On October 31, Chinese regulators jointly issued a guiding opinion to further standardize celebrity endorsement activities aiming to bar entertainers and celebrities from promoting products online that don’t align with the country’s “socialist core values”.
Chinese advertisement law already includes strict provisions on celebrity endorsement, and some have been severely punished by the relevant authorities for illegal endorsements. However, every few months we learn of a new story about celebrity product endorsements gone wrong.
Famous actor Hu Jun endorsed financial products from Wukong Financial Management. This company was later accused of fraud by consumers, resulting in anger at Hu Jun for the paid endorsement.
In August 2021, famous stand-up comedian Li Dan received a fine of more than 870,000 yuan ($134,347) due to an advertisement for women’s underwear that was found to be insulting to women.
Celebrity host Wang Han, had endorsed a popular lending app. The App was later found to have major problems, with several users unable to withdraw funds invested. The number of victims reached more than 370,000, and the amount involved reached 23 billion, resulting in significant damage to Wang Han’s reputation.
In another well-known case, actress Ma Yili endorsed a brand which was later found to be a fraud in the amount of 700 million RMB, and under official investigation.
With the frequent occurrence of illegal and false endorsements by celebrities in recent years, and taking into account the significant power and influence these endorsements carry in the domestic market, the new guidelines create a responsibility for celebrities to investigate and fully understand the products and services prior to an endorsement. When it comes to financial product ads, the guidelines specifically noted that enterprises shall actively and fully disclose product information and potential risks along with any celebrity endorsement. This measure prevents celebrities from claiming ignorance in the event the endorsed product results in harm or turns out to be a scam.
Also under the newly announced rules, celebrities are not allowed to endorse tobacco products (including e-cigarettes), after-school tutoring services, healthcare services, medicine, medical instruments, or formula food for special medical purposes.
In addition, the rule prohibits celebrities suspect of certain legal or moral vices from endorsing products. Moreover, all celebrities are specifically prohibited from endorsing or publicizing any asset management products or related benefits.
China remains a strong consumer market with interest in foreign products, and celebrity endorsements can still be a powerful driver of sales and market growth in China when done correctly and in compliance with the law. Foreign enterprises selling to Chinese consumers need to be aware of these new guidelines when selecting a spokesperson in the country.