Blackmores was one of the companies on a list circulated by the Shanghai Administration for Industry and Commerce (AIC) that coincided with China's Consumer Rights Day last March 15.
Blackmores was fined RMB346,600 yuan (AUS$65,000) for claiming its products could treat a number of diseases.
Chinese laws state that food and vitamin companies must not claim products can prevent or treat illnesses.
Blackmores said the fine was related to marketing materials displayed at a pop-up store at Shanghai's Pudong airport in 2016, and used in international campaigns.
The company said: “At the time, there were uncertainties in the market about the new Advertising Law and we were unaware that the language used was no longer allowed,
"As soon as we were made aware of the breach we removed the materials and the online posts where they were referenced. In recognition of our swift action and compliance with the AIC’s investigation, the penalty was reduced to the lowest level according to the penalties prescribed by the Advertising Law.”
The company added the incident had led to international marketing claims coming under greater internal scrutiny.
“Blackmores takes its obligations seriously, and since the investigation has strengthened its procedures and ensures all advertising claims are subject to legal review,” said the firm.
Other companies singled out for criticism by officials were Nike and Muji.
Bad timing
While most analysts said the fine was relatively small and designed to serve as a slap on the wrists, it shows the continuing struggle overseas brands have to keep up with China’s ever-changing regulatory landscape.
It also came at a key time for Blackmores in China, when it could ill-afford reputational damage.
Last month we reported that net profits at Blackmores slumped by 41% in the first of half of the financial year, with the firm reporting reduced demand from Chinese ‘daigou’ shoppers who buy in Australia and then ship goods back to their homeland.
The firm has also been driving a new strategy to sell more products directly in China.
Blackmores CEO Christine Holgate said at the time: "The first quarter was impacted by changes to the buying patterns of Chinese exporters. The Chinese market is both complex and challenging, though it remains a very important part of our business and we are pleased with our growth."
The growth she referred to was a 92% rise in direct sales in China to $64m. However, it was not enough to offset the drop in ‘daigou’ demand.
All of which means being highlighted around Consumer Rights Day - a prominent national media event in China – is far from desirable.