A recent piece of legislation will have a lasting effect on the China luxury advertising industry: China has banned advertisements for luxury products on national radio and television channels.

This comes just after the Chinese new year when gift giving is very common– specifically giving expensive luxury gifts to government officials. This seems part of the new leadership’s attempt to curb corruption by making luxury items less visible.

According to China’s television watchdog, the State Administration of Radio, Film and Television (SARFT), such ads had “publicized incorrect values and helped create a bad social ethos.” China’s Global Times said that broadcasters have been ordered to stop running adverts that promote gift-giving, which is sometimes used to gain favour with officials.

The ban includes commercials for high-end watches, gold coins and rare stamps. Share prices of Burberry, LVMH, Richemont and Chow Tai Fook, the world’s largest jewelry marker, all fell after Beijing announced the ban.

Ad agencies have been asked to change ads that do not meet the rule. “Unqualified advertisements will be stopped from being broadcast until they are modified”, a member of the advertising department of Zhejiang Satellite Television told the Global Times.

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We now add another complication to advertising in China. Yet, in 2012, China surpassed Japan as the world’s largest luxury market, so there is certainly still demand that will not simply forget those diamond encrusted watch faces. By 2015, McKinsey & Co. have predicted China’s luxury market would account for one-fifth of global sales with a value of $27 billion.

Read more on the ban: from the Global Times here. From CNN here.

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