Social and economic developments in China are transforming this territory into potentially one of the world's largest markets for consumer products. As such, the demand for advertising media in China is increasing exponentially.
As the mass media are politically highly sensitive, television, radio, and print media in China are all still state-run.
Due to the resulting constraints on conventional advertising media, new advertising vehicles have been evolving. The development of advertising display screens for moving images, operated privately by business work units and installed outdoors or indoors in public areas, is a typical example of such new advertising vehicles. These Administration of Advertising Display Screens Procedures (the "Procedures") were promulgated and came into effect on 29 February 1996 specifically to control this particular form of advertising.
Various laws and regulations already exist for the control of advertising which also seek, at least in theory, to promote the development of the advertising industry, to safeguard the rights and interests of consumers and to make effective use of advertising media to serve China's socialist market economy. These 'Display Screen' regulations are expressly stated to supplement the Advertising Law of February 1995, the Administration of Advertising Regulations of December 1987 ("the Regulations") and the Administration of Advertising Regulations Implementing Rules of January 1988 ("the Implementing Rules").
The Procedures consist of 17 articles, dealing with:
- the procedural requirements for installation of advertising display screens;
- monitoring of the advertising content; and
- enforcement mechanisms for non-compliance.
TYPE OF DISPLAY SCREENS COVERED BY THE REGULATIONS
Only display screens installed 'outdoors or within a building in a public place' with 'content used to broadcast advertisement' fall within the scope of the Procedures. Article 2(iii) and (iv) of the Implementing Rules provides a detailed elaboration of this definition as follows:
"the installation of advertisements in such forms as billboards, neon signs, electronic signboards, [and the placement of advertisements on] shop windows, lamp boxes and walls on or in buildings, and in open spaces, in streets, squares, airports, stations or piers; and the placement or posting of advertisements in or outside cinemas, theatres, sports grounds (stadia), cultural halls, exhibition halls, hotels, restaurants, amusement grounds and shopping centres."
The Procedures are therefore worded to encompass a broad spectrum of display vehicles. However, the Chinese characters used to describe 'advertising display screens' cover only screens with content which changes repeatedly. The Procedures therefore should not cover fixed image poster-style advertising.
PROCEDURES FOR INSTALLATION
Articles 3 to 7 set out what business work units in China must do to apply for installation of advertising display screens.
The Administrative Bureaux for Industry and Commerce ('AIC') at the provincial level are responsible for approval of the installation. Applications for installation of networks of display screens must be approved by the central SAIC.
The business work units must be legally qualified to engage in advertising business. The Regulations and the Implementing Rules list out in detail the legal qualifications required.
Where the screen is outdoor, the Advertising Law (Articles 32 and 33) and the requirements of local outdoor advertisement installation plans must be complied with. The work unit must also employ dedicated investigation personnel familiar with advertising law, regulations and government policies to maintain the display screen.
According to the Procedures, approvals should issue within 15 days of submitting an application, resulting in issuance of an "Advertising Display Screen Registration Certificate", which in turn permits installation. In practice, it is likely to take longer than this.
SCRUTINY OF ADVERTISING CONTENTS
In line with the Advertising Law, the Regulations and the Implementing Rules, the advertisement contents must be accurate, lawful and comply with the requirements of socialist spiritual and cultural construction, and must not defraud or mislead consumers in any way.
Advertisements must be submitted to the relevant administrative authority; presumably this is to permit pre-vetting. That said, the business work units which operate the displays are primarily responsible for the contents of the advertisements.
Non-advertisement information (for example general music programming or documentaries) is also allowed but only with special prior approval from the relevant administrative authority in the form of an "Advertising Display Screens Special Information Certificate of Broadcast Permission". Screening of movies or TV fiction programmes is expressly prohibited.
The relevant AIC is expected to conduct at least once a year a special investigation into the operation of the screen display.
Where an advertising display screen is set up without approval, the relevant AIC is empowered to confiscate "unlawful gains" and impose a fine of up to Rmb 5000. It may also order the screen to be removed.
Where the advertising contents are objectionable, the relevant administrative authority can order such advertisement to cease, circulate a notice of criticism, terminate or limit the operation of the screen display and impose a fine of up to Rmb 5000.
These Procedures supplement the Advertising Law, the Regulations and the Implementing Rules, and other relevant regulations at national provincial and local levels. For example, outdoor screens must also comply with the Administration of Outdoor Advertising Regulation Provisions.
As the advertising industry keeps expanding in China, more laws, regulations and government policies at various levels are likely to come into existence to govern the industry. Foreign advertisers may take heart that, whilst the regulatory framework is becoming more complex, the scope for arbitrary exercise of discretionary powers is also diminishing. Nevertheless, it is also of increasing importance to seek legal pre-clearance for significant advertising projects, to guard against untimely surprises.
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