China's top broadcasting watchdog has banned the TV shopping programs of 19 companies from screens after they were found to have less registered capital than the minimum amount required for such programs.
The registered capital of those companies range from 1 million yuan($157,480) to 5.08 million yuan, less than the required amount of 10 million yuan, read a circular recently posted on the website of the State Administration of Radio, Film and Television (SARFT).
Among the companies, five are from Beijing and others are based in provincial regions including Jiangsu, Zhejiang, Hunan, Shanghai, Guangdong, Jilin and Hainan, according to an attached file to the circular.
The SARFT has ordered TV stations to suspend their TV shopping programs and only to renew their contracts when the companies become qualified, read the circular.
TV stations that have "lax supervision" will risk serious punishment, the SARFT warned.
In China, TV shopping programs are sometimes used by fraudsters to sell shoddy products. Commercials for drugs, medical equipment and health supplements for sexual enhancement used to be rampant on China's screens.
While Chinese urban residents are more wary of these TV programs due to constant exposure, TV shopping is relatively novel for people in rural areas.
On September 10, 2009, the SARFT put forward a set of requirements for companies that want to have their products sold via TV shopping programs.
Companies are required to have at least 10 million yuan of registered capital, a regular operation venue and distribution channels.
On February 20, 2010, the SARFT issued a circular that required broadcasting authorities to tighten their rein on TV shopping programs, and to verify enterprises' qualifications before airing their TV shopping commercials.
According to the 2010 circular, the SARFT would name and shame the offending broadcasters and would temporarily ban them from airing all commercial advertisements as punishment.
In serious cases, broadcasters would risk having their broadcasting license revoked.