The city's price watchdogs, the Shanghai Municipal Development and Reform Commission, and the Shanghai Commercial Association have jointly banned retailers and shopping malls in the city from using misleading claims in their advertising or promotional material.
The decision has been made ahead of the annual shopping frenzy that marks the beginning of the Chinese New Year.
Among the terms that have been prohibited are "lowest price," "ex-factory price," "wholesale price" and "extremely low price." Both organizations claim such terms are groundless because their veracity is almost impossible to prove.
As a deterrent, the authorities have threatened to fine retailers anything between 50,000 yuan ($7,920) and 500,000 yuan for violating this directive.
Somewhat more confusingly, they have also threatened to confiscate the portion of revenue that stores earn by way of such misleading publicity. How exactly they can judge the degree of influence these adverts have on the buying public is anyone's guess.
But in fact, before many major holidays it is commonplace for price officials nationwide to crack down on dishonest advertising.
Claiming to have the "lowest prices in town" is one of the oldest tricks in the book for retailers both in China and abroad. Another popular ruse is to post notices on a shop's windows to the effect that it will be closing down in a few days because of bankruptcy or relocation, and that "everything must go." Three weeks later, the stickers are still on the windows and the store is still open for business.
Shanghai officials allege that last year they "heavily" fined more than 10 shopping malls and industry associations for such malpractice. And they claim that this has largely helped to effectively contain - if not totally eliminate - price-related misdemeanors.
But even if officials are resolute and sincere in their campaigns to stamp out dishonest trading, they simply don't have the means to enforce this directive over what amounts to a huge industry. Much of the time they simply rely on tip-offs from members of the public.
I believe that law enforcement needs to be standardized across the entire industry. At the moment, fines and punishments are being imposed arbitrarily on a case-by-case basis, and at the discretion of the individual officers involved.
I also think that local officials' appreciation of the severity of this situation lags far behind that of consumers who, let's face it, are the ultimate victims of such unscrupulous behavior.
To regulate the market by means of the Shanghai Commercial Association is hopelessly inadequate. The association is only responsible for about half of the city's retailers and shops, mainly the larger outlets. However, most consumer anecdotal evidence suggests the majority of dishonest trading happens in smaller businesses.
With this in mind, a non-governmental, third-party regulatory authority should be set up to collect first-hand information about the extent of the problem, and to monitor the fairness and impartiality of any subsequent law enforcement.
