"Obviously that constituent group are wide and varied in terms of their ethnicity, and as a result I guess it's prudent for them to take a conservative approach."
Auckland Transport communications manager Sharon Hunter said as a general rule they did not want to have adverts on shelters that were designed to "shock, offend or be controversial".
"Something which may be funny to one person can easily be offensive to another.
"On this occasion we believed Powershop's advertisement may potentially cause offence to Auckland's Chinese population."
Powershop chief executive Ari Sargent said he was not aware of any official complaints about the advertisement, which has appeared online and on billboards in Auckland and Wellington.
He said previous campaigns had been more likely to cause offence than the Chairman Mao advert.
"I'm surprised that there's been any reaction to that one at all, to be honest."
Powershop had received only one complaint through its call centre, and would be asking Auckland Transport to review the decision.
"Clearly it's a frivolous ad."
Other Powershop campaigns:
* Former Iraq president Saddam Hussein collecting for charity
* Former North Korea dictator Kim Jong-il selling hotdogs for charity
* Pope Benedict XVI marrying a male couple