China's Ad Business Faces a Crackdown

"Hedonism, lavishness and the worship of foreign things" won't be tolerated. Nor will promoting "aristocratic lifestyles."

A new ban on these themes in outdoor advertising takes effect on Apr. 15 in Beijing, according to an announcement on the website of the city's industry and commerce bureau. The restrictions are likely to be rolled out in cities across China as part of what could prove to be a nationwide crackdown on conspicuous consumption, says Shanghai-based Jim Liu, managing partner at outdoor advertising agency Kinetic China.

Why the new Puritanism? China is the world's second-largest luxury goods market and is on track to pass Japan as No. 1 by 2015, predicted China Commerce Minister Chen Deming on Mar. 7. Sales of Ferraris grew 50 percent last year. Lamborghini sales tripled, while sales of Louis Vuitton handbags, Hermès scarves, and Omega watches keep growing rapidly. The retail value of China's luxury market could more than double in five years to $27 billion, McKinsey wrote in a Mar. 8 report.

Although the Chinese love luxury, officials value social stability more. "We are keenly aware that we still have a serious problem in that our development is not yet well balanced, coordinated, or sustainable," Premier Wen Jiabao told delegates to the National People's Congress on Mar. 5. China's Gini coefficient, a measure of income distribution, has risen from 0.3 a quarter century ago to nearly 0.5 today, a level commonly cited as socially destabilizing, according to Li Shi, a professor at the School of Economics and Business at Beijing Normal University.

If social unrest looks more likely, it makes sense to mute celebrations of wealth. Luxury ads are an easy target, so media agencies are scrambling to review their copy. Words such as "imperial" or "royal," often used by sellers of luxury villas, ad copy suggesting "lavishness" or "premium" used by some high-end vehicle makers, and any phrase suggesting a brand is No. 1 are all potential problems.

As part of China's tightly regulated media business, ad strictures already block everything from pharmaceutical companies using doctors (or actors appearing as medical staff) in their jingles to too-overt use of the Statue of Liberty, says Charley Kan, Beijing-based national creative director for media agency MEC Access China. Beijing even has a ban on companies using the phrase zhongyang—literally "central." Pretty inoffensive—except that zhongyang is shorthand for top leaders or the central government, says Yi Caigen, Beijing-based marketing and sales department deputy head at property developer HKI China Land.

Yi isn't that worried. Unlike smaller real estate firms, he says, "We don't need to say we are the best or No. 1. We have a reputation we can stand on." Still, HKI is making changes. Use of the word huang, or royal, may stop. Traditional characters on billboards for Yujintai, Beijing's most expensive luxury residence, will be dropped. Such characters, with elaborate script, evoke the pre-revolutionary past and are frowned on. Showiness can arouse popular resentment, particularly among China's outspoken netizens, says Yi. "The voice of the people is getting stronger and stronger," he says. "And when the government hears from them, it has to act."

The bottom line: Chinese officials want to play down the glaring differences between China's haves and have-nots. Luxury ads will soon be tamped down.

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