China’s growing middle class and rising consumer awareness about the safety and origins of their food have driven demand for better products. Chinese authorities are also implementing higher standards across everything from beverages and food additives to detergents, contaminants and test methods, writes Kristina Koehler-Coluccia from Woodburn Accountants & Advisors
A crisis in food confidence began in China in 2008, when melamine was found in locally produced baby formula, sickening over 300,000 infants, and causing the death of three. Since then, many other food safety scandals have been recorded in the country.
More recently, a “double standards” scandal erupted when it was found that the soy sauce sold by food company Haitian outside of China had fewer additives and preservatives than its domestic counterpart.
In response to these scandals, in July 2022, the National Health Commission (NHC) announced the issuance of 36 new National Food Safety Standards and three revised National Food Safety Standards. This is the first batch of national food safety standards issued by the NHC since September 2021.
Food advertising has also been impacted by these new regulatory measures, with authorities coming down particularly harshly on campaigns and ads endorsing products that claim therapeutic effects. Heavy fines have been issued against food companies that claimed false information on their labels or called their products “organic” without obtaining the proper authorisation from the Certification and Accreditation Administration (CAA). Therefore companies marketing food products in China should avoid any misleading or false content in their campaigns.
According to Chinese Advertising and Consumer Laws, an advertisement is deemed false if it deceives or misleads consumers with incorrect or confusing content, such as if the product does not exist, the information is inconsistent with reality, if scientific or statistical information is false or cannot be verified, or any other circumstances in which the consumers are deceived or misled by false content.
The penalty for campaigns deemed false could be valued at three-to-five times the advertising fees, or, if the advertising fees cannot be calculated or are significantly low, a fine of RMB 200,000 (£23,787) to RMB 1 million (£119,000). If 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 a fine of RMB 1-2 million, and the business licenses may be revoked.
National symbols are taken seriously in China and cannot be used in advertising of food products. The law states that an advertisement may not use any form of the national flag, the national anthem or the national emblem, or the army flag, anthem, or emblem; or use the names or images of state organs or their functionaries. For example, a coffee brand was fined for using the phrase “Same as the Prime Minister’s Coffee” and hanging the photo of a state leader at its stores.
The use of minors under the age of ten as advertisement endorsers is also prohibited in China. In 2018, a2 Milk engaged Chinese actress Hu Ke and her son, who was younger than ten at that time, as endorsers for their milk powder on their official website and social media accounts. As a result, the company was fined RMB 100,000 (around £11,900) by the Shanghai Administration for Market Regulation (AMR).
Another important rule to follow is not to claim disease prevention or therapeutic effects of food products. In May 2022, actress Jing Tian claimed, as an endorser of a fruit and vegetable pressed candy, that the candy could prevent the absorption of sugar, oil and fat in the body. As a result, she was fined RMB 7.22 million (almost £860,000) and banned from being an endorser for three years. The manufacturer of the candy was also penalised, and its products were removed from major e-commerce platforms.
Regular food advertisements are not permitted to claim therapeutic effects or use medical language or language that easily causes confusion between the products promoted and pharmaceuticals or medical devices.
Manufacturers of baby formula and other milk products are not allowed to claim full or partial substitution for breast milk. In 2022, Yashili published advertisements claiming that its products are “the most like breast milk” and purchased search engine optimisation services to list its product at the top of search results. Yashili was fined RMB 200,000 (£23,800) by the Huangpu Branch of the Guangzhou AMR.
Healthcare food or food formulated for special medical purposes must have official approval before appearing in published advertisements. In 2020, Abbott published a short video for its product PediaSure, which is formulated for special medical purposes, before obtaining approval, and was fined RMB 1.94 million.
Advertisements for healthcare food, medicine, medical treatment, or medical devices are also not allowed to use endorsers to make endorsements or testimonials.
More and more multinational corporations in the food industry from the United States and Europe are increasing their stake in China, as they believe in the massive market potential of the country. However, these companies should make sure that they are well-informed of the possible risks regarding false or misleading advertising and the relevant legislation regulating the sector.