omniture

Acorn International Announces New Industry Regulation from SARFT Effective January 1, 2010

Acorn International, Inc.
2009-09-25 17:24 809

SHANGHAI, Sept. 25 /PRNewswire-Asia-FirstCall/ -- Acorn International, Inc. (NYSE: ATV) ("Acorn International" or the "Company"), a leading integrated multi-platform marketing company in China engaged in developing, promoting and selling consumer products and services through an extensive distribution network, today announced that new industry regulations from the State Administration of Radio Film and Television ("SARFT") will impose stricter limitations on TV direct sales programs in China.

(Logo: http://www.prnasia.com/sa/2009/08/11/200908111953.jpg )

On September 10, 2009, SARFT issued a circular to be implemented on January 1, 2010 to standardize regulation of TV direct sales programs in China. The SARFT circular describes their policies as aiming to monitor product selection, ensure product quality, and maximize customer satisfaction. The new regulations impacting the TV direct sales and home shopping industry include the following rules that may have a material impact on Acorn International's business:

1. All infomercials will be classified and regulated under the same

manners as TV commercials. Advertising airtime is limited to 12

minutes per hour, and 18 minutes total between 7:00 p.m. and 9:00 p.m.

Satellite channels are not allowed to broadcast infomercials programs

between 6:00 p.m. and midnight. Infomercials are banned on news

channels, international channels and home shopping channels;

2. All infomercials shall clearly identify the advertisers and guarantee

"unconditional return" after certain days of sales and "payment upon

product inspection";

3. The qualified infomercials companies must have (i) registered capital

above CNY10 million; (ii) regular operation offices; (iii) call center

with more than 100 seats, an established logistic and payment

settlement system; (iv) well-established after market, claims systems;

(v) no fraudulent records in the past 3 years; and

4. Encourage industry association or third-party mediators to establish

"Quality Assurance Fund" to protect consumer interests.

In August 2006, SARFT prohibited certain product categories, including medicines, medical appliances, diet and breast enhancement medications and height enhancement medications or devices from TV advertising.

According to research conducted by China University of Political Science and Law, 97% of fraudulent commercials in China are presented by TV shopping companies, of which only 10% are licensed to sell products through infomercials. Since 2003, SARFT has twice implemented industry-wide regulatory changes. However, many unlicensed and illegal players remain in the industry.

"We are very supportive and welcome of the new SARFT rules in our industry as they aim to promote a healthier and more regulated environment for companies and consumers. Currently, less than 5% of our infomercial programs are aired on channels and time zones banned for infomercials in this round of regulations. While in the short term scarcity of advertising time might increase ad rates, in the long run we feel the new regulations will benefit established industry leaders such as Acorn, as requirements such as higher registered capital and stricter return and warranty policies will eliminate unlicensed companies and companies operating on a smaller scale as well as raise entry barrier for new players," said Mr. James Hu, Acorn's Chief Executive Officer. "SARFT's new regulations set a positive tone for stronger government intervention and industry consolidation. With over ten years of operating history and more than US$128 million cash in reserve, we have the resources and expertise to continue to expand our market presence and, through developing and growing our proprietary branded products, make Acorn a sustainable franchise in China's TV direct sales industry."

About Acorn International, Inc.

Acorn International is a leading integrated multi-platform marketing company in China, operating one of China's largest TV direct sales businesses in terms of revenues and TV air time and a nationwide off-TV distribution network. Acorn International's TV direct sales platform consists of airtime purchased from both national and local channels. In addition to marketing and selling through its TV direct sales programs and its off-TV nationwide distribution network, Acorn International also offers consumer products and services through catalogs, third-party bank channels, outbound telemarketing center and an e-commerce website. Leveraging its integrated multiple sales and marketing platforms, Acorn International has built a proven track record of developing and selling proprietary-branded consumer products, as well as products and services from established third parties. For more information, please visit http://www.chinadrtv.com .

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains certain statements that may include

"forward-looking statements" within the meaning of federal securities laws. All statements, other than statements of historical facts, included herein are "forward-looking statements", including the benefits to the Company from the new SARFT regulations, if any, and the means in which such regulations will be implemented, if at all. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve significant assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the Company's ability to adapt to the SARFT regulations, consumer response to such regulations, and the implementation of such regulations, in addition to those results discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

For more information, please contact:

Acorn International, Inc.

Ms. Chen Fu, IR Director

Phone: +86-21-5151-8888 x2228

Email: fuchen@chinadrtv.com

Web: http://www.chinadrtv.com

CCG Investor Relations

Mr. Crocker Coulson, President

Phone: +1-646-213-1915 (New York)

Email: crocker.coulson@ccgir.com

Web: http://www.ccgirasia.com

Source: Acorn International, Inc.
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