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REGULATIONS ON CONTROL OF ADVERTISEMENTS

    Article 1  These Regulations are formulated for the purpose of
strengthening the administration of advertisement, promoting the development of advertisement undertakings and utilizing advertisement as an effective medium
to serve socialist construction.

    Article 2  These Regulations shall apply to any advertisements published,
broadcast, installed or posted in the People's Republic of China through such
media or in such forms as the press, broadcasting, television, films, street
nameplates, shop windows, printed matters, neon lights, etc.

    Article 3  The content of an advertisement must be true to facts, sound,
clever and easy to understand and must not cheat users and consumers in
any way.

    Article 4  Monopoly and unfair competition shall be prohibited in
advertising operations.

    Article 5  The administrative organs controlling advertisements shall be
the State Administration for Industry and Commerce and local administrative
departments for industry and commerce at various levels.

    Article 6  Units and self-employed industrialists for businessmen wishing
to engage in advertising businesses (hereinafter referred to as advertising
operators) shall submit applications to administrative departments for
industry and commerce in accordance with these Regulations and the provisions
of other relevant laws and regulations and go through, according to different
circumstances, such formalities as examination, approval or registration:

    (1) for enterprises specializing in advertising business, Business
Licences for enterprises as Legal Persons shall be issued;

    (2) for institutions concurrently engaged in advertising business,
Licences for Advertising Operation shall be issued;

    (3) for self-employed industrialists or businessmen capable of running
advertising businesses, Business Licences shall be issued;

    (4) for enterprises concurrently engaged in advertising business,
applications shall be filed with the relevant departments for change of
business scope registration.

    Article 7  The content of an advertisement to be published, broadcast,
installed or posted shall be kept within the advertiser's business scope or
the scope permitted by the State.

    Article 8  An advertisement that contains any of the following contents
may not be published, broadcast, installed or posted;

    (1) that violates the laws and regulations of the State;

    (2) that impairs the national dignity of the State;

    (3) that involves designs of the national flag, national emblem or
national anthem or the music of the national anthem of the People's Republic
of China;

    (4) that is reactionary, obscene, superstitions or absurd;

    (5) that is fraudulent;

    (6) that depreciates products of the same kind.

    Article 9  News media shall provide clear indications for the advertisement
they publish or broadcast. News media may not publish or broadcast
advertisements in the form of news reports nor collect fees for these reports.
Journalists may not solicit advertisements in the name of news coverage.

    Article 10  It shall be forbidden to advertise cigarettes through
broadcast, television, newspapers or periodicals.

    After approval by administrative departments for industry and commerce, it
may be allowed to advertise famous wines and liquors of good quality which
have won prizes at the national, ministerial or provincial level.

    Article 11  Due certificates shall be presented in applying for publishing,
broadcasting, installing or posting advertisements in the following cases:

    (1) for the commodity advertisements concerning standards of quality,
certificates issued by administrative departments in charge of standardization
or by quality inspection agencies, authenticated to be qualified by
metrological verification, above the provincial municipality level shall be
presented;

    (2) for the advertisements which indicate commodities as prize-winners,
certificates of award for the current session or year or for successive
sessions or years shall be presented and classes of prizes and prize-awarding
departments shall also be clearly indicated in the advertisements;

    (3) for the advertisements which indicate titles of high-quality
commodities, certificates of high-quality products issued by the relevant
departments shall be presented and clear indications shall also be made in the
advertisements as to when and by which departments the titles were conferred
on;

    (4) for the advertisements which indicate patent rights of commodities,
patent licences shall be presented;

    (5) for the advertisements which indicate registered trademarks of
commodities, certificates of trademark registration shall be presented;

    (6) for the advertisements of the products which require production
permits, production permits shall be presented;

    (7) for the advertisements concerning culture, education and public health,
certificates issued by the higher competent authorities shall be presented;

    (8) for the other advertisements which require due certification, papers
issued by relevant government departments or agencies authorized by them shall
be presented.

    Article 12  Advertising operators shall check papers or certificates and
examine the contents of advertisements while undertaking advertising business
or acting as advertising agents. They may not publish, broadcast, install or
post any advertisements which violate the provisions of these Regulations.

    Article 13  For the installation and posting of outdoor advertisements,
local people's governments shall organize the administrative departments
respectively in charge of industry and commerce, urban construction,
environmental protection and public security in jointly drawing up the plans,
which shall be implemented under the supervision of the administrative
departments for industry and commerce.

    Advertisements may not be installed or posted in controlled areas near
government organs or cultural relics under special protection, nor in areas
where installation and posting of advertisements are prohibited by local
people's governments.

    Article 14  Rates of charges for advertisements shall be fixed by
advertising operators and reported to local administrative departments for
industry and commerce and to those in charge of price control for the record.

    Article 15  Rates of fees to be charged for acting as agents in
advertising business shall be fixed by state administrative departments for
industry and commerce and those in charge of price control.

    Rates fees to be charged for the use of places and buildings for outdoor
advertisements shall be fixed through consultations by local administrative
departments for industry and commerce with those in charge of price control
and urban construction and reported to local people's governments for approval.

    Article 16  Advertising operators must, according to the relevant
prescriptions of the State, set up bookkeeping records, pay taxes according to
law and subject themselves to the control and inspection by the administrative
departments respectively in charge of finance, auditing and industry and
commerce.

    Article 17  In undertaking or acting as agents in advertising business,
advertising operators shall sign with advertisers or those who have entrusted
them with the business written contracts that shall stipulate explicitly each
party's responsibilities.

    Article 18  Advertisers or advertising operators who have violated the
provisions of these Regulations shall be given the following penalties by
administrative departments for industry and commerce according to the
seriousness of the cases:

    (1) stopping advertising;

    (2) making public corrections as ordered;

    (3) circulating a notice of criticism;

    (4) confiscation of the illegal gains;

    (5) fines;

    (6) suspending business for consolidation;

    (7) revocation of the business licences or the licences for advertising
operation.

    If the violations of the provisions of these Regulations are so serious as
to constitute crimes, criminal responsibilities shall be investigated by
judicial organs according to law.

    Article 19  If advertisers or advertising operators disagree with the
penalties decided upon by administrative departments for industry and commerce,
they may apply for a reconsideration to the next higher administrative
departments for industry and commerce within 15 days after receiving penalty
notices. If they still disagree with the decisions made after reconsideration,
they may bring a suit in a people's court within 30 days after receiving the
reconsideration decisions.

    Article 20  Advertisers or advertising operators who, in violation of the
provisions of these Regulations, have caused losses on the part of their users
and consumers or committed other acts of infringement shall bear the
responsibility for compensation.

    With respect to claims for damages, the claimant may request the
administrative departments for industry and commerce above the county level
for handling. If the parties concerned disagree with the decisions made by
administrative departments for industry and commerce, they may bring a suit in
a people's court. The claimant may also directly bring a suit in a people's
court.

    Article 21  These Regulations shall be interpreted by the State
Administration for Industry and Commerce. The rules for implementation shall
be formulated by the State Administration for Industry and Commerce.

    Article 22  These Regulations shall go into effect as of December 1, 1987.
The Interim Regulations on Control of Advertisement promulgated by the State
Council on February 6, 1982 shall be abrogated as of the same date.