On November 6, 2020, State Administration for Market Regulation of China ("SAMR") released the Guidelines to Strengthen Online Live Streaming Marketing Activities Supervision. This guideline further regulates online live streaming sales and marketing activities.[1] In July, 2020, SAMR consulted on the draft of this guideline and in comparison with the previous draft, the final guideline adds the clause of protecting consumers' right to know and right to choose as one of the articles added.
The Guideline to Strengthen Online Live Streaming
The guideline includes 14 articles covering three major aspects:
① To further implement legal liabilities of relevant legal subjects,
② To standardize online live streaming sales and marketing activities, and to
③ Strengthen investigation and punishment on illegal online live streaming sales and marketing activities.
The main body of this guideline, the standardization of online live streaming sales and marketing activities stipulates that:
Legally prohibited products or services cannot be sold through online live streaming; products or services prohibited from online transactions cannot be sold through online live streaming; commercial advertisement prohibited on mass media cannot be released through online live streaming.
Advertisement on medical treatment, medicine, medical equipment, pesticide, veterinary drug, health food and food for special medical purposes ("FSMP") subject to the advertisement review system cannot be released through online live streaming without the Government's review approval.
Business operators of online live streaming sales should continuously display its administrative certification, contact information and after-sales service information at a conspicuous place in the online store.
Abbott Fined for Illegal Online Marketing
On October 12, Abbott was fined 1.948 million CNY for violating the Advertisement Law, i.e. releasing FSMP advertisement without review approval and using a spokesman in the advertisement. [2]
In January 2020, Abbott PediaSure ("雅培小安素"), an FSMP product for malnourished children (caused by dyspepsia and malabsorption) aged from 1 to 10, released an advertisement on TikTok ("抖音") without a review approval. In this advertisement, which ran from January to May 2020, a film actor recommended this product.
This is a direct violation of Article two of Interim Administrative Measures on the Review of Health Food, FSMP, Drug and Medical Devices Advertisements implemented on March 1st, 2020, which states that advertisement of FSMP should not be published without review approval. Furthermore, according to article eleven which refers to the Advertisement Law, FSMP advertisements should not use a spokesperson to recommend or certify a product.
Other Relevant Regulatory Updates
On October 20, 2020, SAMR consulted on the Supervision and Management Method of Online Transaction. The draft regulates, what are hotly discussed issues lately, such as automatic VIP renewal, manipulation of product comments, and live streaming sales. It is a supplement to the E-commerce Law and will impose strong supervision on online transaction once officially published. [3]
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