Policy Statement & Submission

Our Ref : 51/WKC/387
10 November 1999


Mrs Pamela Chan
Chief Executive
Consumer Council
22/F K Wah Centre
191 Java Road North Point
Hong Kong


Dear Mrs Chan

Self Regulation of Misleading Advertising

Thank you for inviting the Chamber to comment on the subject of misleading advertising. We have consulted our members including members of the Chamber's service policy think tank the Hong Kong Coalition of Service Industries, and our views are set out as follows.

We understand the concern over misleading advertising. Indeed, misleading advertising hurts not only consumers but legitimate traders as well. Having said that, it is our view that the scale of the problem of misleading advertising should not be exaggerated. We maintain that the most important principle in consumer protection must be consumer sophistication - at the end of the day, caveat emptor is the rule. It would not be in the interest of the consumer or the economy as a whole to over-regulate the trader or over-protect the consumer.

With that principle in mind, therefore, we would support a regulatory regime that is minimalist in nature and that emphasises on industry self-regulation, supported by more consumer education.

With regard to misleading advertising, we believe it important to make a distinction between, on the one hand, the service of advertising, and on the other, the goods or service which is the subject of the misleading advertisement. While it is important for Hong Kong, as a world-class business centre, to ensure that the standard of our advertising industry will always be maintained at the highest level, the consumer will be more concerned with the goods or services being advertised, advertisements being merely the means of informing them of the goods or services in question.

Professional advertising is an important high-value business service that, together with other business and professional services, reflects Hong Kong's character as a leading service centre in Asia. Appropriate regulation of the industry will help ensure top quality services of the highest standards. Because of the nature of the industry as a business-oriented professional service which emphasises on creativity and vitality, we believe the main force of regulation should be the market, that is, the business community which is the user of the service, rather than the consumer. The regulatory regime should therefore be one in which market forces are allowed to prevail to the maximum extent. In other words, a self-regulatory regime, through a code of ethics administered by the advertising agency industry itself, would be the most appropriate. It will have the advantage of regulating not just misleading information but also other aspects such as taste, culture, discrimination, decency, etc. Since these are all difficult to define, market forces, rather than legalistic definitions, will prove to be the most effective sanction of good-quality and high standards.

With regard to the goods or services which are the subject of misleading advertisements, we appreciate the need for a higher level of regulation to protect the consumer. However, we would point out that in many instances misleading advertisements are the works not of the professional advertising service sector but of vendors themselves. Hence even the best regulatory regime of the advertising agencies industry might not have any effect on such misleading advertising. The focus of regulation should therefore be more directly on the goods and services themselves, rather than on advertising as a creative information service.

As to the mode of regulation, our view is that the range and diversity of goods and services would render it impractical to establish any all-embracing legislation to protect the consumer from misleading information. Rather, the strengthening of the existing legislation would be much more practical. We would therefore support Option One of your consultation paper which focuses on already existing laws such as the ordinances on Trade Description and Unconscionable Contracts.

I hope you will find our comments useful. The Chamber shares the same interest as the Consumer Council in combating misleading advertising and we will be more than happy to continue the dialogue with the Council on this subject.



Yours sincerely



Dr Eden Woon
Director