Colleagues, let me be frank with you. Over the past 26 years, I have personally witnessed the evolution of China’s advertising market from a "wild west" to a "legal fortress." Recently, many of my foreign enterprise clients have been calling me, worriedly asking: "Teacher Liu, our international celebrity endorser is promoting a product that has not yet passed domestic registration. Is there any risk?" This concern is not unfounded. With the continuous tightening of regulations on advertising endorsers in China, especially the new rules on cross-border data transfer and the "Pedestal of Fame" responsibility system, foreign enterprises are facing unprecedented compliance pressure. Today, I would like to discuss with you the core aspects of these regulatory changes, combining my actual operational experience over the past decade. I hope to help you avoid hidden pitfalls when deploying advertising strategies in China.
一、代言人资格与负面清单
Let's start with the most basic "entry threshold." Many foreign friends believe that as long as the celebrity is big enough, anything goes. This is a huge misconception. According to the latest "Interim Measures for the Administration of Commercial Advertising Endorsements" (2023 revised draft), the qualifications of endorsers have been clearly defined. First, endorsers must not have violated laws or regulations within the past three years, including tax arrears, drunk driving, or drug abuse. For example, an international A-list Hollywood actor endorsed a luxury car brand in 2022, but it was later discovered that he had been fined for tax evasion in the United States. Chinese regulatory authorities immediately requested the removal of all related advertisements. This is truly a case of "A small misstep leads to a great fall." Also, foreign enterprises must pay special attention to China's negative list for endorsements. For example, medical treatments, pharmaceuticals, and special-purpose formula foods are strictly prohibited from using endorsers. I once handled a case of a European health food company: its overseas flagship product used a famous tennis player to promote weight loss effects. According to Chinese regulations, ordinary foods cannot claim health functions, and endorsers cannot exaggerate efficacy. The result? The advertisement was fined 1.2 million RMB, and the brand was blacklisted. Therefore, I repeatedly emphasize to my clients: "When choosing an endorser, do not just look at the number of fans; you must first review their compliance record. Just like a marriage, not just love, but compatibility (compliance is the key)."
Furthermore, the system for identifying endorsers has become more detailed. In the past, "Internet celebrities" promoting products without clear labeling was common. But now, if an individual records a video to promote a product without a commercial relationship, it is considered a false endorsement. I remember one time, a beauty KOL with a Japanese background posted a recommendation for a facial mask on a short video platform, but did not disclose that it was a paid promotion. The Market Supervision Bureau later verified that, although she was a foreigner, as long as the promotion targeted the Chinese market, she fell under Chinese jurisdiction. She was fined 30,000 RMB for violating the "Advertising Law." This tells us that foreign enterprises must not only review the endorsement contract itself but also the identity and behavioral norms of the endorser in China. I suggest that companies sign a Compliance Commitment Letter with the endorser, clearly stating that if the endorser violates regulations during the endorsement period, they must bear the liability for breach of contract and compensation for losses. This is like a "safety belt" – it may not always be used, but it is safer when worn.
二、连带责任与"连坐"风险
This part is what I think foreign investors need to pay the highest attention to. China’s regulatory attitude towards endorsers has shifted from "I just promote, don’t ask me about anything else" to "if you promote, you will be held responsible." According to Article 56 of the Advertising Law, if an endorser endorses a false advertisement that causes damage to consumers, they shall bear joint and several liability with the advertiser. Many foreign enterprises have their headquarters’ global brand spokespersons promoting products in China. If the product has quality issues, not only the company but also the endorser himself may become a defendant. I recall a case of an American sportswear brand: their running shoes were exposed as having sole peeling issues, and the endorser at the time was a Chinese national track and field athlete. The consumer sued both the brand and the athlete together. Although the athlete engaged a lawyer to settle the lawsuit, his personal endorsement fees subsequently plummeted by 40%. This case reminds foreign enterprises that the "joint and several liability" of endorsers is no joke. I advise companies to purchase professional liability insurance in China while signing endorsement contracts, covering the endorser’s compliance risks. Additionally, in the contract, clarify that the endorser must undergo fixed asset inspection or product quality testing. Don’t just take photos and run away after the endorsement – that thinking belongs to the 1990s.
Let’s talk about the "unspoken rules" in actual administrative procedures. Once, when handling an advertising compliance review for a Korean electronics company, I found that their endorsement contract stipulated "if any violation occurs, the endorser shall return the endorsement fee, but not bear compensation." This clause is invalid under Chinese law. The Administrative Bureau for Market Regulation (AMR) explicitly requires that the endorser’s liability exemption clause cannot exempt the statutory liability to compensate consumers. I later helped them modify the contract: the endorser’s liability cap was set at three times the endorsement fee, while the company’s liability was unlimited. In the end, the headquarters approved this plan. Actually, this is a tricky point: foreign enterprises often want to control costs, but in advertising compliance in China, cost-cutting often leads to greater losses. Another point: if the product is recalled, the foreign enterprise must bear the cost of removing advertisements. Sometimes, just the removal cost for subway advertisements and elevator advertisements can be millions. If the endorser is unwilling to assist in removing the content (e.g., if the contract does not specify), the company will have to bear it all. This is like buying a house but forgetting to buy fire insurance – when the fire comes, you realize it’s too late.
三、跨境数据与代言信息报送
Now, let’s talk about the hottest topic: data compliance. Many foreign enterprises love to use international celebrities, but celebrities' personal data (such as ID information, bank account numbers, and tax information) often need to be transmitted from the headquarters to China, or from China to the headquarters. According to the "Personal Information Protection Law" and the "Data Security Law," the cross-border transfer of personal information of endorsers must pass a security assessment or obtain individual consent. I once handled a case for a French luxury group. They wanted to sign a global image ambassador in Paris, whose data (including DNA ingredient allergy test results for endorsement products) needed to be transmitted to China’s e-commerce platform for use. The headquarters was troubled: if they didn’t transmit it, face-to-face signing was required, which was inefficient; if they transmitted it, they might face penalties. In the end, we adopted the plan of a "Standard Contract for the Cross-border Transfer of Personal Information" and conducted a Personal Information Protection Impact Assessment (PIA). That was a thorough research. Not only did we analyze the data flow, but we also considered the third-party service providers involved. The process from start to finish took three months. But the result was quite good: later, the advertisement was not fined by the Cyberspace Administration. This tells us that foreign enterprises must not take shortcuts when it comes to endorser data. Even if the endorser is your own employee, as long as personal data is involved, you cannot transmit it casually.
Additionally, the reporting of endorsement information has also become a key focus. Some regions require advertisers to file their endorsement contracts in the system. For example, in Shanghai and Shenzhen, some districts have begun piloting an "Advertising Endorsement Filing Platform." The company must upload the endorser's real name, registered number, and endorsement duration. If it is not filed, it is deemed a violation. I remember once, a German industrial company hired a retired Chinese professor to endorse its lubricants. Since the headquarters provided a ready-made English contract, they signed it without filing. Later, during a market supervision inspection, the contract was found, and they were fined 50,000 RMB for failing to file. The professor also went to the tax bureau to complain because the company did not withhold individual income tax on his endorsement fees. This complicated things further. That time, I personally accompanied the client’s CFO to the tax bureau to explain, and it took three rounds of mediation to resolve the matter. Therefore, I suggest that foreign enterprises establish an "Endorser Information Entry Checklist" before signing, ensuring that five types of information are reported: individual ID, bank account, contract amount, performance period, and tax payment status. Don’t think this is troublesome – in administrative work, "convenience" often leads to "trouble."
四、内容审核与"红线"划定
Next, we discuss the content of the advertisement itself. Many foreign enterprises have beautiful creative ideas, such as shooting a promotional video of "Food Adventures in China" with a Western celebrity. But once the details are not handled well, it can be a disaster. China’s advertising review has red lines regarding territorial integrity, ethnic equality, and social stability. For example, a well-known American fast-food brand once shot an advertisement in China: the protagonist, a foreign celebrity, stepped on a model of the Forbidden City while eating a hamburger. As soon as this advertisement was released, Chinese netizens were outraged, and the Market Supervision Bureau immediately ordered the removal. The foreign celebrity later publicly apologized on Weibo, but the brand’s reputation in China was damaged. I helped them analyze it afterwards and found that the headquarters’ creative team had no understanding of Chinese culture. They thought it was just "playful behavior," but they didn’t realize that stepping on the Forbidden City is an absolute taboo. Since then, the brand now adds a "Cultural Review" clause to every endorsement contract, requiring the creative video to be pre-submitted to a Chinese legal team for review. This is actually a good point: the endorsement content not only must not violate laws and regulations, but also must not violate "public order and good customs" (公序良俗).
In addition to cultural aspects, the issue of "puffery" in endorsements is also a focus. Foreign enterprises often exaggerate the efficacy of their products due to differences in overseas regulatory standards. For instance, a German skincare brand claimed that its cream could "completely remove wrinkles." This absolute wording is strictly prohibited in China. The endorser, a Chinese actress, also faced penalties. In the end, the actress not only refunded 2 million RMB in endorsement fees but was also banned from endorsing any brand for six months. At that time, the brand kept complaining to me: "Our clinical trial data in Europe is accurate, why can’t we say it here?" I told them: "Yes, you can say it reduces wrinkles, but you cannot say completely removes them, because Chinese regulators require that clinical data must be locally verified." Since then, the brand has added "Data Localization Review" to its Chinese advertisements. This is the same as my 14 years of experience in registration procedures: the review standards for the same thing differ from place to place, and you have to adapt to local conditions. Not being willing to change means you are out of the game.
五、未成年人代言的特别限制
Many foreign enterprises love to cast cute foreign babies or teenage idols, but this area has the strictest regulations. According to the "Advertising Law" and the "Minor Protection Law," minors under the age of 10 are absolutely prohibited from being endorsers. Also, minors over 10 but under 18 can only endorse products suitable for their age, such as stationery and toys, and cannot endorse alcohol, gambling, or medical products. I once handled a case for a Japanese snack brand: they wanted to use a 7-year-old Japanese child model to promote puffed food. The initial draft stated "the most delicious food in the world." I said no, first, the child is under 10 and cannot be an endorser; second, it uses superlative language, violating Article 9 of the Advertising Law. The brand initially wanted to try it, saying "just a model, not a real endorser." I told them: "If the advertisement explicitly indicates the child’s name, age, or allows the child to speak a line, it is considered an endorsement." In the end, they replaced it with a 12-year-old child and changed the wording to "delicious and fun." This is another tricky point: foreign enterprises often think "foreign children are cute, there should be no problem." But Chinese law applies equally to everyone.
Another very important detail: if a minor’s image is used, the guardian must sign a consent form. I remember once, an Australian dairy company used a photo of an Australian child holding a milk carton. Afterwards, the child’s father claimed in court that the company had not obtained a legal guardian’s authorization. Although the photo was taken in Australia, it was published in China, falling under Chinese law. The court ruled that the company compensate 50,000 RMB. This is not a large amount, but the negative impact on the brand’s public image was significant. Since then, I have asked every client to have the guardian sign a bilingual "Image Use Authorization" and have it notarized. Additionally, clearly state the usage scope of the image, such as which media, which tier cities, and for how long. This is the same as my many years in administrative work: "write it in black and white, and you will be safe." Don’t assume the other party is trusted; in China, trust is valuable, but contracts are more reliable.
六、税务穿透与跨境支付
Finally, I need to talk about tax, which is my specialty. Many foreign enterprises sign endorsement contracts with overseas celebrities and pay endorsement fees from the headquarters overseas, bypassing Chinese tax jurisdiction. But the newly revised "Individual Income Tax Law" (2019) and the "Tax Collection and Administration Law" clearly stipulate that foreign individuals who earn income from the Chinese market (including endorsement fees and image royalties) must pay tax in China. If a celebrity does not have a physical presence in China, but signs a contract with a Chinese entity to promote products in China, the promotional income is considered "income from personal services" and is subject to withholding at a rate of 20%-40%. I once handled a case for an Italian luxury brand: its global brand ambassador (a famous Italian actress) endorsed a perfume specifically for the Chinese market, with a contract amount of 5 million RMB. The headquarters planned to remit this amount directly from Italy to the actress’s Swiss account. I immediately stopped them and told the Chinese legal representative: "If you do this, the tax bureau will not only impose a late fee but also a penalty of 0.5 to 5 times the tax amount." In the end, we helped them establish a "Domestic Performance Model": the actress signed a contract with a Chinese agent, reported temporary taxes, paid individual income tax in China, and obtained a tax payment certificate. Later, the tax bureau checked the contract and found it compliant. This process was quite cumbersome, but it was necessary.
Furthermore, the issue of cross-border payment is also quite headache-inducing. Many foreign banks are unaware of the tax implications of endorsements for the Chinese market and often refuse to remit funds. I remember a case: a British football star endorsed a Chinese sportswear brand, with a contract amount of 3 million pounds. The bank in the UK refused to remit the funds because the contract did not include a "tax clause." I then drafted a "Tax Compliance Letter" for the brand, stating that all taxes related to the Chinese market had been paid or would be withheld. Only then did the bank release the funds. Therefore, when foreign enterprises negotiate endorsement contracts, they must include a "Tax Liability Clause," clearly stating who will pay the Chinese withholding tax. Generally, it is "tax inclusive" (the advertiser bears the tax). But the key is to ensure that the contract amount is high enough to cover the tax, otherwise the celebrity will not cooperate. Another point: if the endorser is a corporate entity (e.g., an overseas studio), it may be considered a "royalty income," which involves double taxation agreements. At this time, the help of a specialized tax advisor is essential. My experience over these many years tells me that "in advertising endorsements in China, tax is never just an appendix; it is a lifeline."
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Looking back at the entire discussion, the core of the changes in "Regulations on Advertising Endorsers for Foreign Enterprises in China Amid Regulatory Changes" can be summarized as: **qualification review strictens, joint liability solidifies, data compliance advanced, content audit deepened, minor protection rigid, and tax supervision penetrates.** These six major aspects are intertwined, forming a complex compliance network. For foreign enterprises, it is no longer just a matter of "handing out money for an endorsement"; they need to systematically consider legal, tax, and data security factors. I suggest that future research focus more on the "localized adaptation" of endorsers, particularly how to balance "global brand image" with "Chinese legal requirements." This is like a double-edged sword: if used well, it can quickly boost brand awareness; if used poorly, it can seriously damage reputation and finances.
From a forward-looking perspective, I believe that as China's market supervision moves towards "credit-based regulation," the compliance record of endorsers will become transparent data. In the future, foreign enterprises may be able to query endorsers' compliance scores through the National Enterprise Credit Information Publicity System. This is a good trend, just like the "social credit system" for brand endorsements. Foreign enterprises should actively adapt to this trend, establish internal compliance databases, and include endorser data as part of risk management. Additionally, with the rise of AI and virtual idols, what regulatory sandboxes will emerge for "virtual endorsers" (such as Liu Yexi)? This is also a topic worth pondering. In short, to succeed in China's advertising market, foreign enterprises must shift from "transactional thinking" to "governance thinking" and treat endorsers as participants in the overall compliance system rather than mere spokespersons.
---**Jiaxi Tax & Finance’s Perspectives:** At Jiaxi Tax & Finance, we have been deeply involved in the registration and compliance services for foreign-invested enterprises for 14 years and have witnessed countless cases of foreign companies "falling into pitfalls" due to endorsement issues. Our view is that the core change in "Regulations on Advertising Endorsers for Foreign Enterprises in China" is the shift from "advertiser responsibility" to "ecosystem responsibility." The endorser is no longer an isolated node but a core element of the advertising compliance chain. We advise foreign enterprises to treat the compliance of endorsement contracts as part of "project management" rather than a one-time legal review. Specifically, Jiaxi provides: (1) Pre-endorsement compliance audit, including endorser background checks and contract clause review; (2) Cross-border data transfer support, including the drafting of standard contracts and impact assessments; (3) Tax payment planning, including the calculation of withholding tax and application for tax treaties; (4) Post-endorsement risk management, including emergency plan design for product recalls. We firmly believe that with the help of professional institutions, foreign enterprises can not only avoid legal risks but also leverage compliant endorsements to enhance brand trust. After all, in China, "compliance is the best marketing."
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