In China, leveraging online marketing such as key opinion leaders (KOLs) and live streaming is crucial for brands. Though lack of online marketing compliance can result in bad publicity and lasting damages for brands.
KOLs in China play a key role in raising brand visibility and gaining product sales among target consumers. With the growth of social media platforms in China, online advertising is an integral part of brand strategy and growth. Although, the rise of KOLs promoting products has not been without scandal. Specifically, measures regulating online advertising have not aligned with technological developments till recently. Equally, KOLs and live streamers’ liabilities have not been legally defined.
The Measures for the Administration of Internet Advertising (Measures) issued by China’s State Administration for Market Regulation (SAMR) and effective from 1 May 2023 addresses the regulator gaps in online advertising. And replaces the Interim Measures for the Administration of Internet Advertising previously issued in 2016. Significantly, the Measures upgrades provisions to define evolving online advertising forms such as KOLs and live streaming, strengthening transparency and protection of consumer – specifically for minors and certain sensitive industries.
The reforms are expected to affect all business advertising online in China and across a wide range of industry sectors.
Below, we outline the do’s and don’ts for online advertising based on the Measures. And to prepare companies for the effective date of 1 May 2023.
Do identify online advertisements.
Soft selling such as KOLs or influencers endorsing experiences or products shall be identified as advertisements. The Measures emphasizes the legal obligation within the Advertising law that requires advertisements to be visibly identified as an advertisement.
For example, paid web rank advertisements are required to indicate advertisements in a visible area. And product or services advertised as knowledge, experience sharing or consumption with a purchase link or payment method shall indicate visibly that it is an advertisement.
In this manner, KOLs or influences endorsements with purchase links shall be visibly declared as an advertisement.
Don’t overlook live streaming liabilities.
The New Measures establish legal liabilities for online live streamers. Namely, provisions define roles and legal obligations according to existing rules as regulations.
Internet live streamers who advertise goods or services for a fee are defined by the Measures as companies selling the goods or providing the services. And shall legally fulfil the duties and obligations of advertisers.
Operators of live streaming rooms and live streamers who provide advertising services (such as advertising design, production, agency, and publishing services) are defined as advertising operators and publishers. And must assume the same legal duties and liabilities as advertising operators and publishers.
Also, live streamers recommending goods or services in their names or images shall comply with all legal requirements associated with advertising endorsers.
Don’t disguise advertisements as health knowledge
Based on the Advertising Law, Measures widen the scope of prohibited advertisement by prohibiting the following products from online advertisement via health or wellness knowledge:
- medical treatment;
- drugs;
- medical devices;
- health food; or
- formula foods for specific medical purposes.
Additionally, health or wellness knowledge webpages shall not include the address, contact information, purchase link, and other details of the product sellers or service providers of such products.
Do check if the contents need approval.
Under the Measures, any online advertisement related to the following products shall be reviewed and approved by a competent advertising censorship authority before publication:
- medical treatment;
- drugs;
- medical devices;
- pesticides;
- veterinary drugs;
- health food;
- formula food for special medical purposes; or
- other advertisements that are subject to censorship as required by other laws and administrative regulations.
For such products, advertising is forbidden to be published on the internet without prior review and approval.
Equally, any content as approved by the censorship authority shall not be edited, spliced, or modified. Any altered content is required to be prior reviewed and approved.
Don’t neglect obligations for minors
The following nine products are forbidden to be online advertised towards children:
- medical treatment;
- drugs;
- medical devices;
- health food;
- formula food for special medical purposes;
- cosmetics;
- alcohol;
- cosmetology; and
- advertisements for online games that negatively affect minors’ physical or mental health.
Online advertisements include websites, webpages, internet applications, and official accounts.
Do retain internet advertising archives.
Advertisers shall create and maintain advertising archives related to the following items:
- internet-published commercials (including website, applications, official account, online store, etc.).
- algorithmic recommendation service
- advertising release records
And advertising archives need to be regularly updated and retained for at least three years after the advertisement finished publication. Any violations shall be ordered to rectify and a fine of up to 50,000 RMB can be issued. Additionally, such violations can be publicly published online, which could damage the company’s public reputation.
Do ensure pop-up and open-screen advertising are easily closed.
Pop-up advertisements shall visibly mark the closing sign with a one-click closure. Advertisers and publishers cannot deceive users via a pop-up advertisement
- no closing signage;
- multiple clicks to close;
- false, unclear, or difficult-to-locate closing sign;
- obstacles to closing advertisements;
- continued pop up after being closed.
Equally, advertisers shall not deceive or mislead users to click or browse advertisements through the following manners:
- false alerts of system or software updates, error reports, cleanups, or others;
- setting false signs of playing, starting, suspending, stopping, or returning to certain web pages; or
- making false promises of rewards or others.
Conclusion
The Measures define online advertising forms and establish related legal obligations for advertisers, publishers, and platform operators. Hence, strengthening online marketing compliance. Equally, the reforms increase transparency and protection of internet users, so that soft advertising is visibly labelled as an advertisement to migrate misrepresentation.
For international brands conducting marketing campaigns, it is important to prepare for the reforms and ensure internet marketing compliance is implemented -especially working with third parties advertising companies, KOLs and live streamers. Any violations can lead to legal liabilities and public relations damages.
Contact Us
If you have questions or concerns on online marketing compliance, please contact us at talktous@horizons-advisory.com to schedule a consultation session. Horizons can provide insight, expertise and the right solutions for you.
