Holding mass media to account

What prompted the State Administration of Industry and Commerce to issue the Provisions? As most Chinese government institutions carry out the drafting and the review process for new regulations, without direct public input or knowledge, we cannot be certain. But in my opinion, some of the reasons could be as follows:

1. The drafting and issuance of a new Advertising Law to replace or revise the current Advertising Law that dates back to 1994, and does not address the kind of media now used by advertisers, is taking much longer than anticipated. A new Advertising Law probably will not be finalised and promulgated until 2014;

2. Mass media advertising has increased significantly over the past 15 years;

3. Advertisers, due to the competitive nature of the Chinese market, are pushing the limits of creativity. In many cases, they are overstepping the legal requirements and the spirit of the Advertising Law in the advertisements that are released each year in the PRC;

4. Mass media organisations have not been fully reviewing advertisements for compliance with PRC advertising legal requirements. In this way, it is difficult for such organisations to ensure that the advertisements that they release over their media meet minimum standards as to truth and accuracy;

5. The Chinese public's expectations in the area of truth in advertising are much greater today than at any time in the history of the PRC;

6. There have been too many cases of false and misleading advertisements by mass media resulting in loss and damage to the public;

7. The advertising industry in the PRC has become so large that it is difficult for the PRC governing authority, the Administration of Industry and Commerce, to supervise the content of advertisements due to the enormous amount of advertisements that are released each year through numerous types of mass media;

8. The Chinese public wants more government oversight of the advertising industry,

9. The Chinese government wants mass media organisations to become more responsible and accountable for advertisements that they release; and

10. Mass media in the PRC have a significant influence on young and new consumers.

Implementation of the Provisions is a good first step by the Issuing Authorities, but with all new laws, regulations and policies in the PRC the success or failure of the Provisions will come down to effective implementation and oversight. This has been the Achilles heel with many new PRC laws and regulations over the years – well thought out with good legal provisions but weak implementation and enforcement. Will this be the case with the Provisions? I think not as the PRC authorities recognise that PRC consumers are very well informed and becoming increasing reactive. They also have access, through the internet, to extensive information to assess the advertiser's products and advertising claims. The public expects regulatory authorities to protect the interest of the public.

Over the past couple of years, there have been several situations where advertisers and mass media have contravened the advertising laws. These situations have put the regulatory authorities under pressure to explain why these situations were allowed to occur. With the explosion of blogs and chat lines in the PRC, even a localised and small matter, can grow into a major embarrassment for the advertisers, mass media and the regulatory authorities.

So how will mass media organisations and advertisers deal with the requirements of the Provisions? In most cases, mass media organisations will not have great difficulty to implement the requirements outlined in the Provisions. As such, organisations have been legally obligated to review advertisements for legal compliance based upon the provisions of the Advertising Law and government policy for several years, they will have some type of structure in place for this process. Therefore, mass media organisations should be able to implement the new structure without much difficulty. What will be new for mass media organisations is that the Administration of Industry and Commerce will now hold them accountable, if they do not conduct the level of review of advertisements required by the Provisions to minimise the number of non-complaint advertisements that are published.

The Provisions will help catch non-compliant advertisements before being unleashed on the public. However, even with the most robust regulatory structure and oversight program, advertisers who need to grab the public interest for their products and services, as well as mass media organisations who need to obtain revenue from advertisers, will push the limits of regulatory compliance. I do not think the advertising industry want it any other way. This situation will therefore, always result in some advertisements that are published and are subsequently found to be non-compliant. The US is a good example of this situation. The US has a very comprehensive set of advertising regulations, a sophisticated voluntary self-regulatory structure and knowledgeable advertisers/advertising agencies/mass media organisations. Each year in the US, thousands of advertisements come under review by the US authorities and the industry's self-regulatory organisation for non-compliance issues based upon complaints by consumers and competitors. That is the nature of the advertising industry regardless of the country or political system or cultural standards.

China is very unique in the world of advertising. It has a vibrant commercial sector that the PRC government is encouraging to come up with ways to entice the Chinese public to spend more on consumer goods and services but, with regulatory requirements that advertisements musts recognise the country's political values and public interest. This is a challenge for advertisers and mass media organisations without some degree of regulatory guidance that reflects what is happening in the PRC today. The Provisions, whether you agree with the requirements or not, do help in addressing some of the issues of guidance and accountability in the mass media and advertising sector.

Since China entered the World Trade Organisation in 2001, the government is slowly moving to establish a comprehensive regulatory regime for media and advertisers. This regime incorporates relevant media forms, social norms and public expectations, but with traits that are uniquely Chinese.

Richard Wageman, DLA Piper, Beijing