SHANGHAI, Sep. 25, 2009 (PRNewswire-Asia-FirstCall) -- Acorn International, Inc. (NYSE: ATV) ("Acorn International" or the "Company"), a leading integrated multi-platform marketing company in China engaged in developing, promoting and selling consumer products and services through an extensive distribution network, today announced that new industry regulations from the State Administration of Radio Film and Television ("SARFT") will impose stricter limitations on TV direct sales programs in China.
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On September 10, 2009, SARFT issued a circular to be implemented on January 1, 2010 to standardize regulation of TV direct sales programs in China. The SARFT circular describes their policies as aiming to monitor product selection, ensure product quality, and maximize customer satisfaction. The new regulations impacting the TV direct sales and home shopping industry include the following rules that may have a material impact on Acorn International's business:
1. All infomercials will be classified and regulated under the same
manners as TV commercials. Advertising airtime is limited to 12
minutes per hour, and 18 minutes total between 7:00 p.m. and 9:00 p.m.
Satellite channels are not allowed to broadcast infomercials programs
between 6:00 p.m. and midnight. Infomercials are banned on news
channels, international channels and home shopping channels;
2. All infomercials shall clearly identify the advertisers and guarantee
"unconditional return" after certain days of sales and "payment upon
product inspection";
3. The qualified infomercials companies must have (i) registered capital
above CNY10 million; (ii) regular operation offices; (iii) call center
with more than 100 seats, an established logistic and payment
settlement system; (iv) well-established after market, claims systems;
(v) no fraudulent records in the past 3 years; and
4. Encourage industry association or third-party mediators to establish
"Quality Assurance Fund" to protect consumer interests.
In August 2006, SARFT prohibited certain product categories, including medicines, medical appliances, diet and breast enhancement medications and height enhancement medications or devices from TV advertising.
According to research conducted by China University of Political Science and Law, 97% of fraudulent commercials in China are presented by TV shopping companies, of which only 10% are licensed to sell products through infomercials.
