Q&A: Online Advertising in China

Advertising

Regulation

What rules govern online advertising?

The applicable rules are as follows.

  • Legislation: The Advertising Act 2021, as amended.
  • Administrative Rules:
    • Interim Measures for the Administration of Internet Advertising 2016; and
    • 2019 Network Information Content Ecosystem Governance Arrangements.
  • Self-regulatory codes: The China Advertising Association is the industry self-regulatory association for advertising, which has formulated and promulgated self-regulatory codes for the advertising industry (for example, self-regulation of ‘China Advertising Association and the Self-Discipline Pact).

Targeted advertising and online behavioral advertising

What rules govern targeted advertising and online behavioral advertising? Are special notices or consents required?

Online advertising is defined as commercial advertisements that directly or indirectly promote goods or services through websites, web pages, internet applications and other internet media in the form of text, images, audios , videos, etc.

Online editorial content may be considered online advertising provided there is paid promotion of goods or services, directly or indirectly, for profit. According to the Advertising Act 2021, commercial advertising involves the activities carried out by sellers of goods or service providers to promote their goods or services, directly or indirectly, through a certain medium and form. Thus, editorial content will only fall under the rules governing advertising if it can meet this condition.

False advertising

Are there rules against misleading advertising online?

The rules against misleading online advertising are mainly set out in the Anti-Unfair Competition Act 2019, the Advertising Act 2021 and the Provisional Measures for the Administration of Internet Advertising 2016.

Under the Advertising Act 2021, a wider variety of advertisements are now vulnerable to scrutiny for misleading advertising. Advertisers are now required to substantiate all claims and statements regarding their veracity to avoid non-compliance. The use of technical or digital methods to create or enhance the true effect of a product or service in advertisements, in particular, is penalized as misleading advertising.

There are no explicit standards governing the evidence that advertisers must keep regarding the substantiation of advertisements.

Although the above rules are applied centrally, there are still strict rules regarding specific areas of online advertising.

Restrictions

Are there any digital products or services that cannot be advertised online?

The General Rules of the Advertising Act 2021 state that the following must not be advertised:

  • narcotics;
  • psychotropic substances;
  • toxic drugs for medical use;
  • radioactive pharmaceuticals and other special drugs;
  • drug precursor chemicals; and
  • pharmaceuticals, medical machines and treatment methods for the rehabilitation of drug addicts.

Prescription drugs other than those mentioned in the above list may only be advertised in professional medical or pharmaceutical journals designated jointly by the Health Department of the Council of State and the management of the Council of State’s pharmaceutical regulations.

The Special Rules of Interim Measures for the Administration of Internet Advertising 2016 state that it is not permitted to design, produce, act as an agent or post on the Internet any advertisements for goods or services whose production, sale or supply is prohibited by laws and administrative regulations, or any advertising for goods and services the publication of which is prohibited. It is also prohibited to publish advertisements for prescription drugs and tobacco on the Internet.

Responsibility of the host

What is the responsibility of content providers and parties who only host the content, such as ISPs? Can other parties be responsible?

Section 45 of the Advertising Act 2021 states that internet information service providers must restrict the display and publication of illegal advertisements through their platform for transmitting and distributing information of which they have knowledge or should know.

For any violation of these provisions, the State Administration for Market Regulation confiscates the illegal income. When the amount of illegal income is 50,000 yuan or more, a fine of one to three times the amount of illegal income shall be imposed simultaneously. When the amount of illegal income is less than 50,000 yuan, a fine ranging from 10,000 to 50,000 yuan will be imposed simultaneously. In serious cases, the competent authorities order the offender to arrest the companies concerned.