BEIJING — In a remarkable turnabout from the heady last decade of celebrating conspicuous wealth and luxurious new lifestyles, Beijing has banned outdoor advertising that uses certain terms celebrating opulence and high-end living.
This story first appeared in the March 23, 2011 issue of WWD. Subscribe Today.
The new policy from the Beijing Administration for Industry and Commerce was first reported in the official China Daily newspaper, which quoted a press release from March 17 about new rules taking effect April 15. The move “will target advertisements that ‘promote hedonism’ or ‘the worship of foreign-made products,’ ” the newspaper said. Thus far, it appears the actual change relates to banning the use of certain words on outdoor advertising like billboards. These include “supreme,” “royal,” “luxury” or “high class” — words frequently seen on Beijing’s multitudinous billboards.
Luxury brand companies in China downplayed the policy decision, with several managers saying it wouldn’t affect their plans for advertising or marketing, much of which is done in print and online. Those at greatest risk might be the companies that try to oversell their goods by using heavy-handed language. Potentially more worrisome for luxury brands is the unexplained statement by the Beijing administration that advertising not heavily promote foreign items.
“We almost never use display advertisements; we use magazines and the Internet to promote our products,” said Liu Jing, a marketing manager with Lan Jewelry, a high-end Chinese brand. “What’s more, in our advertisements we have never used words like ‘supreme,’ ‘royal’ or ‘high class.’”
Four other companies declined comment on the record but said they didn’t expect a hit from the new policy since their advertising tends to be more subtle. Still, this adds a new level of potential discomfort, especially with the questionable ban on “worship of foreign-made products” that the Beijing administration did not explain.
The change appears to be an attempt from the political leadership to show that China is serious about tackling one of the country’s most pressing problems: its rapidly growing wealth gap. At the same time, it’s also the world’s fastest growing market for luxury goods, passing the United States in 2009 with a $10 billion-a-year luxury goods market second only to Japan. Chinese shoppers, even those without substantial wealth, tend to be brand-obsessed and marketing often plays to that obsession.
Yet at the same time, there is growing discontent within the middle and poorer classes about the country’s massive and growing wealth divide. As the top echelons of society have gotten exponentially wealthier in recent years, wages have remained stagnant for millions of blue-collar workers, despite record-paced inflation. Since the country’s leadership is ever-vigilant about the potential for social unrest — especially with reports that there have been some attempts in certain cities in China to mimic the demonstrations that have gone on in the Middle East — it’s now turning its attention to that wealth gap.
In a signal of just how pressing the problem is, Premier Wen Jiabao brought up the growing wealth divide in his annual speech to the National People’s Congress this month. Wen said the central government is committed to increasing incomes for rural residents and other poorer people, while watching overall conditions. Even so, the Beijing advertising move was an unexpected left turn.
China Daily quoted unnamed sources as saying the move was in fact intended to tamp down on false advertising, which is rampant in the city — particularly in the real estate sector. Fines for breaking the new rules will run as high as $4,500, but there was no comment on just how they’ll be enforced.