Chinese Cigarette Brands Enter No-advertising Era
By Tobaccochina Online
Cigarette brands in China, under the system of state tobacco monopoly, have entered a no-advertising era as a result of the interim measures for management over advertising on the internet (hereinafter referred as “the measures”) announced by the general administration for industry and commerce on September 1.
The measures specifically stipulate that “Any use of the internet to release advertisements of prescription drugs or tobacco shall be prohibited”, and provide detailed and specific definitions of advertisements on the Internet. The implementation of the measures will undoubtedly mean a full-scale ban on tobacco advertising on the internet.
Article 22 of the advertising law amended in 2015 specifically provides that “Any release of tobacco advertisements through media of mass communication or at public places, means of public transportation, or outdoor places shall be prohibited.” In an effort to prevent legal loopholes on tobacco advertising or tobacco advertising in disguised forms, the same article also says that “Any use of the advertisements of other goods or services or public-interest advertisements to publicize the names, trademarks, packages, decorations, or similar contents of tobacco products shall be prohibited.”
Definition of “mass communication” unclear
However, the definition of “media of mass communication” by the advertising law has not been specific enough. Therefore, it has become a common occurrence that emerging media, including the WeChat web and tweeting service, are often used in tobacco advertising.
In 2013, there were few Chinese tobacco manufacturers that bothered to open official accounts for their cigarette brands on the WeChat web. However, in 2014, there was a sharp increase in the number of tobacco manufacturers that rushed to open such accounts. By September 2016, 17 Chinese tobacco manufacturers had opened official accounts on WeChat to promote their cigarette brands and boost sales. These WeChat accounts have quickly become a powerful means of promotion and driving sales of tobacco brands.
Head-on blow to manufacturers
However, the sudden announcement of the measures dealt a head-on blow to the tobacco manufacturers. Article 3 of the measures, through “summarization and enumeration” provides a definition of advertising on the internet, which includes the following three parts: how advertisements are released, which refer to internet media channels such as websites, web pages, and internet application programs; the forms of advertisements, including the written form, the form of pictures, the audio form, and the visual form; and the purposes of the advertisements, whether it is to directly or indirectly promote goods or services.
The definition of advertising on the internet made by article 3 covers all existing media and also new forms of communication that may emerge in future. Under the measures, any tobacco advertising, whether it is made through websites, web pages and APPs, or by means of social utilities such as the WeChat web and tweeting service, and whether it is conducted by individuals or enterprises, shall be prohibited.
At the same time, the measures increase the responsibility of internet service providers to regulate online advertising. Previously, internet service providers simply offered and charged a fee for connectivity for the accounts owned by tobacco companies. However, service providers are now required to adopt technical and management measures including deleting, blocking, and breaking links, which is also a requirement made of the various media platforms themselves.
Presently, tobacco manufacturers generally conduct promotion activities through third-party platforms. According to the relevant provisions of the Mmasures, these promotion activities may be breaking the law. Moreover, the third-party platforms concerned will have the right and obligation to block any possible tobacco advertising that they discover, which will cause those who release web-based tobacco advertisements to greater legal risks. According to Article 57 of the advertising law and article 2 of the measures, those who advertise tobacco in violation of the law may be sentenced to a fine of between CNY200,000 (US$29,985) and CNY1 million, and may have their business licenses and relevant permits revoked where the circumstances of their offense is severe.
Significant changes to WeChat accounts
After the promulgation of the measures on July 9, 2016, many tobacco manufacturers began to modify their approaches to advertising, including the significant modification of the content of their WeChat accounts for cigarette brands. Some manufacturers responded by deleting the online articles suspected of being advertisements for cigarette brands. Others modified the orientation of their future tobacco advertisements. Still others suspended their cooperation with partners in online marketing. By August 31, they had basically wiped out all content in their WeChat accounts that had connections with tobacco brands, those suspected of being tobacco advertising, and even many of the content that was not tobacco advertising at all. Many tobacco manufacturers even suspended the operation of their websites.
Industry insiders have responded to the new challenges and restrictions brought by the measures and its new “advertising law” by focusing on how tobacco manufacturers should now promote the sales of their brands. In particular, many invariably mentioned the retail sector. Today, the tobacco industry of China has more than 5 million retailers, but customer service is still a weak link in their operation. Those in the industry generally believe that tobacco manufacturers need to focus on making up for shortfalls in the retail sector as part of the chain and service end of the tobacco industry; that they need to further explore and conduct trials in terms of online service/offline experience and online information support/offline service guarantee; and that they need to promptly promote systemic transformation and upgrade from advertising on the Internet to service provision on the internet, as well as promote a shift from simplistic information release and transmission to favorable interaction between manufacturers and customers, and, later, to all-round customer service provision.
The leaders of China’s tobacco industry have already started the process of policy support and funding guarantee for retail sector image improvement and information, training of retailers, and construction of the environment for cigarette consumption, etc. It is believed that overall planning and systematic execution by the tobacco industry will be put on the agenda soon.
Industry shift to services?
A Chinese saying goes, “Behind bad luck comes good luck.” The introduction of the measures has seemingly imposed a ban on the tobacco industry, but it will be something good if the tobacco industry is hence compelled by the measures to realize a shift in cigarette marketing, improve customer service, and strengthen relations between manufacturers and customers, which will in turn greatly contribute to improving and strengthening the marketing capacity of the tobacco industry. What would be a shift in cigarette marketing? In reality, it means to truly improve customer service. For example, when customers show a desire to buy a tobacco product, can you immediately help them gain product information and review comments by consumers? When customers have decided to choose your brands, can you make it convenient for them to make a purchase and even to receive home delivery? And, when customers wish to express their opinions or make suggestions for your brands, can you respond by offering them proper solutions? Settling such trivial matters that are closely related to customers will be far more useful than worrying about those external restrictions.
In the era of mobile internet, it is service provision that will be a better form of marketing and word-of-mouth passing of information that will be a better form of advertising and publicity. The measures may create an opportunity for China’s tobacco industry to put a total end to traditional advertising and may make it pay greater attention to improving its services, e.g. by satisfying customer demand, improving information disclosure, accelerating establishment of platforms, strengthening interaction between manufacturers and customers, etc.
Cigarette brands in China have virtually entered a no-advertising era. But, as far as cigarette brand marketing is concerned, it is just beginning to usher in both opportunities and challenges brought about by the new measures.