Harmonious regional advertising regulation? A comparative examination of government advertising...

Advertising regulation has been widely recognized as a significant environmental factor that impacts international advertising (Clegg 2002; Daniels 1995; Duncan and Ramaprasad 1995; Erevelles et al. 2002; van Oldenborgh 1996). Heterogeneous legal conditions in local markets are often cited by

On the other hand, we are living in a fascinating age of globalization, when products, ideas, and people regularly flow across national borders. When it comes to protecting consumer interest and maintaining fair market conditions, governments around the world may face an identical set of challenges, and may consequently resort to similar regulatory responses. Thus, it is possible that countries share considerable common ground in their regulation of advertising, despite their pronounced social, economic, and political differences.

Advertising regulation takes a number of forms, ranging from laissez-faire to government regulation, with different degrees of self-regulation in between (Boddewyn 1985). To date, advertising self-regulation has received considerable attention from scholars in the field (e.g., Boddewyn 1992; Miracle and Nevett 1987; Neelankavil and Stridsberg 1980). International trade organizations have also been "coordinating efforts to establish common grounds upon which national systems of marketing self-regulation should be based" (Boddewyn 1992, p. 16). In contrast, there has been limited research to compare and explore the common ground that government regulation of advertising in different countries may share, even though scholars generally acknowledge the irreplaceable role of government regulation (Boddewyn 1985; LaBarbera 1983).

In reporting on a comparative examination of government advertising regulation in China, Hong Kong, and Taiwan, this paper aims to achieve three objectives: (1) to propose a theoretical framework for comparing government regulation in different markets; (2) to provide a comprehensive comparison of the advertising regulation systems in China, Hong Kong, and Taiwan; and (3) to identify the common ground among the three systems and explore possible ways of harmonizing regional advertising regulation in Greater China. The rest of the paper will be organized into three sections, each corresponding to one of these objectives.

GOVERNMENT ADVERTISING REGULATION: A COMPARATIVE FRAMEWORK

Determinants and Forms of Advertising Regulation

There are four levels of advertising regulation: international, regional, national, and local (Petty 1996). Understandably, national and local regulations are the primary sources of regulatory disparities between international markets. Efforts have been made by international and regional organizations to standardize advertising regulation. For instance, both the International Chamber of Commerce (ICC) and the International Advertising Association (IAA) have been actively promoting self-regulatory codes to guide advertising practice around the world (Boddewyn 1992). The European Union (EU) has passed legislation to harmonize advertising regulation among its member states (Cunningham 2000; Greer and Thompson 1985; Petty and Spink 1995).

Arguably, the European experience of standardizing advertising regulation is unique in that the EU is a supernarional sovereign entity delegated by its member states and endowed with legislative power (European Commission 2004). For this reason, its legislature can effectively rally governmental forces to push for uniform regulation in the region. As we turn our attention to the rest of the world, the question still remains: Could harmonious advertising regulation be an attainable goal for other regions where EU-like entities are nonexistent? To investigate such a question, it is necessary to take a look at the various determinants and forms of advertising regulation.

Advertising regulation closely reflects its social environment and is determined by a spectrum of social and historical forces, including culture, religion, legal tradition, and economy (Boddewyn 1982; Harker 1998; Rotzoll and Haefner 1996). The combination of these forces uniquely conditions a country's advertising regulation. Meanwhile, some other forces, such as the need for consumer protection and market fairness, are less cultural and historical in nature and may elicit similar regulatory responses from governments. Comparative studies suggest that countries tend to converge in regulating deceptive advertising, while they diverge in dealing with taste and decency issues (Boddewyn 1991; Petty 1996; Shao and Hill 1994).

The historical forces that determine the formation of advertising regulation are not static but constantly evolving: Authoritarian regimes are replaced by democratic governments; developing economies experience significant growth; planning economies join the free-market, free-trade club; and new technologies break down the barrier of space and connect people from different cultures as never before. Even cultural values change over time because of industrialization (Priem, Love, and Shaffer 2000; Tse, Belk, and Zhou 1989) and the influence of global media messages, including advertising (Chu and Ju 1993). The implications of these changes for international advertising regulation are twofold. First, to adjust to new situations and new issues, national regulations are in a constant state of flux. Second, as more countries progress toward the ideals of a free market, prosperity, and democracy, the common ground for national regulations to converge also expands.

Boddewyn (1989) identifies four sources of social control: community, market, state, and industry. Following such a model, advertising regulation assumes a variety of complementary forms, including communitarian/self-discipline, laissez-faire, regulatory, and self-regulatory. Each form of regulation has its own strengths and limitations (Boddewyn 1989; LaBarbera 1983). They are also interrelated: Communitarian values and ethics serve as the ideological compass for regulation and self-regulation; market or self-regulatory failures tend to provoke governmental measures; and the formulation and enforcement of government regulations requires participation from the community and the industry. A robust regulatory system should rely on a combination of these complementary forms for effectiveness and efficiency.

Although its effect is still open to debate (Kassarjian and Kassarjian 1988; Leen 1992; Oliver 1988), scholars generally agree that government regulation of advertising has its strengths and is indispensable, especially "in areas where code violations would be intolerable, such as consumer health and safety" (LaBarbera 1983, p. 65). A survey conducted by Davis (1994) indicates that most advertising professionals are influenced primarily by legal consideration rather than ethics when making advertising decisions. Such a finding confirms that compared with self-regulation, government regulation is more effective in eliciting compliance.

There have been efforts to compare government regulation in different countries on specific advertising issues. As part of an "acceptable advertising" framework, Harker (1998) compares the legal regulatory frameworks in Australia, Canada, New Zealand, the United Kingdom, and the United States. Shao and Hill (1994) survey the legal restrictions on television advertising for socially sensitive products in 15 different countries. Petty (1996) examines how governments around the world regulate misleading advertising. Taylor and Raymond (2000) focus on product category restrictions in Japan, Taiwan, China, and South Korea. Hoek and Sparks (2000) discuss international regulatory restrictions on tobacco promotion.

With these efforts noted, there has been a general lack of comprehensive comparative research of government regulation in different countries. A possible reason is that compared with self-regulatory codes, advertising legislation tends to be much more complex and elaborate, often interspersed among different statutes. Even if a researcher has all the necessary resources to collect the relevant data, he or she still faces the challenging task of deciding which specifics to report on and compare. Presumably, not every regulatory difference or commonality between countries holds equal significance for international advertising. In such a light, a theoretical framework is needed to guide this line of research, so that scholars can stress a similar set of important issues for meaningful comparison of government regulation between countries.

A Theoretical Framework

The theoretical framework proposed here embraces a holistic approach to advertising regulation and focuses on four aspects for comparative analysis: (1) social context, (2) general regulatory system, (3) statutory provisions, and (4) regulation enforcement (see Figure 1).

[FIGURE 1 OMITTED]

Social Contexts

Aiming to reflect the major forces that affect advertising regulation, the scheme for this section borrows from Boddewyn's model on sources of social control (1989). The need for such a section is highlighted by Shao and Hill's study (1994), which finds that countries at different stages of economic development and with different cultures (high/medium/low context) differ in their regulatory environment. By situating regulatory comparisons in the larger context, scholars can acquire a more panoramic perspective on the topic of advertising regulation (Rotzoll and Haefner 1996).

General Advertising Regulatory Systems

Different forms of advertising regulation, with their own strengths and limitations, complement each other in terms of effectiveness and efficiency. For this reason, comparisons of the general regulatory systems, particularly of the state of other forms of advertising regulation in each market, can lend scholars valuable insights into government regulations in the target countries.

Advertising Statutory Provisions

The literature on advertising regulation suggests that a number of advertising issues stand out and remain the foci of regulation around the world. These issues include deceptive and unfair advertising (Carson, Wokutch, and Cox 1985; Petty 1996; Simonson 1995; Wyckham 1996); socially sensitive products such as tobacco, alcohol, medical products, feminine hygiene products, and contraceptive products (Hoek and Sparks 2000; Jones and Donovan 2002; Shao and Hill 1994; Taylor and Raymond 2000); sex and decency in advertising (Boddewyn 1991); and advertising to vulnerable groups, especially children (Cross 2002; Enis, Spencer, and Webb 1980). Not surprisingly, most of these issues are also among the most important topics for advertising ethics research (Hyman, Tansey, and Clark 1994).

In this section, the overall restrictiveness of each system will be evaluated on a "remedies continuum" (Mazis et al. 1981), which classifies regulations into three categories, ranging from least to most restrictive: removing restraints on information flow, enhancing information flow, and restricting information flow.

The second evaluative criterion of restrictiveness checks whether a regulatory system deals with soft issues or not. Scholars contend that soft issues such as decency, taste, and social ethics, which are subjective in nature, should not be a domain for government regulation (Boddewyn 1985; LaBarbera 1983). Some critics even argue that suppressing information "for the public good" through government regulation amounts to censorship and marks a distinction between totalitarian regimes and free societies (Oliver 1988). In other words, government regulation that tackles soft issues is more restrictive in nature.

Advertising Regulation Enforcement

No discussion of advertising regulation would be complete without evaluating the effectiveness of enforcement (Boddewyn 1985; Petty 1996). Therefore, the last component of the framework covers enforcement issues such as monitoring and censorship systems, compliance rates, and punishment of violations. Such enforcement data can also provide an objective basis for comparing the effectiveness of the regulatory systems concerned.

In summary, the framework proposed here strives to provide a comprehensive and yet practical road map for comparative analysis of government advertising regulations. In the following section, this framework will be applied to compare governmental advertising regulation in China, Hong Kong, and Taiwan.

COMPARING GOVERNMENT ADVERTISING REGULATIONS IN CHINA, HONG KONG, AND TAIWAN

The Social Contexts of the Three Markets

The People's Republic of China, Hong Kong, and Taiwan are part of "Greater China," a geopolitical concept that refers to Chinese societies in East Asia (Shambaugh 1993). These markets have strong cultural and economic ties, and yet, due to historical reasons, they have followed a different trajectory of development in the last 150 years (van Kemenade 1998). As a result, the social contexts of their advertising regulations do share some commonalities, but they also differ considerably.

The majority of the populations of China, Hong Kong, and Taiwan are ethnic Chinese, with written Chinese as their common language and the mandarin dialect gaining in popularity (U.S. State Department 2004). Predominantly influenced by Confucianism and Buddhism, people in these societies inherit a similar repertoire of cultural values and customs (Hartland-Thunberg 1990).

The three markets differ on some economic and political dimensions (see Table 1). Today, Hong Kong and Taiwan are affluent and democratic societies with a free market economy. Notably, a former colony of Great Britain that is largely influenced by the British political system (Liu 1997), Hong Kong operates on the philosophy of "maximum help and minimum interference" for business (Hong Kong Government 2004) and has been long recognized as one of the world's most open and dynamic economies (U.S. State Department 2004). Taiwan started economic and political reforms in the 1980s and emerged as a free and democratic society in a short period (van Kemenade 1998). In comparison, the Chinese market is much larger, poorer, and less democratic. While experimenting with market mechanisms, it is still struggling with its socialist legacy (Yang 2000).

The development of advertising in each of the three markets generally reflects the economic environment. Chinese advertising has had a late start (Chu 1982), but has experienced phenomenal growth during the last two decades, and it now ranks as the second biggest advertising market in Asia, trailing immediately behind Japan (Flagg 2000). However, when it comes to per capita advertising spending, Hong Kong is still leading the game while China lags far behind (see Figure 2). This is because Hong Kong has a well-developed advertising industry and is considered "the advertising capital of Asia" (Ha 1998, p. 1). Taiwan's advertising industry has undergone steady growth since the 1980s (Wang et al. 1997), and nowadays, multinational advertising agencies hold a lion's share of the market (Liu 2002).

[FIGURE 2 OMITTED]

To a great extent, each of the three markets is located at a specific stage on the continuum of economic development, with Hong Kong as the most developed of the three, China the least, and Taiwan somewhere in between. Consequently, many of their differences are closely associated with their distinct stages of development. Empirical research on values, business ethics, and moral reasoning largely supports such an observation (Chiu et al. 1998; Lee et al. 1994; Tai and Tam 1997; Tse, Belk, and Zhou 1989; Westwood and Lok 2003). It is possible that when the economic gaps between these three markets shrink, many of their differences may become negligible or even disappear.

The General Advertising Regulatory Systems of the Three Markets

Although general advertising regulations in China, Hong Kong, and Taiwan are distinct systems (see Table 2), they share a fundamental commonality in that governmental regulation is the primary form in each system. Nominal self-regulatory organizations do exist in the three markets, but they are either closely affiliated with the government or play a rather minor role in the system. The China Advertising Association (CAA), the only national advertising trade organization in China, is a quasi-governmental entity, as it is funded by the state, and its top officials are also government regulators at the State Administration of Industry and Commerce (SAIC). In addition to educating Chinese advertising professionals about advertising laws and regulations, the CAA offers preclearance services to advertisers and agencies for a fee. The CAA has local chapters around the country (China Advertising Association 2001). The China Consumers' Association (CCA) is also affiliated with the SAIC, and serves as the main consumer protection agency in China.

Unlike their Chinese counterparts, self-regulatory agencies in Hong Kong and Taiwan are independent trade organizations. Nevertheless, their role in advertising regulation is not extensive. The Association of Accredited Advertising Agents of Hong Kong (Hong Kong 4As 2004), the primary body for advertising self-regulation in Hong Kong, regulates its 25 members, which are all leading agencies in the market (Hong Kong 4As 2004). The Consumer Council of Hong Kong handles a range of consumer protection issues, but, strictly speaking, it is not a self-regulatory body, as it is funded by and its officials are appointed by the government (Hong Kong Consumer Council 2004). The Taipei Association of Advertising Agencies and Consumer's Foundation contribute to advertising self-regulation in Taiwan, but are limited in the scope of their reach and activities (Boddewyn 1992).

A plausible explanation for the limited role of self-regulation in the three markets is that political democracy in these societies either has a short history or is still nonexistent. It was not until the late 1980s that the departing British government implemented a democratic election system in Hong Kong (Liu 1997), and that the Taiwanese government lifted its martial law and promoted democracy on the island (U.S. State Department 2004). Today, Chinese government is still one-party and authoritarian in nature. Without a hospitable climate of political freedom and democracy, it is difficult for autonomous private organizations to compete with the state in the arena of regulation.

Advertising Statutory Provisions in the Three Markets

Deceptive and Unfair Advertising

Although none of China's advertising statutes provides a definition of deceptive advertising, the Chinese authority abides by the "misleading" principle. (1) According to a Chinese regulator, an ad would be considered false and deceptive if it misleads the consumer about the advertised product or service and leads the consumer to have an understanding of the product or service that is different from the real conditions of the product or service (Liu 1999). Chinese advertising regulations interpret unfair competition in advertising the same way as deceptive advertising because, as the Chinese government contends, advertising that misleads the consumer inevitably harms the interest of competitors (Jiang 1997). To curb deceptive advertising and unfair competition, Chinese statutes ban or restrain the use of some common advertising techniques (see Table 3).

Advertising legislation in Hong Kong enforces the "truthful" principle and provides that no advertisement may contain any descriptions, claims, or illustrations that explicitly or by implication mislead consumers about the product or service advertised. It also prohibits advertisers from disparaging competitors and from imitating unreasonably the name or advertising slogans of competitors (Hong Kong Broadcasting Authority 2004).

The guidelines issued by the Fair Trade Commission of Taiwan in 1995 define false representation as "any information or communication which misrepresents the truth, becomes unacceptable to an adequate number of [the] general public, and which is sufficient to cause the general public to reach erroneous perception or decision," and misleading representation as "any representation or symbol, whether true or false, which is sufficient to cause an adequate number of the general public to reach erroneous perception or decision" (Liaw 1997, pp. 56-57). To combat deceptive advertising, the Taiwanese government has banned or restrained some potentially misleading advertising claims (see Table 3).

In comparison, the three regulatory systems' definitions of deceptive advertising are very similar. However, their primary means to combat false and misleading advertising differ considerably. The Chinese system relies essentially on restricting information flow through categorical bans. The Hong Kong system tends to encourage information flow through requirement of substantiation except in the case of medical and weight-loss products. The Taiwanese system lies somewhere in the middle: It is more restrictive than Hong Kong's but less restrictive than the Chinese system.

Socially Sensitive Products

Specific statutes exist in China for the purpose of regulating advertising of socially sensitive products. For instance, advertising for medical products and services is governed by a number of regulations, including Methods in the Administration of Advertising for Medicine (Chinese State Administration of Industry and Commerce 1992b), Methods in the Administration of Advertising for Medical Equipment (Chinese State Administration of Industry and Commerce 1992a), and Methods in the Administration of Advertising for Medical Services (Chinese State Administration of Industry and Commerce 1993). Provisional Methods in the Administration of Tobacco Advertising (Chinese State Administration of Industry and Commerce 1995b) and Methods in the Administration of Advertising for Alcohol (Chinese State Administration of Industry and Commerce 1995a) regulate tobacco and alcohol advertising, respectively.

In Hong Kong, provisions on advertising medical products and services can be found in the Undesirable Medical Advertisements Ordinance (Hong Kong Department of Justice 1997b), as well as in the Generic Code of Practice (Hong Kong Broadcasting Authority 2004) issued by the Broadcasting Authority. The Smoking (Public Health) Ordinance (Hong Kong Department of Justice 1997a) and the Generic Code of Practice include regulations on tobacco and alcohol advertising.

Taiwan's Medicine Law (Taiwanese Legislative Council 2004) and Detailed Methods in the Implementation of Medicine Law (Taiwanese Department of Health 2002) stipulate provisions on advertising for medicine. Regulations on tobacco and alcohol advertising are provided by the Law on the Administration of Tobacco and Alcoholic Products (Taiwanese Executive Council 2004) and the Law on Preventing Tobacco Dangers (Taiwanese Department of Health 1999).

Apparently, there are differences between the three systems when regulating advertising of socially sensitive products (see Table 4). For instance, China and Taiwan subject medical advertising to mandatory government certification and preclearance programs, whereas such programs do not exist in Hong Kong. Yet, overall, the three systems are equally restrictive in two ways. First, many of the provisions, especially those governing medical advertising, tend to restrict information flow. Second, the three systems invariably incorporate provisions governing taste and decency issues.

It seems that the restrictiveness of the three systems leaves advertisers of medical products few choices of persuasion. As hard-sell techniques such as testimonials, comparisons, and fear appeals are largely prohibited, advertisers have to turn to soft-sell techniques for help. For this reason, Lin (2001) finds that more Chinese medical advertisements use a soft-sell approach than is the case in the United States.

Sex and Decency in Advertising

Advertising statutes in the three markets all contain provisions on sex and decency issues. China's Advertising Law (the People's Congress of China 1994) bans advertising that contains pornographic, violent, superstitious, terrifying, or disgusting content. Similarly, Hong Kong statutes require that advertising matter comply with standards of decency and that it is presented with courtesy and good taste (Hong Kong Broadcasting Authority 2004). The Taiwanese government also rules that advertising should not contain superstitious, indecent, violent, or pornographic content; nor should it depict human bodies or corpses inappropriately, or resort to sexual appeals or fear appeals to persuade. Indeed, Taiwanese regulations even prohibit advertising from using sharp sounds or harsh, shaky lighting (Taiwanese Executive Council 1999).

Advertising Targeted at Vulnerable Groups

The three regulatory systems invariably provide extensive and very similar provisions to regulate advertising targeted at children. To protect children physically, children's advertising is not allowed to depict dangerous activities and unhealthy behaviors. To protect children mentally, advertisers are prohibited from exploiting children's credulity or loyalty to their favorite teachers, artists, and celebrities. To protect children morally, advertisements should not depict children with bad manners, make a child feel superior for owning a product, instill bad values in children, or interfere with parents' education of their children. Advertisements inappropriate for children are banned from children's programs, and child actors are prohibited from playing in advertisements of products unsuitable for children's consumption.

Advertising Regulation Enforcement in the Three Markets

Advertisers of products such as medicine, medical equipment, agricultural chemicals, and veterinary medicine are required by Chinese law to obtain advertising certification from the government and to go through governmental censorship before their advertisements go to the media. Complaints are handled by the SAIC, the CCA, and their local branches. According to statistics from the Chinese government, China punished 37,707 cases of illegal advertising in 1998, an increase of 18.7% from 1997 ("General Status" 1999). The figure jumped by 36.56% to 51,494 in 1999 (Wang 1999), and to 66, 824 in 2000 ("Statistics on the Status of Illegal Advertising Cases" 2002).

In Hong Kong, both the Complaints Committee of the Broadcasting Authority and the Consumer Council are responsible for investigating advertising complaints (Martin 1996). Given Hong Kong's laissez-faire approach to advertising regulation, regulation compliance has been problematic. According to a massive survey conducted by the Consumer Council between 1998 and 1999, 58 out of 256 television advertisements (22.7%) and 913 out of 1,777 print ads (51.4%) were found to contain questionable claims (Hong Kong Consumer Council 1999).

In Taiwan, radio and television stations are required to send specific categories of advertisements to the News Bureau for government censorship. Several government agencies handle complaints based on their specific jurisdiction. Complaints against false advertising are also regularly filed by competitors to the Fair Trade Commission. According to the Department of Health, between March and July 2001, 1,015 cases of complaints against advertising for cosmetics, food, and medicine were filed by consumers, half of which were later found to be in violation of the relevant regulations ("Health Department Reports Success in Fight Against Fraud" 2001).

Based on the statistics, it seems that China has a much higher number of advertising complaints than Hong Kong or Taiwan. A couple of reasons account for this phenomenon. First, the Chinese market is much larger and more complex. Second, the free market system in China is still in the formative stage, and the regulatory power of the market is not in full swing yet. Third, the Chinese regulatory system is more complex and constantly changing, regularly churning out new regulations. Consequently, it is more likely for advertisers to violate regulations out of ignorance.

The systems in Hong Kong and Taiwan are equally confronted with the issue of ineffective enforcement. In such a context, the Hong Kong authority sees the urgent need to reform its regulation system and improve regulation enforcement (Hong Kong Consumer Council 1999). The Taiwanese authority attributes the poor compliance by advertisers to the fact that local government agencies, which are responsible for monitoring and inspecting advertisements, lack the necessary human resources to effectively prescreen advertisements before they go to the media ("Health Department Reports Success in Fight Against Fraud" 2001). To improve its enforcement of advertising regulations, the Taiwanese government encourages the participation of the public in the monitoring process by financially rewarding consumers who report illegal advertisements.

To an outside observer, the roots of ineffective enforcement in the three markets may lie in the fact that self-regulation plays a minor role in the three systems. Government regulation has its limitations. Notably, it takes enormous resources to effectively enforce a complex governmental regulatory system, and few governments have an adequate budget to do so (Wyckham 1996). In such a context, ineffective enforcement becomes a rather natural outcome. To achieve effectiveness and efficiency, the solution is to expand the complementary roles of other forms of regulation in the system, including communitarian regulation and self-regulation.

In summary, this section has applied the theoretical framework developed previously and has compared governmental advertising regulations in China, Hong Kong, and Taiwan on a number of dimensions. The comparison shows that the three systems contain both similarities and differences. Now the question is, Is there hope for harmonious advertising regulation in the region? The next section will discuss this question.

HARMONIZING REGIONAL ADVERTISING REGULATION

Governmental advertising regulations in China, Hong Kong, and Taiwan embrace the same essential principles: the "truthful" principle and the "decent and ethical" principle. As a result, they share considerable common ground.

In enforcing the "truthful" principle, the three systems incorporate similar interpretations of deceptive advertising and take a tough stance against potentially misleading advertising techniques, especially in the case of medical products and services, where false advertising may seriously affect the consumer's health and well-being. The three systems all implement vigorous regulation of socially sensitive products such as medical products and tobacco, alcohol, feminine hygiene, and contraceptive products by banning or restraining their advertising in the media. To promote the "decent and ethical" principle, the three systems all include provisions on taste and decency issues, which closely reflect Chinese culture's preoccupation with morality and propriety (Weber 1964). This is especially true in the case of regulations on children's advertising, which is required to teach children respect for elders, good manners, and moral behavior.

The three systems contain a similar set of problems. They are very restrictive to the extent that they not only impose vigorous regulation on hard issues, but also tackle soft issues. Their approach to combating deceptive advertising often consists of restricting information flow rather than enhancing it. Their provisions on taste and decency are vague and open to subjective interpretation. Finally, their enforcement is equally problematic due to the weak role of advertising self-regulation.

In terms of overall stringency, China ranks first in being most stringent, Taiwan ranks second, and Hong Kong, third. Such a ranking closely echoes the economic and political contexts of the three markets. Hong Kong is a developed free market with a long history of laissez-faire government policy. In contrast, China and Taiwan have a much shorter history of having a market economy. Meanwhile, China inherits from its Communist regime, and Taiwan from its Nationalist government, heavy political baggage, the residue of which is still discernable in their respective advertising regulations. Thus, some of the differences between the three regulatory systems are historical in nature and will diminish as their economic and political conditions become more homogeneous.

Given the substantial similarities between the three systems, there are good reasons to believe that harmonizing advertising regulation in Greater China is an attainable goal. First of all, since Chinese culture underpins these societies, there is solid common ground where the community, government regulators, and advertising professionals in the region can meet and reach consensus in developing general ethical guidelines on advertising practices.

There have been large-scale flows of goods, capital, and talent, as well as cultural interaction, between the three markets ("The Chinese Economic Area" 1995; Cui 1998). For instance, the development of advertising in Hong Kong has been significantly stimulated by businesses from mainland China (Martin 1996). The new status of Hong Kong as a special administrative region of China since 1997 further cements the strong economic ties between the two markets. Meanwhile, investors from Hong Kong and Taiwan contributed more than 70% of China's realized foreign capital inflows between 1982 and 1994 (Hsing 1998). As businesspeople from these three markets interact and cooperate on a regular basis, they inevitably influence each other on business ethics and practices. Therefore, technical and economic motivations exist for both businesses and governments to push for standardized advertising regulation in the region.

Countries borrow from each other's regulatory experience, and developing countries are more likely to learn from advanced regulatory systems (Boddewyn 1988; Petty 1996). This holds true for markets in Greater China, where in their searches for ways to improve their regulation systems, governments have been actively studying each other's regulatory practices (Chen 1997; Hong Kong Consumer Council 1999; Zhao and Lin 2001). In this light, the idea of harmonizing advertising regulation in the region would not be simply brushed aside by these governments as something strange and unrealistic.

In standardizing advertising regulation among its member states, the EU focuses on a minimal set of common rules concerning some key advertising issues, while allowing "member states to enforce more stringent laws on broadcasts that will not traverse national boundaries" (Cunningham 2000, p. 81). Such a strategy may be equally applicable in Greater China, as the three regulatory systems compared here already follow similar guidelines and regulate a similar set of advertising issues.

Indisputably, efforts to harmonize advertising regulation in Greater China will encounter a number of hurdles. For instance, political antagonism between China and Taiwan will prevent the two governments from officially cooperating with each other on the issue. Regulations by local governments in China and Taiwan also make the task more complicated and difficult. Finally, the fact that governments often use regulations as trade barriers may potentially hinder efforts to achieve uniform advertising regulation in the region.

The most effective way to overcome these hurdles is to emphasize and promote the role of advertising self-regulation in the region. As mentioned earlier, advertising regulations in China, Hong Kong, and Taiwan are invariably dominated by government regulation and lack efficiency. Advertising self-regulation relies on the internalization of ethics by advertising practitioners and can provide more flexible, timely, and efficient solutions to routine regulatory issues (Boddewyn 1985; Labarbera 1983).

CONCLUSION

In developing and applying a comparative framework to government advertising regulations in China, Hong Kong, and Taiwan, this paper explores the feasibility of harmonizing regional advertising regulation in Greater China. Given the social contexts of the three systems and their commonalities, it seems that harmonization of advertising regulation is an attainable goal for the region.

Harmonizing regional advertising regulation is not a brand-new idea. The EU has been piloting such efforts for a couple of decades and with considerable success (Cunningham 2000). The findings of this paper on advertising regulation in Greater China further confirm the feasibility of such an idea. Theoretically, the Middle East and Latin America are likely candidates for implementing harmonious regional regulation. Future research may want to compare national advertising regulations in each of these regions to see if they share adequate common ground for standardization.

The inconsistent nature of national regulations has often been cited as an obstacle to standardized international advertising (Teinowitz 2001). In such a context, the benefits of harmonious advertising regulation are obvious as well as enormous: Regulation compliance would be simplified and improved, enforcement costs would be reduced, and a standardized advertising campaign would be more feasible than ever.

In the end, where a person stands on the issue of international regulation may depend on whether he or she is a pessimist or an optimist (Boddewyn 1988). Pessimists may use specific examples from local regulations to argue against harmonized regional advertising regulation, contending that cultural, social, and political gaps between countries are too huge to bridge.

Optimists see that in the era of globalization, governments in different countries face similar challenges, focus on an identical set of products and issues, and consequently, share considerable common ground in their advertising regulation. This common ground can serve as the starting point for a push toward harmonious advertising regulation across national borders.

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NOTE

(1.) A database of China's major advertising statutes and regulations is available at www.a.com.cn/cn/hygl/index0.htm. A bilingual database of Hong Kong statutes is available at www.justice .gov.hk/eng/index.htm. The Taiwanese National Legal Documents Database is available at http://law.moj.gov.tw.

Zhihong Gao (Ph.D., University of Illinois at Urbana-Champaign) is an assistant professor of marketing, Marketing Department, Rider University.

TABLE 1
Economic and Political Contexts of China, Hong Kong, and Taiwan

Market                         China

Population (2002)           1.3 billion
Economy                     Progressing toward free market
GDP (current U.S.$, 2002)   $1.4 trillion
GDP per capita (current     $1,100
  US$, 2003)
Country classification      Lower-middle income
Political system            One-party authoritarian regime
Freedom of speech           Guaranteed by constitution
                              but ignored in practice

Market                       Hong Kong        Taiwan

Population (2002)           6.8 million    22.6 million
Economy                     Free market    Free market
GDP (current U.S.$, 2002)   $163 billion   $296 billion
GDP per capita (current     $22,618        $13,318
  US$, 2003)
Country classification      High income    High income
Political system            Pluralistic    Multiparty
                              democracy      democracy
Freedom of speech           Guaranteed     Guaranteed

Sources: U.S. State Department (2004); United Nations (2004).

Note: GDP = gross domestic product.

TABLE 2
General Advertising Regulatory Systems in China, Hong Kong, and Taiwan

Market                          China

Legal tradition         Civil law
General advertising     Advertising Law of 1994;
  law                     Regulations of 1987
Specific regulations    Advertising statutes on
                          specific issues
Primary government      State Administration of
  regulatory agency       Industry and Commerce
Involvement of other    Yes
  government agencies
Consumer organization   China Consumers Association
Self-regulatory         China Advertising Association
  agency

Market                        Hong Kong                  Taiwan

Legal tradition         Common law               Civil law
General advertising
  law                   n.a.                     n.a.
Specific regulations    Interspersed among       Interspersed among
                          chapters of              specific statutes
                          statutory laws
Primary government      Broadcasting Authority   Government Information
  regulatory agency                                Office
Involvement of other    Yes                      Yes
  government agencies
Consumer organization   Consumer Council         Consumer's Foundation
                          Consumers'
                          Association
Self-regulatory         Association of           Taipei Association of
  agency                  Accredited               Advertising Agencies
                          Advertising Agents
                          of Hong Kong

Note: n.a. = not available.

TABLE 3
Regulations on Advertising Presentations
and Claims in China, Hong Kong, and Taiwan

Claim/market                  China

Comparative            Banned.
  advertising
Exaggerated claims     Banned.
Cure rates or          Banned.
  guaranteed
  effectiveness
Purchase rewards       Banned in the case of
                         medical products.
Testimonials           Banned in the case of medical,
                         cosmetic, and special
                         food products.
News-format            Banned.
  advertising
Substantiation         Required for statistics,
                         quotations, research results,
                         and award-winning claims.

Claim/market                Hong Kong                Taiwan

Comparative            Banned for weight-     Misleading
  advertising            loss products.         comparative
                                                advertising
                                                banned.
Exaggerated claims     Banned in the          Banned.
                         case of medical
                         products; need to
                         be substantiated
                         in other cases.
Cure rates or          Restrained.            Banned.
  guaranteed
  effectiveness
Purchase rewards       Tobacco and            Banned in the
                         alcoholic products     case of medical
                         should not be used     products.
                         as prizes.
Testimonials           Banned in the          Banned in the
                         case of medical        case of medical
                         products;              products.
                         restrained in
                         the case of
                         weight-loss
                         products.
News-format            Needs to be            Required to be
  advertising            identifiable           differentiated
                         or flagged as          from programs;
                         advertising.           banned in the
                                                case of medical
                                                products.
Substantiation         Required for           n.a.
                         professional
                         advice or
                         recommendations,
                         nutritional claims
                         about food.

Note: n.a. = not available.

TABLE 4
Statutory Provisions on Advertising Socially
Sensitive Products in China, Hong Kong, and Taiwan

Markets                                   China

Advertising for        * Requires government certification
  medical products       and censorship.
  and services         * Advertising for prescription drugs
                         banned in the mass media.
                       * Testimonials, comparisons, fear appeals,
                         puffery, and statistics are banned.
                       * Advertising for some drugs and
                         treatment of some diseases
                         are banned.
                       * Advertising for medical services
                         should follow a standard format.

Advertising for        * Banned in the mass media
  tobacco products       except billboards and
                         the Internet.
                       * Should not contain images of
                         smoking or underage people.

Advertising for        * Tightly regulated in the
  alcoholic products     broadcast media.
                       * No advertising of alcoholic beverages
                         between children's programs.

Advertising for        * Advertising for feminine hygiene
  personal products      products banned during meal times;
                         advertising for most sex-related products
                         banned, except government-approved
                         contraceptive products after 10:30 P.M.

Markets                                 Hong Kong

Advertising for        * Advertising for prescription
  medical products       drugs are banned.
  and services         * Testimonials by patients,
                         dramatization of ailments,
                         and offensive descriptions
                         are banned.
                       * Testimonials by professionals
                         need to be substantiated.
                       * Advertising for treatment of many
                         diseases and conditions
                         are banned.

Advertising for        * Banned in all mass media.
  tobacco products

Advertising for        * Illegal between 4:00 P.M. and
  alcoholic products     8:00 P.M. in the broadcast media.
                       * No advertising of alcoholic beverages
                         between or in close proximity
                         of children's programs.

Advertising for        * Should be restrained and in
  personal products      good taste.

                       * Should not be broadcast in proximity
                         of children's programs.

Markets                                  Taiwan

Advertising for        * Requires government
  medical products       certification and censorship.
  and services         * Advertising for prescription
                         drugs banned in the
                         mass media.
                       * Testimonials, claims of
                         guaranteed cure or
                         effectiveness, news or interview
                         format, over dramatization of
                         symptoms, purchase rewards,
                         and question-answer format
                         are banned.
                       * Advertising for treatment
                         of some diseases and
                         conditions are banned.
                       * Advertising for medical services
                         should follow a standard format.

Advertising for        * Banned in the mass media
  tobacco products       except in magazines targeting
                         readers 18 years or older.

Advertising for        * Regulated.
  alcoholic products
                       * Required to contain warning that
                         "excessive drinking harms health."
                       * No advertising of alcoholic
                         beverages between children's
                         programs.

Advertising for        * Should not employ real people,
  personal products      models, or child actors.