* Muji fined 200,000 yuan for violating China advertising law
* Problem was packaging for 119 clothes hangers from Japan
* Second time Muji has been hit by such criticism this year (Adds Muji statement, similar cases)
SHANGHAI, May 24 (Reuters) - Japanese retailer Muji has been fined 200,000 yuan ($31,300) in Shanghai for using packaging that lists Taiwan as a country, underscoring China's growing sensitivity to how companies refer to the self-ruled island.
This marks the second time Muji has been hit by such criticism from China this year, and comes after a number of foreign firms including Delta Air Lines and Marriott International Inc have apologised for similar actions.
Muji, which is owned by Ryohin Keikaku Co, imported 119 clothes hangers from Japan last year in packaging that marked Taiwan as the "country of origin", the Shanghai Administration for Industry and Commerce said in a statement.
The Muji packaging violated Chinese advertising law which warns against hurting China's dignity and interest, said the statement, which was published last month but reported by Chinese media on Wednesday.
"The party did not properly fulfil their inspection obligations which lead to the above-mentioned goods to enter the market to be sold," the regulator said, adding that Muji had since changed the packaging and made corrections.
A Ryohin Keikaku spokeswoman in Tokyo confirmed the fine and said the company would make thorough efforts to comply with the regulation.
Its Shanghai unit also pulled a catalogue in January after authorities complained that it had published an "inaccurate" map with wrong borders and missing islands.
China has been increasing its efforts to police language used by firms to describe territories such as Taiwan, Hong Kong and Macau. Its actions, particularly those directed at foreign airlines, have been criticised by the White House as "Orwellian nonsense."
Taiwan is China's most sensitive territorial issue. Beijing considers the self-ruled, democratic island a wayward province. Hong Kong and Macau are former European colonies that are now part of China but run largely autonomously.
In January, U.S. carrier Delta apologised for listing Taiwan and Tibet as countries on its website, while hotel chain Marriott International's Chinese website was suspended for a week for listing Tibet, Taiwan, Hong Kong and Macau as separate countries in a customer questionnaire. ($1 = 6.3875 Chinese yuan) (Reporting by Brenda Goh, Additional Reporting by Ritsuko Shimizu in TOKYO; Editing by Edwina Gibbs)