what we think

By Maarten Roos, Anderson Zheng

China’s strict rules for advertising are often a challenge for Western brands that are trying to distinguish themselves in the market. One of the key issues is the use of absolute wording or superlative adjectives such as “national level”, “the highest level” and “best”, which is generally prohibited in China and can subject brands to heavy penalties under the PRC Advertisement Law (2021). Some articles that R&P previously published on legal compliance in advertisement:

China’s Strict Rules on Advertisement: Foreign Companies Be Prepared

China Continues to Enforce Compliance in Advertisements

The State Administration of Market Regulation (SAMR) has taken the initiative to give brands more room to manoeuvre. The Guidance for the Use of Superlative Adjectives in Advertising (Draft Rules), issued for public comment on 7 December 2022 and expected to enter into force in early 2023, offers new interpretations on key concepts that expand the opportunity of brands to use superlatives in Chinese advertising.

New Exemptions

The Draft Rules offer the following exemptions:

1. The prohibition on using superlative adjectives in advertisements shall not apply if such adjectives do not refer to the products promoted by the operator but they only (a) indicate the operator’s service attitude, business idea, or corporate culture, or (b) express the operator’s or the product’s goal and pursuit.
2. Even if the superlative adjectives do refer to the products promoted by the operator, such wordings are permitted as long as they are authentic, do not have the objective effect of misleading the consumers or derogating other operators, and meet one of the following situations:

1. such adjectives are descriptions only for self-comparison of the same brand or the products of the same company, and the content is authentic; 
2. such adjectives provide consumers with tips on how to use the product, such as the best method and time to use the product, the best preservation term, etc.;
3. such adjectives are contained in the product or service classification recognized according to national standards, industry standards, and local standards; 
4. such adjectives are directly contained in the product name or registered trademark, and the use of the product name or registered trademark in the advertisement is to refer to the actual product and distinguish the product from other products;
5. such adjectives only promote the background information of the product and its raw materials, and the content is authentic; 
6. such adjectives are contained in awards and titles that the product has received according to relevant national regulations;
7. such adjectives state the spatial and temporal order and objective situations, such as the sales volume, sales revenue, market share and other factual information that the advertiser can prove, when specifying the time, the place and other conditions.

Reduced Penalties

Under the PRC Advertisement Law, the local regulatory authority (the Administration of Market Regulation, AMR) may penalize the non-compliant use of superlative adjectives in advertisements, with a penalty of between CNY 200,000 and 1 million. In serious cases the company’s business license can also be revoked.

The Draft Rules propose to soften the applicable penalties in some cases:

• The advertiser may be exempted from penalty if it is the first time for it to use superlative adjectives in advertising and the damage is minor and is rectified timely.
• The AMR may develop a list to exempt certain minor violations in using superlative adjectives from penalty and make adjustments to it.
• The penalties for publishing a non-compliant advertisement containing superlative adjectives will be lower if the publication is on the operator’s own premises or through its own media, and publication is of short duration or is only viewed by a few people, causing no harm or slight harm.

Exceptions to any lenient treatment are the use of superlative adjectives relating to (a) cure effect, rate, and efficiency in advertisements of medical treatments, pharmaceuticals, medical equipment, health food, foods for special medical purposes, and (b) investment return and security in financial products advertisements, which will not be deemed as a minor violation or of slight social harm and so will be subject to the regular penalties as stipulated in the PRC Advertisement Law.

The new guidelines, once formally adopted, will present new opportunities to Western brands trying to distinguish themselves in the Chinese market. At the same time, Chinese law on advertisement remains stricter than the laws of most other jurisdictions, and so vigilance on compliance with Chinese legal standards should remain an important focus for international companies advertising in China.

R&P China Lawyers is a full-service law firm with a strong compliance practice. The firm assists clients to screen advertisements and advise on compliance risks; and it supports companies that are the target of a complaint or government investigation. For more about our practice, please email Maarten Roos at [email protected]), or your usual contact at R&P China Lawyers. The firm can also assist with general compliance matters.