What Happened: Chanel has been fined for inaccurate advertising of two of its products in China — Chanel Luxury Essence Cream (Light) and Chanel Shining Good Night Repairing Mask. Due to violations of the “Regulations on Cosmetics Hygiene Supervision” and the “Advertising Law of the People’s Republic of China,” the Market Supervision Administration of Jing’an District, Shanghai issued an administrative penalty of ceasing advertising and a fine of $30,500. On the product pages, the ingredients and predicted results of the two cosmetics were deemed to be inaccurate and misleading. During the investigation, it was reported that listed ingredients such as anti-freckle agents were not found and Chanel was unable to prove actions such as, “inhibiting melanin” and “fading spots.”
The Jing Take: This is not the first time Chanel has fallen foul to China’s advertising standards. In 2017, it was fined $200,000 — a substantially larger fee — by the Shanghai Huangpu District Market Supervision Administration for an issue around labelling errors that occurred in 2015. Indeed, online reactions to the fine have pointed out the irrelevance of such a minor fee. Many see it as only right that Chanel must be punished. Yet, they also know that this is barely a drop in the ocean for a brand who’s 2019 operating profit was $12.3 billion. Yes, the fine is minuscule, but the negative press and animosity it will undoubtedly generate will be far greater. Chanel is the most copied luxury brand in the counterfeit market and it is constantly battling fakes; however, these latest false claims are self-generated and a massive own goal. This telling-off could well work out to be far more costly to the brand’s reputation in the long run, especially in a market as unforgiving and competitive as China’s.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
Editor’s Note (December 4, 2020): A previous version of this article state that in 2017, Chanel was fined by the Shanghai Huangpu District Market Supervision Administration for selling fake products. This is incorrect. Chanel was fined due to an error in the labelling of its product in China, which the Administration stated as “adulterating inferior products as superior or sub-standard ones as standard.”