The final version of the Guidelines on Strengthening Supervision of Online Livestreaming Marketing Activities was issued on November 5, 2020 (“Guidelines”) by China’s State Administration for Market Regulation. This issuance was well-timed to coincide with China’s 2020 Single’s Day online shopping extravaganza, and only several months after the release of the draft Guidelines on July 29, 2020 (see our last article: http://blog.galalaw.com/post/102gcxu/china-strengthens-supervision-of-online-live-streaming-marketing-activities-throu).
The Guidelines do not fundamentally equate livestreaming marketing with advertising activities, as may be concluded from the title and content of the Guidelines. Rather, the Guidelines make clear that only if the livestreaming content constitutes an advertisement is such activity subject to the Advertising Law and other laws governing advertising activities (as discussed below).
We summarize several key points of the Guidelines as follows:
The respective liability of three types of entities involved in livestreaming marketing
If an online platform provides links or other services for merchant or live streamers, and also publicizes and promotes livestreaming marketing activities that constitute advertisements, then it shall be liable under the Advertising Law as an advertising publisher or agent.
If an online platform provides an online shop, transaction matchmaking, information about the product/service offered for sale, and/or access or technical services for merchants or live streamers promoting products or services via livestreaming, then it shall be liable under the E-commerce Law as an e-commerce platform operator.
Any merchant promoting products through online livestreaming is subject to the E-commerce Law, Anti-Unfair Competition Law, Product Quality Law, Food Safety Law, Law of the Protection of Consumer Rights and Interests, Advertising Law, Pricing Law and other laws relevant to marketing activities.
If the livestreamer promotes the function, quality, sales, users’ comments, and/or awards of a product or services via online streaming, then the promotional content must be true, legal and compliant with the Anti-unfair Competition Law. Further, if the livestreaming content constitutes an advertisement under the Advertising Law, then such online livestreamer shall be liable under the Advertising Law as either the advertisement publisher, advertisement operator or the endorser.
Online livestreaming promotional activities shall be strictly regulated
As we discussed in our previous article (http://blog.galalaw.com/post/102gj2v/advertising-for-pharmaceutical-and-health-care-products-and-services-in-china-pr), the requirement to procure prior government approval for certain advertisements is often ignored by advertising publishers and advertisers. In the Guidelines, this requirement is reiterated; namely, the Guidelines state that prior government approval for advertisements for medical treatment, drugs, medical devices, pesticides, veterinary drugs, dietary supplements and formula food for special medical use.
Meanwhile, the Guidelines require the merchant to establish and implement a product inspection system and to display its business license and provide its business address, contact information, after-sales services and other information for consumers, in order to protect the consumer’s information rights.
The Guidelines do not stipulate the punishment for violating its provisions. Instead, the Guidelines provide that the market regulatory authority shall focus on activity in violation of the E-commerce Law, Law of the Protection of Consumer Rights and Interests, Anti-Unfair Competition Law, Product Quality Law, Trademark Law, Patent Law, Food Safety Law, Advertising Law and Pricing Law.
The promulgation of the Guidelines is an important step in bringing more order to the online livestreaming industry. However, as we mentioned before, as mere guidelines, there is room for further details to be introduced, such as how to distinguish whether a livestreamer should be considered an advertisement publisher, advertisement operator or endorser. Therefore, the industry awaits the promulgation of detailed implementation rules after these Guidelines. Also, many illegal and inappropriate cases were exposed and even commented on by CCTV after 2020’s Single Day, showing that the industry is still not acting in line with the Guidelines or related laws or regulations. We will give a brief introduction about these cases in our next article.