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Chinese regulator issues advertising fine to multinational company

Proctor & Gamble has been fined 6 million RMB (US$958,000) by a Chinese regulator for false advertising of its Crest toothpaste.12 Mar 2015

The Shanghai Municipal Administration of Industry and Commerce said the claims made in an advert were overstated, and digitally altered images made teeth look whiter, the Financial Times said.   

The television advert featured Taiwanese actor and singer Dee Hsu, known as 'Little S'. It claimed that teeth could be whitened in one day, the South China Morning Post said.

Earlier this year a survey by the American Chambers of Commerce found that US firms feel foreign businesses are being hindered by the Chinese authorities in a way that they haven't before.

Fifty-seven percent respondents said they believed that foreign firms were being scrutinised under China's pricing, anti-monopoly and anti-corruption campaigns, and 65% of these respondents expected this to have a negative impact on their own business.

"If it is true that a toothpaste manufacturer falsified its advertising by digitally enhancing the images used as to the whitening powers of its product, then it does not deserve our sympathy. However, there does seem to be a trend towards bashing foreign businesses," said Peter Bullock, a Hong Kong-based lawyer with Pinsent Masons, the law firm behind Out-Law.com.

"Last autumn’s story about McDonalds is a case in point. McDonalds reportedly continued to use a supplier of meat products in China after the supplier was found to have used tainted or expired meat products, on the basis that the supplier was nonetheless more reliable than local alternatives," said Bullock. "Arguably, again if this reporting is true, McDonalds faced a difficult choice and arguably jumped the wrong way.McDonalds has since faced similar problems in Russia, which it puts down to part of the trade war resulting from Russia’s incursion into the Ukraine. It seems to be a part of the political risk run by identifiably western brands in these straitened times."

In February, US chipmaker Qualcomm was fined US$975 million after a Chinese anti-trust investigation into its patent licensing. The fine was the largest in China's corporate history, the BBC reported at the time

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