants involved in a false or misleading advertisement may also be held liable. For example, the law requires that an administrator of a public place, an operator of a telecommunications business, or an internet information service provider shall stop the sending or publishing of illegal advertisements if such entity knows or should have known about the illegality relating to the advertisements in question (Article 45, the Advertising Law). Through the operation of this provision, the law essentially imposes liability for verification on these third parties.

The Advertising Law outlines self-regulation rules in the advertising and marketing sector. The main responsibility of self-regulatory bodies is to assist the government authority to regulate the industry, set up industry standards and develop an industry self-regulation system. The key self-regulatory bodies, the China Advertising Association (CAA) and the China Association of National Advertisers (CANA), have adopted certain ethical codes to help maintain order in the advertising market and strengthen self-regulation in the industry. Violations of these ethical codes may result in admonishment or a circulated notice of criticism within the organisation.

A private right of action is available for consumers and private citizens to challenge advertising practices. When the content of an advertisement infringes the legitimate interest of a consumer or private citizen, the latter may have a cause of action and claim for remedies based on applicable laws, such as the Civil Code, the Advertising Law, the Consumer Protection Law, etc. The Advertising Law specifically provides for a cause of action for consumers against the advertiser if the advertisement is fraudulent, deceptive or misleading and the consumer’s interest is harmed after the purchase of products or receipt of services. The remedies available for private actions include, in general, damages, rescission and apologies.

The past 12 months have seen heightened regulatory efforts in the advertising industry continue, including in relation to:

• online adverts and live-streaming e-commerce – the Administrative Measures for Internet Advertising (in draft form soliciting public comments); Opinions concerning the Further Normalization of Online For-Profit Live-Streaming Marketing Activities to Promote the Healthy Development of the Industry; 
• targeted push and use of algorithm – the Personal Information Protection Law; the Administrative Provisions on Algorithm Recommendation for Internet Information Services; and
• medical cosmetology – the Administrative Guide on Medical Cosmetology Advertising.

On the law enforcement front, the areas worth noting include:

• as the 20th Party Congress will be held in the fall of 2022, regulatory efforts are carried out against behaviours such as taking advantage of the 20th Party Congress for commercial publicity purposes (See 1.8 Politics, Regulation and Enforcement);
• the role of the people's procuratorates being increasingly recognised in initiating public interest litigation cases regarding deceptive advertising in areas closely related to people’s well-being, the Supreme People's Procuratorate was admitted as a member of the Inter-Ministerial Joint Meeting on Rectifying False and Illegal Advertisements in March 2022; and
• actions against deceptive advertising in important areas continued to be emphasised, including medical treatment, medicines, dietary supplements, medical cosmetology, finance, and emerging areas such as NFTs and the metaverse (See 9. Web 3.0).

Ever since the beginning of the COVID-19 pandemic, regulatory attention has been focused on sanctioning false advertising by companies seeking to capitalise through mentions of the virus in their advertising and marketing efforts. In February 2020, the Supreme People’s Court, the Supreme People's Procuratorate, the Ministry of Public Security, and the Ministry of Justice jointly clarified that false advertising related to the prevention or control of the COVID-19 emergency falls within the scope of the crime of false advertising (Article 2.5, Opinion on Cracking Down Illegality and Crime that Jeopardise the Prevention and Control of the Coronavirus Pneumonia Epidemic, February 2020). Following this Opinion, court rulings and administrative penalty decisions have shown a tendency to impose penalties at the heavier end permitted by law on cases related to COVID-19. In a case decided in 2021 by a Shanghai court, two individuals were found guilty of criminal false advertising for falsely asserting that a certain kind of disinfectant they were promoting “could completely prevent the spread of COVID-19 virus” and so on, and bother were sentenced to imprisonment for several months.

As the 20th Party Congress will be held in the fall of 2022, one of the government’s focuses this year is to maintain a steady public opinion environment in order to avoid negative impact on the upcoming Party Congress, or to “purify market environment and social atmosphere to welcome the 20th Party Congress”. In April, the SAMR issued the Development Plan of the Advertising Industry for the 14th Five-Year Plan, of which the first “major task” is the regulation from the perspective of correct political orientation. The local AMRs have published guidelines for marketers in this regard. For example, the Remind Letter on Regulating Commercial Advertising and Promotions issued by the local AMR of Beijing specifically prohibits taking advantage of the 20th Party Congress for commercial publicity purposes.

On another side, regulatory authorities, together with government-backed industry associations, have continued efforts in regulation on celebrities and moral issues. For example, endorsement by the so-called “talents with lapsed morals” is another category specifically prohibited in the Remind Letter issued by the local AMR of Beijing. In addition, for the guidance of the participants in the advertising industry to strengthen the sense of social responsibility and ethics and form a self-regulatory mechanism on ethic issues in compliance with laws and regulations, the Commission on the Advertising Ethics was established on 10 September 2021 under the supervision of the Inter-Ministerial Joint Meeting as a consulting institution within the China Advertising Association. As a result of the enhanced regulation and change of public atmosphere, a heavier burden is imposed on advertisers to conduct thorough background due diligence checks on potential endorsers, and advertisers have been encouraged to enhance the moral clauses in their endorsement agreements to better cope with the potential moral risks of their endorsers.

According to Article 28 of the Advertising Law, any advertisement that defrauds or misleads consumers with any false or misleading content will be a false advertisement. Furthermore, the law specifies a list of scenarios where a false advertisement will be deemed to exist, including where:

• the advertised product or service does not exist;
• in connection with the product's performance, functions, place of production, uses, quality, specification, ingredients, price, producer, term of validity, sales condition, and honours received, among others, or the service's contents, provider, form, quality, price, sales condition, and honours received, among others, or any commitments, among others, made regarding the product or service, there is any inconsistency with the actual circumstances that has a material impact on purchase decisions;
• any scientific research result, statistical data, investigation result, excerpt, quotation, or other information, which is fabricated or forged or cannot be validated, has been used as certification material;
• the results of using the product or receiving the service are fabricated; and
• consumers are otherwise defrauded or misled with any false or misleading content.

Per the Supreme People’s Court, in determining whether it is misleading and false publicity, the courts shall consider factors such as daily life experiences, the general attention of the relevant public, the facts causing misunderstanding and the actual circumstances of the subject of the publicity, etc.

The scope of advertising claims subject to the regulation of the Advertising Law is broad, including both express claims and implied claims regarding products and services. Any product or service-related information that can have a material effect on a consumer’s decision-making is regulated by the Advertising Law, including introduction of the scale, location and environment of the advertiser, as well as claims having to do with business goodwill and the history of the advertiser.

The Advertising Law does not set forth how to distinguish express and implied claims; instead, the court and administrative regulator would have substantial discretion to determine whether there is an actionable implied claim. The key to determining whether there is an actionable advertising claim is whether the advertisement has any false or misleading content or defrauds or misleads consumers. The misrepresentation made by an advertisement may be any information relating to product quality, composition and ingredients, function and use, expiry date and place of origin. To avoid being challenged, an advertising claim should be truthful and precise and an “implied claim” is not a safe harbour.

Advertising claim substantiation is largely achieved by verification of the certifications of the advertiser/advertised products. The Advertising Law requires the advertising agent and advertisement publisher to examine the relevant certification documents, and to verify the content of an advertisement under laws and administrative regulations. According to the Administrative Regulations for Advertising, the following certification documents need to be provided respectively in connection with the corresponding types of advertisements:

• for a commodity advertised as meeting quality standards – the certificate of inspection issued by the competent standardisation administrative department or by a quality inspection body;
• for a commodity advertised under the title of a high-quality product – the certificate of a high-quality product issued by the government;
• for a commodity advertised as under patent protection – the certificate of grant of patent;
• for a commodity advertised as bearing a registered trade mark – the certificate of trade mark registration;
• for cultural, educational or public health advertisements – the certificate issued by the competent administrative department; and
• the certificate issued by the competent authority, or its authorised institution, in the case of other types of advertisements for which certificates are required.

In addition, the Advertising Law also requires advertisements in highly specialised industries, such as medical treatment, medicine, medical devices, dietary supplements, etc, be subject to review by applicable authorities of the claims therein.

The Advertising Law does not specifically provide for standards generally applicable to testing that is conducted to support advertising claims. There have been some judicial findings indicating that an advertising claim is more vulnerable to being challenged if the statistics used in the claim are research results of institutes owned or sponsored by the advertiser itself.

According to the Drug Administration Law, prior to the launch of any new drug, three rounds of clinical trials are required to verify the safety and effectiveness of that drug. After the launch, the drug manufacturer shall collect information and look into safety incidents according to the clinical treatment of patients. Therefore, for advertisements of such pharmaceutical products, the requirement for clinical trials is in fact included in the supporting documents (such as relevant permits) required to be submitted. Advertisements for medical drugs are subject to content censorship review by the drug supervision and administrative authority.

Article 9 of the Advertising Law generally prohibits content “hindering public order or violating social morality or involving ethnic, racial, religious, and gender discrimination”, among other types of content. Though there are no detailed rules at state or local level in this regard, non-compulsory guidelines are being made. In December 2020, the government of Shenzhen released the first official guidebook on gender equality in advertisement, which aimed to identify and prevent gender discrimination in advertising practices. In the Administrative Guide on Medical Cosmetology Advertising (“Medical Cosmetology Advertising Guide”) issued by the SAMR in November 2021, advertisements that may create “appearance anxiety”, improperly associate undesirable appearance with negative remarks such as “laziness” and “poverty” or improperly associate outstanding appearance with positive remarks such as “diligence” and “success”, are deemed to violate the good social moral and thus are closely watched.

Administrative cases have taken place regarding advertisements involving stereotyping or discrimination. For example, in a case handled by Shanghai local AMR, a bra advertisement with descriptions including “a piece of equipment enabling easy success for women” was found to violate social morality and involve gender discrimination, and the AMR confiscated the publisher’s illegal income and fined the publisher CNY200,000.

To date, there have been no laws and regulations under PRC law specifically targeting the ads conveying misleading information about the environmental impact of a product, also referred to as “greenwashing” ads. “Greenwashing” is generally understood as a form of deceptive advertising or marketing strategy to persuade the public that certain products, aims and policies are environmentally friendly, which may include two typical types of behaviours.

The first type of greenwashing involves direct false descriptions of the environment-friendly features of a product or misappropriation of certain environment-related certification marks (eg, the organic food or green food certifications). This type of greenwashing constitutes false advertisement and therefore is subject to the regulation relating to false advertising.

The second involves a marketing strategy that focuses only on a few specific features of a product that can be beneficial to the environment without referencing the other features or the product as a whole or intentionally omitting defects in its products that could harm the environment. By meticulous choice of terms used in the advertisement, this type of greenwashing manages to escape from the regulation because what is contained in the advertisement can hardly be deemed false or misleading and thus is more difficult to catch as a matter of law. 

Advertising claims in connection with all the following types of products and services are subject to special rules as stipulated in the law: education and training, real estate, dietary supplements, medical treatments, drugs, medical devices, pesticides, veterinary drugs, feed and feed additives, tobaccos, spirits, commodity or services with an expected return on investment, crop seeds, tree seeds, grass seeds, breeding livestock and poultry, aquatic seedling and species breeding, etc (Articles 15-27, the Advertising Law).

In addition, certain expressions are specifically prohibited in an advertisement relating to a regulated industry. For instance, according to the Interim Administrative Measures for the Review of Advertisements for Drugs, Medical Devices, Dietary Supplements and Formula Food for Special Medical Purposes (“Interim Measures for Review of Medical-Related Advertisements”), advertisements on drugs, medical devices, dietary supplements and formula food for special medical purposes shall not contain any commitment-related language, such as “safe”, “no toxic side effect”, “refund if found ineffective”, or “non-addictive”.

Comparative advertising is, with certain exceptions and constraints, permitted by the Advertising Law, provided, however, that no advertisement shall disparage the goods or services of any other producer or trader, and the advertiser, advertising agent, and advertisement publisher shall not conduct any form of unfair competition in their advertising activities. Notwithstanding the foregoing, with respect to certain categories of products – such as medical drugs, medical devices and dietary supplements – comparative advertising is not allowed.

For products and services not prohibited by the law from comparative advertising, on the basis that there is scientific evidence and/or proof that the products/services being compared are of the same categories and are comparable in nature, comparative advertising is allowed, and identifying a competitor by name is not prohibited by the law per se.

Generally speaking, all advertising claims must be truthful, objective and provable. The law does not stipulate a specific standard for comparative advertising claims. However, the non-disparaging requirement discussed in 3.1 Specific Rules or Restrictions is closely related to comparative advertising.

There is a general understanding that has developed regarding comparative advertising claims. The products or services being compared must be comparable in nature. A comparison between products of a different nature to distinguish the advertiser’s own product/service may be misleading to consumers and disparaging to the product/service with which it is being compared. An advertisement is not required to disclose the disadvantages of the subject product or service. However, in the case of comparative advertising, if the advertiser excessively emphasises the disadvantages of the compared product, while remaining silent about the disadvantages of its own product, such claims may mislead the consumer to believe that the product being advertised has no disadvantages. In such case, a comparative advertisement lacking complete information may be viewed as a false advertisement.

An advertiser may challenge claims made by a competitor based on different causes of action, including false advertising and unfair competition. If the advertiser exaggerates its own products and disparages the competing products, or publishes false advertisements that contain non-truthful or misleading information, the advertiser may be found to have conducted false advertising and commercial disparagement, and consequently be subject to administrative sanction and civil liabilities for violating the Advertising Law and/or the Unfair Competition law. The liabilities include damages, fines, cessation of the illegal act, elimination of effects and revocation of the business licence.

Digital advertising has seen tremendous development in China over recent years. Forms of digital advertising range from advertising on social media to search engine advertising, e-commerce retail advertising, and in-feed advertising. All such advertising activities are primarily regulated by the Advertising Law and the Provisional Internet Advertising Measures, although the latter is reportedly undergoing amendments and is expected to be superseded by the contemplated draft Administrative Measures for Internet Advertising published by the SAMR for public comments in November 2021.

Defining “Advertising”

Determining what counts as an advert and the role of players in digital advertising can be difficult. The Provisional Internet Advertising Measures require all online advertising to be conspicuously marked with the word “advertising”, regardless of its form. In practice, however, a significant quantity of “soft advertising”, which does not appear as traditional advertising, exists and can be effective in driving consumer interest. Prior to placing promotional content online, marketers should assess whether their marketing activity will be subject to any advertising rules and their own role in that activity, as the Advertising Law imposes different liabilities on different actors involved in advertising activities.

Ensuring Content Originality

Given the tremendous resources and information available online, marketers must ensure the originality and quality of their advertising content and prevent copying from other resources without proper licensing or permission, which may lead to severe copyright issues.

Local Regulation

Becoming aware of the various applicable regional rules is a key marketing challenge. Each of the AMRs, the primary government agencies regulating advertising activities, has its particular scope of authority, based on regional territories, yet social media advertising often transcends regional boundaries.

Data Protection

Marketers may have to play it safe with regard to data utilisation. If the marketer chooses to advertise on a less sophisticated social media platform, as opposed to a strong and sophisticated network, the marketer needs to be more careful about the rules protecting user data before it uses the data provided by the platform.

As to the liability of the advertiser for content posted by others on the advertiser’s site or social media channels, as long as advertising is deemed to be in existence and the advertiser is deemed as an “advertiser” within the meaning of the Advertising Law, that advertiser is required to “be responsible for the truthfulness of the advertisement”. Bona fide reliance by consumers may be found, which could render the host advertiser liable due to content posted by others on its website or social media. The law does not distinguish the identity of the publisher to determine the liability of the advertiser. To avoid being held liable, advertisers are advised to conduct regular reviews of the content on its site or social medial channels, and to remove any undesirable content.

In principle, the same disclosure requirements apply to social media advertising and traditional media advertising. Meanwhile, it is noteworthy that Article 7 of the Provisional Internet Advertising Measures provides that internet advertising shall be identifiable and clearly marked with a recognisable “advertising” label. The current law does not provide for any exceptions for social media ads that have space limitations or constraints. As discussed in 4.2 Key Legal Challenges, however, there are grey areas of advertising on the internet that the current laws and rules do not seem to have fully caught up to yet. See also 4.6 Special Rules for Native Advertising.

At this time, there appear to be no unique laws or regulations that specifically apply to the use of major social media platforms, such as WeChat or Weibo. Meanwhile, major social media platforms in China have developed their own editorial and content guidelines and verification procedures with which the advertisers must comply on top of the existing laws.

Native advertising is a type of advertising that matches the form and function of the platform upon which it appears. It can take the form of in-feed ads, search and promoted listing, content recommendation, Weibo posts, WeChat articles, etc. The reason for it being called “native” is that such advertising integrates with the original content of a website or app and is designed with a focus on user experience. As such, native advertising does not look like other advertising, but more like part of the overall website or app content.

However, if it is a marketing activity to promote a product or service, it should still be subject to the disclosure requirements as provided for in 4.4 Disclosure Requirements. As mentioned, the Advertising Law and the Provisional Internet Advertising Measures both require that advertising be clearly identifiable. In practice, however, due to the blurred lines between editorial and sponsored claims, native advertising is usually not marked with an “advertising” label as required by law. As such, in the event that native advertising infringes on consumers’ rights and interests or “interrupts the order of the advertising market”, its well-hidden form could bring more uncertainty as to how it should be regulated.

There is no legal definition of “misinformation” in current PRC laws and regulations. However, misinformation on the topics of public importance, if they disrupt the public order, may be subject to administrative penalties and even criminal liabilities in certain circumstances. The Law on Administrative Penalties for Public Security provides that detention of up to ten days and a fine of up to CNY500 may be imposed where a person intentionally disrupts the public order by spreading rumours, making false reports of dangerous incidents and epidemic incidents or otherwise raising false alarms, while a criminal charge of fabricating and intentionally spreading false information may result in public surveillance, criminal detention or imprisonment of up to seven years. As referenced in 1.7 COVID-19, Regulation & Enforcement, with respect to the impact of the pandemic, the Opinion on Cracking Down Illegality and Crime that Jeopardise the Prevention and Control of the Coronavirus Pneumonia Epidemic specifies that fabricating false information about the pandemic and spreading such online or on other media, or knowingly spreading false information about the pandemic online or in other media which severely disrupts the public order shall constitute the crime of fabricating and intentionally spreading false information pursuant to the Article 291 of the Criminal Law.

Popular types of influencers include celebrities, entrepreneurs, professional streaming hosts or key opinion leaders. Influencers have recently been put under even closer watch by the government. Incidents involving influencers, such as tax evasion, infringement of trade mark rights and false publicity, have been reported. Supervision by platforms of influencers has levelled up as a result.

China’s rather unique social media landscape has led to an ecosystem for influencer campaigns, resulting in two main business models: social media advertising and e-commerce retail advertising. Said models have not changed much during the past 12 months.

Social Media Advertising

The first model involves numerous popular social media platforms in China (WeChat, Weibo, Douyin, Kuaishou, Little Red Book, etc), whereby the influencer posts promotional content for soft-sell advertising. Successful influencers take more creative approaches, such as sharing personal experience or offering competitive discounts, instead of reciting overwhelming product descriptions to persuading their audience.

E-commerce Advertising

In the second model, platforms (eg, Taobao Live Streaming, JD, Pinduoduo, etc) set up direct sales channels for various business owners to promote and sell their merchandise. Influencers who promote their own brand/products may be the business owner themselves, or a business owner may hire an influencer to create a post or/and conduct a live-stream to promote products online.

An influencer campaign that promotes a brand or product and influences the purchasing decision of a consumer would be viewed as advertising and, as such, be regulated by the Advertising Law, the Provisional Internet Advertising Measures and other regulations applicable to online activities in general.

If an influencer campaign is carried in the form of live-streaming marketing, the relevant parties – including the platform, live-streaming operators, marketing personnel and the influencer – shall abide by the following regulations and rules:

• the Opinions concerning the Further Normalization of Online For-Profit Live-Streaming Marketing Activities to Promote the Healthy Development of the Industry (March 2022);
• the Measures for the Administration of Live Streaming Marketing (for Trial Implementation) (May 2021);
• the Notice of National Radio and Television Administration on Strengthening the Administration of Live-Streaming Shows and E-commerce (November 2020); and
• the Guiding Opinions of State Administration for Market Regulation on Strengthening the Regulation of Online Live-streaming Marketing Activities (November 2020).

Among the live-streaming marketing participants, live-streaming marketing platforms take primary responsibilities in connection with the marketing activities. Such responsibilities include going through filing formalities, obtaining necessary permits and approvals, and conducting security evaluation in accordance with applicable laws and regulations.

For live-streaming studio operators and marketing personnel, qualification review and real-name authentication are required. They shall perform the duties and obligations of advertisement publishers, advertisement agents or advertisement endorsers, as applicable, if the live-streaming content constitutes a commercial advertisement.

Authorities are taking actions jointly to tighten regulations and tackle disorders. In April 2022, the Cyberspace Administration of China, the SAMR and the State Taxation Administration jointly launched a nationwide campaign to rectify misconduct in live-streaming and short videos, including misconduct of false or improper marketing, etc.

An advertiser’s liability under the Advertising Law for the content posted by its influencer is determined mainly by two factors: whether the influencer’s activity is advertising under the Advertising Law, and the relationship between the advertiser and the influencer. When advertising is deemed to have taken place, the influencer may be viewed as the advertising publisher where the influencer is presenting the advertising content, or as the endorser where the influencer personally certifies the product or service.

The Advertising Law imposes strict liability on the advertiser with respect to the truthfulness of the content of the advertisement. In a scenario where the influencer (being the advertising publisher or endorsement person) is conducting advertising activity, the advertiser may be held liable if the content posted by the influencer is deceptive or misleading.

At this time, there appear to be no rules that explicitly prevent employees of a company or a hired firm from posting reviews online of the company’s own products. That said, the Anti-Unfair Competition Law prohibits business operators from making false or misleading commercial promotions regarding the performance, function, quality, sales, user reviews, awards, etc, so as to defraud or mislead consumers. Likewise, business operators are not allowed to arrange fictitious transactions to assist other business operators to carry out false or misleading commercial promotions. A violation of such rules may result in a fine of up to CNY2 million and revocation of a business licence.

The Civil Code generally prohibits disturbing the peace and privacy of an individual by phone calls, text messages, instant messengers, emails, leaflets, etc without such individual’s express consent. Specifically, email marketing is also regulated under the Advertising Law, the Measures for the Administration of Internet Email Services and the Provisional Internet Advertising Measures.

Electronic advertising must clearly indicate the real identity and contact information of the sender, and must provide to the recipient the means to unsubscribe.

Legal liabilities for violation of such rules include confiscation of illegal proceeds, rectification of wrongdoings, and a fine up to CNY100,000 as applicable.

Telemarketing is governed by the Advertising Law and certain other administrative rules. According to the Proposal for Special Action against Unsolicited Telemarketing Calls and its supporting work plan issued in 2018, for commercial outbound telemarketing calls:

• the consent of users shall be obtained;
• a white list of users shall be established; and
• the time and conduct of telemarketing calls shall be regulated.

In summary, the user’s consent is essential for permitted telemarketing, alongside other factors, including that the content of telemarketing, must be lawful (eg, solicitation of gambling is strictly prohibited in any event). There are no express legal liability provisions under the relevant rules governing telemarketing, but the authority may apply the Advertising Law for illegal advertising activities and the Consumer Protection Law for infringement of consumers’ rights.

Advertising by text messaging is regulated by, in addition to the Advertising Law, specifically the Provisions on the Administration of Short Message Services Communications (“SMS Provisions”), as well as the administrative regulations and rules promulgated by local governments.

In summary, the general requirements for SMS advertising are that:

• the recipient shall be informed and have given consent, as commercial short messages can only be sent after informing the recipient of the type, frequency and time limit of such messages and obtaining the consent of recipients;
• the identity and contact information of the SMS content provider shall be included; and
• a convenient and effective way to unsubscribe shall be provided along with the SMS.

The SMS Provisions provide no specific liability provisions. However, the Measures for the Supervision and Administration of Online Transactions (“Online Transaction Measures”) provide for rectification of wrongdoings and a fine of up to CNY30,000 as liabilities. In addition, the law enforcement body may also rely on the Advertising Law to enforce the prohibition against illegal SMS advertising and the Consumer Protection Law for infringement of consumer rights.

In connection with the use of consumer data for purposes of targeting or retargeting consumers with advertising, the Personal Information Protection Law (PIPL) provides that, in the case of a targeted push and commercial marketing to individuals by means of automatic decision-making, the option to not be targeted by their characteristics (eg, the option to refuse tailored recommendation) or convenient opt-out options shall be provided at the same time.

Moreover, the newly promulgated Administrative Provisions on Algorithm Recommendation for Internet Information Services provide that algorithm recommendation service providers must provide users with the choice of selecting services not targeted at a user’s personal characteristics, or refusing services based on such user’s personal characteristics. In addition, algorithmic recommendation service providers shall not unreasonably differentiate between consumers in terms of prices and other transaction conditions based on and taking advantage of each consumer’s preferences, transaction habits and other characteristics.

As for self-regulation, a nationwide industry standard Personal Information Security Specification provides for restrictions on the use of personal information. It provides that, in using personal information, clear identity directionality shall be eliminated to avoid identifying any individuals directly, unless otherwise necessary for the realisation of the purpose of the use approved by the subject of personal information upon authorisation.

The Advertising Law introduced a set of restrictions on advertising that targets minors under the age of 18, as well as certain additional restrictions on advertising targeting minors under the age of 14. In connection with minors under the age of 18, the following restrictions apply:

• tobacco ads are prohibited;
• no advertising activity shall be conducted in kindergarten, primary and middle schools, as well as on textbooks, school uniforms, stationery, etc; and
• no adverts for medicine, drugs, cosmetics, etc, shall be published in mass media targeted at minors.

In connection with minors under the age of 14, the advertisement shall not contain:

• any inducement for the minors to ask parents to purchase the advertised goods or services; or
• any unsafe activity that may cause imitation by minors.

If an advertiser violates the Advertising Law by sending advertisements to minors, the advertiser may be subject to sanctions including recall of illegal advertisements, fines, non-approval of future advertisements in a one-year term, confiscation, revocation of business licence, etc.

Collection of personal information of minors is also covered by the PIPL, the Laws on the Protection of Minors (“Minors Protection Law”) and the Provisions on the Cyberspace Protection of Children’s Personal Information. Consent from parents or other guardians of minors under the age of 14 shall be obtained for processing such minors’ personal information. Personal information of minors is categorised as, among other things, a kind of “sensitive personal information” under the PIPL. As such, heightened requirements regarding the collection and processing of sensitive personal information shall apply and separate processing rules shall be made specifically for processing minors’ personal information.

Violation of the Minors Protection Law may result in, among other things, confiscation of illegal turnover and relevant fines, a fine of up to CNY1 million if there is no illegal income, and shutdown of the website in question. In addition, if such action violates the PIPL, heavier penalties, such as a fine of no more than CNY50 million or 5% of the perpetrator’s business income from the previous year, may be triggered.

“Sweepstakes” does not have a corresponding legal term under existing Chinese laws. Likewise, there are no specific rules governing sweepstakes as marketing activities. That said, sweepstakes can be loosely interpreted as prize-attached sales, which are subject to certain rules and may trigger different legal issues. According to the Interim Provisions for Regulating Promotional Activities, prize-attached sales refer to the activities of business operators to provide consumers with prizes, articles or other benefits to sell commodities or obtain competitive advantages, such as lucky draws, gift giving and the like.

Anti-Unfair Competition Law

Laws and regulations such as the Anti-Unfair Competition Law and the Certain Regulations on Prohibiting Unfair Competition in Prize-Attached Sales promulgated by the State Administration of Industry and Commerce (SAIC) impose regulations on prize-attached sales. The regulatory focus includes unclear information on prize-attached sales, internally determined prizes, rigged winning results, inferior products with high prices, and the amount of the highest prize exceeding the statutory limit.

Lottery Management Regulations

If any person issues lottery tickets in the guise of prize-attached sales in order to seek profits and to earn the price difference from the sale of commodities by setting prices much higher than the actual commodities under the lure of large prizes, this act shall be deemed illegal and may even constitute a crime. According to the Lottery Management Regulations, where anyone violates these regulations by illegally issuing or selling lottery tickets, or issuing or selling foreign lottery tickets within the territory of the PRC, they may be subject to criminal liability; where no crime is constituted, they may be subject to a public security penalty.

Advertising Rules

If sweepstakes are used as marketing promotions to reward consumers and to draw attention to products or services, then they shall be subject to all advertising law requirements as a form of advertising campaign.

The existing Chinese law has not defined what constitutes a “contest of skill” or a “game of chance”, nor does it provide for a distinction between them. Gambling disguised as a contest of skill or game of chance is strictly prohibited, yet the law has not provided the criteria to distinguish contests of skill and games of chance (as forms of marketing activity) from those regarded as prohibited gambling.

As “contests of skill” and “games of chance” are not defined legal terms, they are, in principle, subject to particular registration or approval requirements only if the concrete activity falls into the scope of defined activities for which such requirements exist. For example, if the contests or games constitute sports competitions, they are regulated by the sports administrative department under the State Council, soon in accordance with the newly promulgated Sports Law which will come into effect in January 2023. This new law provides that sports events are subject to graded and classified management by the sports administrative authority.

There are no special laws or regulations for loyalty programmes in the PRC. Similarly, the term “loyalty programme” does not have a corresponding legal definition under the existing Chinese law. A typical “point-based” loyalty programme involves a business setting up an account for a customer and offering points for each purchase, which accumulated points may be redeemed for discounts or gifts from the business or connected stores. Though no special laws or rules in this regard, there are rules to be borne in mind if a business owner intends to launch a loyalty programme, including the following.

• If the loyalty points are deemed as virtual currency for online games, specific rules would apply, including the Provisional Measures for the Administration of Online Games, the Notice of the Ministry of Culture and the Ministry of Commerce on Strengthening the Administration of Virtual Currency in Online Games, and the Notice on Regulating the Operation Order of Online Games and Prohibiting the Use of Online Game Gambling.
• Loyalty programmes may not be used as a disguised commercial bribe.
• When a loyalty programme involves pre-paid membership, the business owner shall observe relevant rules specifically for prepaid cards.

Generally speaking, the Chinese Anti-Monopoly Law prohibits operators in the market that have a dominant position from selling commodities at a price below cost without justifiable reasons. In addition, the Price Law forbids dumping sales for the purpose of crowding out competitors and dominating the market, or implementing hidden price decrease by way of increasing the grade of merchandise or services. A marketer’s offer of free or reduced-price products or services is not illegal per se, but regulators may, in certain circumstances, deem such activities as unfair methods to gain advantages over competitors and impose rectification proactively. The Interim Provisions for Regulating Promotional Activities require business operators to clearly indicate the benchmark for discount or price reduction, the conditions attached to the discount, and the time period for the promotion.

According to the Online Transaction Measures, online transaction operators shall notify the consumers in a prominent manner for consumers’ selection five days before a consumer accepts relevant services or the date of automatic renewal. During the service period, operators shall also provide convenient and instant opt-out or change options without charging unreasonable fees. Violation may result in an order of rectification of the misconduct and a fine of up to CNY30,000.

Under the PRC regulatory framework, betting and gambling activities, including those related to sports, are generally prohibited. Where there is a violation, the threshold for administrative liability could be as low as, for organisers, accumulating a profit of CNY300 and, for participants, personal gambling of amounts of CNY200, under different enforcement rules promulgated by local provincial authorities. Criminal liabilities may be incurred if one engages in gathering people to gamble for profit, engaging in gambling as one’s profession, operating casinos, or organising PRC citizens to gamble outside China involving large amounts.

According to the Advertising Law, advertising is prohibited from including gambling content. For the avoidance of doubt, the China Sports Lottery issued by the General Administration of Sports and the China Welfare Lottery issued by the Ministry of Civil Affairs, are not deemed “gambling”. Advertisements for such lottery tickets are managed by their respective issuer authority and supervised by the PRC Ministry of Finance and the SAMR.

To date, there has been no official definition of cryptocurrency or NFT at the legislative level in China. Regulatory bodies emphasise upholding the Renminbi as the statutory currency, and cracking down on illegal financial activities of illegal fundraising (such as initial coin offerings), financial fraud, pyramid schemes and money laundering through cryptocurrency. The Initiative to Prevent NFT-Related Financial Risks, jointly issued by the China National Internet Finance Association, the China Banking Association and the Securities Association of China in April 2022 as a non-compulsory initiative, affirms that NFTs may be utilised to enrich the digital economy and promote the development of the culture and creativity industry. However, it reiterates that financialisation, money-laundering and securitisation in connection with the NFTs are still strictly forbidden.

So far, there does not seem to be specific statutory rules governing NFT activities or the advertising thereof. In September 2021, a notice issued by high level authorities including the People’s Bank of China, the Office of the Central Cyberspace Affairs Commission and the Supreme People's Court stressed the prohibition on providing commercial display and marketing for virtual currency-related business activities.

The metaverse is commonly understood as an integrated network of 3D virtual worlds facilitated by the use of virtual reality and augmented reality technologies. This concept became popular in China in 2021, but it is yet to be officially defined by the legislators or regulators. There are no special laws or regulations that apply to advertising within the metaverse, nor are there any administrative or judicial cases in this regard, given its youth as a concept. Nevertheless, there are notices alerting the public against illegal fundraising and fraud wrapped under the cover of the metaverse, and the existing advertising laws and regulations will apply where applicable.

The digital advertising platforms and the use of advertising technology (adtech) are mainly regulated by the Provisional Internet Advertising Measures. Under the Provisional Internet Advertising Measures, the internet advertisements may be published in a well-targeted manner by utilising, for example, the information integration and data analysis services provided by the advertising demand-side platforms, media-side platforms and advertising information exchange platforms.

In connection with the use of adtech, the following activities are expressly forbidden under the Provisional Measures:

• intercepting, filtering, covering, fast-forwarding or implementing other restrictions on the advertisements duly operated by others;
• disrupting the normal transmission of advertising data, falsifying or blocking advertisements duly operated by others, etc; and
• inducing false quotes, seeking unlawful interests or undermining others’ interests by utilising false statistical data, communication effects, etc.

In addition, the Administrative Provisions on Algorithm Recommendation for Internet Information Services regulate the use of algorithmic technologies, including generation and synthesis, personalised push, sorting and selection, retrieval and filtering, scheduling decision-making, etc, all of which may be considered as different types of adtech. Among other things, the algorithm recommendation service providers are required to inform the users in a noticeable way with respect to the provision of algorithm recommendation services, and to publicise the basic principles, purposes and main operating mechanisms of algorithm recommendation services in an appropriate way. 

Specific rules and restrictions that apply to the advertisements of regulated products and services can be found in the Advertising Law and the regulations governing the advertising of products and services in special sectors, including the following.

• Food – From the perspective of advertising regulation, food can be categorised as “dietary supplements”, “formula food for special medical purposes” and ordinary food. The Advertising Law and the Food Safety Law provide for specific restrictions on the presentation in the advertisements of dietary supplements and food. For instance, advertisements of dietary supplements and food may not claim that such products can be used for prevention or treatment of diseases, and that advertisements of baby dairy products, beverages and other food claiming to be full or partial substitute for breast milk are prohibited from distribution in mass media or public places, etc. Besides, advertisements in connection with the former two categories are subject to prior censorship pursuant to the Interim Measures for Medical-Related Advertisements. According to the Food Safety Law, formula food for special medical purposes shall be subject to regulations applicable to drugs.
• Medical Devices and Drugs (including formula food for special medical purposes) – Advertisements in connection with medical devices and drugs are subject to prior censorship pursuant to the Interim Measures for Review of Medical-Related Advertisements. Restrictions under the Advertising Law include, without limitation, that:
1. advertisements for special drugs (including narcotics, psychotropics, toxic drugs for medical purposes, radioactive drugs, etc), pharmaceutical precursor chemicals, drugs, medical devices and treatment methods for drug abuse rehabilitation are prohibited, as well as drugs for special use by the army and preparations made by medical institutions;
2. prescription drugs other than those set out as being prohibited from advertising, as well as certain full-nutrition formula food as a kind of formula food for special medical purposes, may only be advertised in specialised pharmaceutical or medical journals jointly designated by both the health and drug administrative departments of the State Council; and
3. advertisements of drugs, medical devices, and medical treatments may not include content such as assertions or guarantee about efficacy or safety, statement on the recovery or response rate, etc.
• Alcohol – Article 23 of the Advertising Law provides that advertisements for alcohol may not include contents of inducement or instigation of alcohol consumption, promotion of immoderate drinking, depiction of drinking actions, depiction of driving cars, boats, airplanes, etc, or explicit or implicit expression that alcohol consumption would ease tension and anxiety and enhance physical stamina, etc.
• Vaping/tobacco – Article 22 of the Advertising Law and related regulations provide that advertisements for tobacco may not be published in mass media, in public places, outdoors, or on the internet, and that no tobacco advertisement of any kind may be sent to minors. Advertising in connection with vaping shall be subject to the regulations applicable to tobacco.
• Cannabis – Cannabis is deemed to be a kind of narcotic drug and is strictly restricted in the PRC. Only very limited usage of cannabis, including for the purpose of medical use, education and research, is permitted under the supervision of applicable authorities. Correspondingly, the advertising of related products and services is also prohibited.

Beyond the specific products listed in 10.1 Regulated Products, there are other products or services for which advertisements are regulated, including the following.

• Medical treatments – Similar to drugs and medical devices, advertisements for medical treatments are also subject to prior censorship. Standards and procedures for the review of such advertisements are provided in Administrative Measures on the Advertising for Medical Treatments, as well as the newly-issued Medical Cosmetology Advertising Guide.
• Education and training – Article 24 of Advertising Law prohibits advertisements for education and training from including contents of:
1. explicit or implicit guarantees for successful enrolment, passing certain examinations, obtaining certain degree qualifications or certificates, or the effect of education or training, etc;
2. explicit or implicit expression of the advertiser involving relevant examination institutions or its personnel, or writers of the examination questions in the education or training;
3. recommendation or endorsement using the name or image of scientific research or academic institutes, etc.
• Real estate – Article 26 of Advertising Law provides certain specific restrictions on advertisements of real estate, including that information of the property listed shall be true; information as to the area shall be the floor area or the usable area; such advertisements shall not include contents of commitment on increases in property value or investment return, etc. Provisions on the Release of Real Estate Advertisements, issued by the SMAR, include more detailed regulations on the advertising of real estate.
• Investment solicitation/fundraising/internet financing/personal financing – As financing is closely related to the security of private assets, advertising in connection with various kinds of fundraising or financing services is heavily regulated. Generally speaking, such advertisements are required to include reasonable risk warnings, and are prohibited from including explicit or implied statements of guarantee for future earnings, or recommendation or endorsement by using the name or image of academic institutions or industry associations, etc.
• Other products or services – Advertising of the following products or services are also regulated under applicable laws or regulations: pesticides, veterinary drugs, feed and feed additives, crop seeds, tree seeds, grass seeds, breeding livestock and poultry, aquatic seedling and species breeding, wild animals and the relevant products, products relating to stamp collection, souvenir medals, Renminbi, insurance, and services of certified public accountants and lawyers, etc.
• Advertisements other than those of medical treatment, drugs and medical devices – Any other advertisement claims shall not involve the function of treatment of diseases or include medical terms or terms that may mislead the readers to confuse the promoted product with drugs or medical devices.