China Regualtory Environmnt
...siderable resources are wasted by agencies and corporations in determining whether the content of their campaigns comply with PRC law. Content approval is often made by subjective officials, rather than by industry groups following set standards of laws. Since October 1999, the Chinese government has banned the use of China-specific product claims on all product packaging, signage, promotional items, print, and broadcast media advertising. This ban applies to such claims as “number #1 in China”, “largest selling”, “recommended by” and many more. These regulations burden companies by preventing them from advertising positive truths about their business or products, a right guaranteed by China’s advertising laws. Inconsistent implementation of these regulations at the local level has resulted in significant loss and confusion for multinationals and serves China in the form of protectionism, as local firms are exempt from such restrictions. Even with these implications, 2001 advertising expenditures in China exceeded 12 billion dollars U.S., an increase of approximately 25 percent from 2000. There has also been an explosion of new advertising media in China, most notably the Internet. Online advertising is predicted to reach sales of 543 million dollars U.S. in 2003. Even with this expected growth, China is not likely to readily open the floodgates to multinationals. The WTO is not law so China can still determine how many foreign companies will be allowed into their market. The protected industries in China such as media, which includes advertising, foreign operators will no longer be forced to act as minority partners in joint ventures with local companies. They currently are not allowed to own more than 49 percent. They will be able to majority own their joint ventures by 2004, and wholly own them by 2006. Additionally, tariffs will be lifted, distribution networks liberalized, and intellectual property rights will have meaning. This will open up competition in a range of areas, including very lucrative ones, such as telecoms and financial services (Act Local Think Global). China is a market that has been dominated by local businesses and corporations. The key to getting a piece of the 1.3 billion population pie is to be as invo...