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On December 7, 2022, China’s State Administration for Market Regulation (SAMR) opened Enforcement Guidance on Absolute Terms in Advertising1 (hereinafter the Guidance) for consultation. Feedbacks can be sent to [email protected] prior to January 6, 2023.
Current governance on absolute terms
Absolute terms refer to expressions like “state-level,” “highest-grade,” “best” or other similar words. Pursuant to Paragraph 3 of Article 9 of China’s Advertising Law (latest amended in 2021)2, an advertisement must not contain such terms. Otherwise, violators will face a fine of 200,000 to 1,000,000 yuan as per Article 57 of the same Law.
However, when it comes to practice, improper punishment happens occasionally. One of the famous cases3 is—in 2016, a self-employed storekeeper was fined 200,000 yuan for printing “The Most Delicious Chestnut in Hangzhou” on the take-out bag. The storekeeper appealed to the Court. In 2018, the Court decided that the punishment was improper and altered the fine from 200,000 yuan to 100,000 yuan based on a whole consideration, as per China’s Administrative Punishment Law.
All in all, the use of absolute terms in advertising will mislead consumers, cause advertising chaos, disparage peers, and disrupt the market order. But the difficulty lies in deciding on the punishment and avoiding improper punishment.
Proposed enforcement rules
To standardize the supervision of the use of absolute terms and help market supervision authorities issue appropriate penalties, SAMR proposed the Guidance. The key elements are as follows.
1. Two types of situations where current provisions on absolute terms do not apply.
Type A: The absolute terms in advertising do not implicate the commodity. Instead, they only
State the production operator's service attitude, business philosophy, or company culture.
Express the operator’s goal or the operator’s pursuit of making good commodities.
Type B: The absolute terms in advertising implicate the commodity, but do not have the objective effect of misleading consumers or disparaging other operators. To be specific, absolute terms are allowed to be used,
Only to describe commodities of the same brand or the same enterprise for self-comparison purposes, and the description is real.
To introduce the tips for consumption such as the best method, the best time, or the best shelf life to use the commodity.
In product description or service grading terms based on national standards, industry standards, or local standards.
When the trade name or registered trademark of commodities contains absolute terms; and the trade name or registered trademark is used to refer to a certain commodity—to distinguish the commodity from other goods.
Only to describe the background information of the commodity and its raw materials, and the description is real.
When awards or titles, issued as per relevant national rules, contain the absolute terms
To express the objective situation in a specific time period and territory, such as the factual information which can be proved, like product sales volume, sales value, market share, etc. Advertisers shall be able to prove the authenticity of relevant absolute terms, otherwise, Advertising Law still applies.
2. Direction is given to help market supervision authorities issue punishment.
At the beginning of the Guidance, it denoted that market supervision authorities shall issue just punishments equal to the fault, be fair and adhere to the principle of comprehensive discretion (based on the fact, consequence, etc.), after considering political, social, and legal effects.
For the first time using absolute terms in advertising, the consequences of harm are minor, and the misconduct is corrected in a timely manner, there can be no administrative penalty.
For operators who use absolute terms in their business premises or self-media, if the advertising is short in duration or has few viewers, and with no harmful consequences, or only with minor consequences, the market supervision authority can issue a lighter administrative penalty as per the law.
However, using absolute terms associated with curative efficacy or cure rate in advertising health food, foods for special medical purposes, medicines, etc., will not be regarded as a minor infringement or infringement with minor consequence.
Read the full text of Enforcement Guidance on Absolute Terms in Advertising (Consultation Draft) for more details. For further translation service, please email [email protected].
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