P&G, a US-based transnational cosmetics giant, has accepted a heavy penalty for misleading advertising of its skincare product SK-II, according to a local newspaper in east China's Jiangxi Province on Friday.

The Nanchang-based Xinxi Daily reported that the provincial capital’s Commercial and Industrial Bureau had settled on a fine of 200,000 yuan (US$24,000) after a 20-day investigation into how SK-II had been advertised.

The commercial and industrial bureau made its decision on March 25 and P&G accepted the determination on April 1, the report said. Cao, deputy director of the bureau’s fair trade office, showed reporters the signed Punishment Determination Note on Thursday.

P&G has been faced with two parallel cases resulting from the experience of one of its customers.

Lu Ping said she spent 840 yuan (US$100) on a 25-gram bottle of SK-II anti-aging De-Wrinkle Essence, referred to as ‘miracle water’ in its ads, in the hope of seeing positive effects after 28 days’ daily use as promised. Instead, she alleges that it provoked a painful allergic reaction.

The People’s Court of the Donghu District of Nanchang accepted her lawsuit against P&G on March 1, which is expected to be heard later this month.

On March 6, Lu’s attorney Tang Wei also submitted a complaint to the Jiangxi Provincial Commercial and Industrial Bureau.

The bureau told the newspaper that local SK-II counters failed to provide evidence of the product’s effects, despite claims that it could make skin look 12 years younger in one month.

The watchdog said the assertion came from research on 300 women in Japan that did not constitute authoritative proof, and it stopped circulation of advertising materials and ordered the company to settle its fine within 15 days.

No one from P&G was available for comment after the decision.

The bureau also conducted an investigation into SK-II's ingredients in response to Lu's accusation that the skincare formula contained unsafe ingredients, but found no evidence of this.

The product passed all pH tests, and contained amounts of formaldehyde, lead, arsenic and hydrargyrum within safe parameters, but the newspaper claimed that the local facilities were not well equipped enough to run checks on other substances.

P&G China spokesperson Feng Jialu has said repeatedly that the product is safe, and that the only problem lay in its advertising.

An SK-II salesperson at the Pacific Department Store in Beijing said the lawsuit has had little impact on sales as "old customers keep coming back."

However, according to some media an unconfirmed confidential survey conducted by P&G earlier this month found that 12 percent of SK-II's frequent users doubted the product's quality.

P&G said it employs nearly 98,000 people in almost 80 countries worldwide. What began as a small, family-operated soap and candle company now provides products and services to consumers in 140 countries.

Its portfolio of trusted brands includes Pampers, Tide, Ariel, Always, Pantene, Bounty, Folgers, Pringles, Charmin and Downy.

(China Daily April 11, 2005)