Chinese society pays increasing attention to food safety. Recently, a “double standards” scandal erupted when it was publicized that food company Haitian’s soy sauce sold overseas had fewer additives and preservatives than its domestic product. This heightened awareness of food is in trend with China’s growing regulatory focus on food safety and related advertising over the past several years. Of particular note, there is an ongoing enforcement campaign targeting ads and endorsers of foods that claim therapeutic effects. We summarize several typical Dos-and-Don’t learned from relevant food advertisement and endorsement cases in China, for brands to note and avoid repeating these mistakes.
1. Don’t involve false or misleading content
Cases- YonHo Soybean Milk claimed that its soybean milk products had been presented as national gifts in various foreign embassies in China; in fact, the company had merely presented their products to some embassy staff on informal occasions without any backing by the government.
A drink company advertised that its sparkling water has “zero sugar, zero fat and zero calories”, when in fact it has 2,150 calories per 100ml.
A food company labeled its food as “Organic” without obtaining certification by the Certification and Accreditation Administration (CAA), etc. All of these operators were fined millions of RMB for false or misleading content.
Regulations- An advertisement is deemed a false advertisement if it deceives or misleads consumers with false or confusing content, as follows: (i) the products or services do not exist; (ii) the information on products or services is inconsistent with the actual situation in terms of the performance, function, place of origin, purpose, quality, specification, ingredients, price, producer, validity period, sales, awards of the products or the content, provider, form, quality, price, sales and awards of the services, or in terms of any guarantee relating to the products or services, and such inconsistency has a substantial influence on purchase; (iii) scientific achievements, statistics, research results, abstracts, quotations and other information that is false or forged or cannot be verified, is used as evidentiary materials; (iv) claims are made of false effects deriving from the use of the products or services; or (v) other circumstances in which the consumers are deceived or misled by false or misleading content (Article 8, Anti-Unfair Competition Law & Article 28, Advertising Law).
Penalty- The advertiser may incur a fine of three-to-five times the advertising fees, or, if the advertising fees cannot be calculated or are significantly low, a fine of RMB200,000 to RMB1 million. If the illegal activities have been committed more than three times within two years or there are other serious circumstances, the advertiser may incur a fine of five-to-ten times the advertising fees, or if the advertising fees cannot be calculated or are significantly low, a fine of RMB1 million to RMB2 million, and the business licenses may be revoked (Article 55, Advertising Law).
2. Don’t use the name or image of national organizations or staff
Case- In 2018, 3W Coffee was fined RMB 200,000 for using the phrase “Same as the Prime Minister’s Coffee” and hanging the photo of state leader on 3W Coffee’s walls at its places of business .
Regulations- An advertisement shall not involve any of the following: (i) using or using in disguised form the National Flag, the National Anthem or the National Emblem, or the Army Flag, the Army Anthem or the Army Emblem of the People's Republic of China; (ii) using or using in disguised form the names or images of state organs or their functionaries; (iii) using "state-level", "the highest-grade", "the best" or other similar words. (Article 9, Advertising Law)
Penalty- The advertiser may incur (i) a fine of RMB200,000 to RMB1 million; where the circumstance is serious, the business licenses may be revoked, and the authorities shall revoke the approval documents for advertisement review and shall not accept the relevant entity's application for advertisement review for one year. With regard to advertising agents and advertisement publishers, the market regulation departments shall confiscate the advertising fees and impose a fine of RMB200,000 to RMB1 million, and where the circumstance is serious, business licenses may be revoked concurrently (Article 57, Advertising Law).
3. Don’t use minors under the age of 10 as advertisement endorsers
Case- In 2018, a2 Milk engaged Chinese actress Hu Ke and her son, who was less than ten years old at that time, as endorsers for their milk powder on a2 Milk’s official website and social media accounts. As a result, a2 Milk company was fined RMB 100,000 by the Shanghai AMR (the “Administration for Market Regulation”).
Regulations- Minors under the age of ten shall not be used as advertisement endorsers (Article 38, Advertising Law).
Penalty- The advertiser may incur (i) a fine equivalent to three times the amount of the advertising fees, or, where the advertising fees cannot be calculated or are significantly low, a fine of RMB 100,000 to RMB 200,000; (ii) if the circumstance is serious, a fine of three-to-five times the advertising fees, or, where the advertising fees cannot be calculated or are significantly low, a fine of RMB 200,000 to RMB 1 million and the business licenses may be revoked (Article 58, Advertising Law).
4. Don’t claim disease prevention, therapeutic effects.
Case- In May 2022, Chinese actress Jing Tian claimed, as endorser of a fruit and vegetable pressed candy, that such candy could prevent absorption of sugar, oil and fat. As a result, she was fined RMB 7.22 million and banned from being an endorser for the next three years. The manufacturer of such candy (Infinite Free) was also penalized, and its products removed from major e-commerce platforms. Please see our previous article for more details of this case: http://blog.galalaw.com/post/102hvkz/why-brands-and-endorsers-should-both-understand-the-law-on-endorsements-in-china
Regulation- Regular food advertisements are not allowed to claim therapeutic effects or use medical language or language that easily causes confusion between the products promoted and pharmaceuticals or medical devices (Article 17, Advertising Law).
Penalty- For the advertiser, the penalty is the same as under item 3 above, namely, Article 58 of the Advertising Law. In addition, the endorser was prohibited from acting as an endorser for the next three years.
5. Don’t claim full or partial substitution for breast milk
Case- In March 2022, Yashili published advertisements claiming that its products are “the most like breast milk” and purchased search engine optimization services so that its product was listed as the top search result for “milk powder similar to breast milk”. Yashili was fined RMB 200,000 by the Huangpu Branch of the Guangzhou AMR.
Regulations- It is prohibited to publish, in mass media or public places, advertisements for infant dairy products, beverages and other foods that claim full or partial substitution of breast milk (Article 20, Advertising Law).
Penalty- Same as the penalty under item 2 above, namely, Article 57 of the Advertising Law.
6. Do undertake prior review and obtain official approval before publishing advertisements for healthcare food or food formulated for special medical purpose
Case- In October 2020, Abbott published a short video via its Douyin account, “Abbott Pediasure”, in which Chinese actor Xu Zheng promoted Abbott’s product, PediaSure, which is a food formulated for special medical purposes. Such short video constituted an advertisement and, thus, prior approval from the local AMR should have been obtained. In addition, advertisements for food formulated for special medical purposes are subject to regulations on medical advertisements, which prohibits endorsements. As a result, Abbott was fined RMB 1.94 million by the Pudong Branch of the Shanghai AMR.
Regulations- No advertisement for any medicine, medical device, healthcare food or food formulated for special medical purposes may be published without prior review and approval by the competent authority (Article 2, Interim Administrative Measures for Examination of Advertisements for Medicine, Medical Devices, Healthcare Food and Foods for Special Medical Purpose).
Advertisements for food formulated for special medical purpose are subject to the regulations on medical advertisements in the Advertising Law and other laws and regulations (Article 80, Food Safety Law).
Advertisements for healthcare food, medicine, medical treatment, or medical devices shall not use advertisement endorsers to make endorsements or testimonials (Article 16 & 18, Advertising Law).
Penalty- Same as the penalty under item 3 above, namely Article 58 of the Advertising Law.
Please note that the above does not cover all regulations on food advertisements, nor are the examples exhaustive of typical violations. In particular, local governments occasionally issue their own guidelines for commercial advertisements or for official mandatory review of food advertisements, such as the Compliance Guidelines for Commercial Advertising Endorsement issued by the Shanghai AMR in January 20, 2022 and the Compliance Guidelines for Advertisements for Medicines, Medical Devices, Healthcare Food and Formulated Food for Special Medical Purposes issued by the Zhuhai AMR on August 8, 2022. Moreover, advertisements on social media accounts, such as on Weibo or WeChat, or via livestreaming or short video, are also subject to advertising laws and regulations.
Needless to say, following the rules for food and food advertising is one of the key factors to success in Chinese markets. Illegal food advertisements bring not only administrative penalties but also negatively impact the brand’s reputation, especially if there is improper content or serious problems result. It is advisable to consult with professionals before making food advertisements in China.