Apparently good news for people that love bad news: just in time for “GDC China” which is taking place in Shanghai these days (not to be confused with “China GDC” …), the Chinese General Administration of Press and Publications (GAPP) issued several notes, which were instantly picked up by Western media, reinforcing once again its announcement from earlier this year that “foreign businesses were banned from investment in China’s online game operations through setting up wholly owned enterprises, joint ventures and cooperatives.”
However, as Inside Social Games quotes a Beijing investor correctly: This is a) not a new policy and b) “total BS”.
Its just another display of power in the ongoing fight between the Chinese Ministry of Culture (MOC) who is backing up Think Services “GDC China” event and GAPP which supports the rivaling China GDC event from Howell Expo (Think Services former 2007 JV partner).
All of the large Chinese game companies are listed on international stock exchanges and/or invested by foreign VC, so are all of the currently most promising rising stars.
How to publish or operate a game title in China:
For simple licensing deals or software development in China, a WOFE or in some cases even a rep office is sufficient. However for actually publishing or operating games in China foreign companies are not entitled to hold the required game licence.
There are 2 work-arounds for this:
- JV with the Chinese partner holding a majority stake
- The the so called “Sina Structure” – see graph below
For licensing deals, approval usually takes around 8 months (not including time required for localization and other revisions).
According to GAPP each application will take up to 80 business days before any decision to be made. This however does not include game testing time, which can lead to GAPP ending up testing your game forever.
For the second option the entire process can take between 18 to 30 months or longer.
The key to success (as with all business in China) is of course your domestic partners relationships with all involved parties.
Source: China bans foreign investment in-online games: O RLY?
Funny how people just love to bash China even on news that isn’t confirmed. That’s 100%, absolutely not biased at all (sarcasm).
Really though, if you’re going to criticize the government, do it for legitimate reasons. Overplaying issues can be just as bad as downplaying them, by detracting from the REAL problems with the government.
And economic sanctions against China? Considering the amount of debt the US owes them, and considering how dependent the current economy is on trade relations with China, you better have a really fat wallet to cover the expenses involved.
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Oh my.
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How like to Chinese govt., get lots of money into their country by exploiting cheap labor, I.E. toys and other crap products, and try to keep the money there. Their maniacal control of their people is staggering.
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What happened to you, China? You used to be cool.
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China seriously sucks. There is no getting by that fact.
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Genaral Mao approves this message.
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@mrdietsoda: Not really, no.
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Anyone surprised by this lives in a fairy world. Time to wake up…
What did they do to that girl anyway?
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I’ve never seen an asian elf before.
Now I have.
Also, fake blue eyes are lame. Thoughts?
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@hismastersvoice: just enlarged her head X2 it seems :)
..and added some bio-engineered hearing aids.
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It’s interesting that apparently the Chinese government does not seem to internally agree on this:
[www.gamepolitics.com]
If they start doing this then I think its time for sanctions against the country.
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@mrdietsoda: Gotta say mate… Probably not
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@Archaneus: Sure they did! Like 100 years ago.
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@Kenny: Mmmmm, I love colons!: Guess what! Her ears are fake too. You must suspend your disbelief.
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Kinda seems like they’re shooting themselves in the foot by pushing away foreign investment – I mean, sure they have plenty of their own money, but you’d think that a Chinese government agency wouldn’t shun the idea of taking more foreign capital into their own economy, even if it means that foreign companies would have a stake in their game development and therefore a certain degree of controlling rights…
I really don’t understand the reasoning behind it – maybe someone with a better understanding than I about foreign economic policy could help shed some light on this?
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How patriotic.
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@TurtleSoup: I think they feel that their market is too big to ignore. I’m sure by doing this they feel that they will be able to both control and share in the profits of all online gaming in their country.
I can’t see it being good for the gamers. I’m pretty sure the Chinese Govt has a pretty backward view of gaming.
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@TurtleSoup: There’s myriad of other, more valid reasons for sanctions against the country, starting with free speech and ending with currency undervaluing.
Sanctions imposed = 0
"The statement from GAPP was released just in advance of the kick off of the Game Developers Conference in Shanghai, which opened today."
Ahahahahahahaaaaaa….
*passes out*
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@mrdietsoda: that was wayyyyyyy back, when mulan and eddie murphy were still alive
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@eskimo103: Chinese goat has the same view of at least one US company that has a very active vision of what gaming is about, and that’s making money
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Well, the Chinese government is quite protectionist in regards to the economy and views foreign investments quite suspiciously. It is starting to resemble the late Qing Dynasty more and more, whose arrogance and xenophobia destroyed them.
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I’d probably be amused at how corrupt Chinese government is right now but… What the fuck happened to that girl there?
Her head is like two times the normal size… Are elves supposed to look like that?
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@eastx: 100 years go? China was probably getting its ass handed to it by the British and French.
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@deanbmmv: Yeah, who said backward views are bad anyway? I like backward views.
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@Draco_2k: She looks worse than that Calvin Klein ad. Her leg is bone thin.
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@Islandkiwi: But i like her hair, it’s cute.
Crap i think that sounds girly :(
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@mrdietsoda: Hey China’s still cool! You pay later!
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So, is china under the impression that isolation from the rest of the world is the way forward?
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So this is the new great gaming wall of China I’ve been hearing about.
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@eastx: actuallu no, they were cool about 300 years ago. after that, everything just fell apart.
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@S1LV3R_F0X: Mmm… General Mao… no wait…
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@ShushKebab: The French? really? I find that hard to believe.
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lol @ you people spouting generic western views without knowing what you’re talking about.
Underdeveloped countries more often than not NEED to use such tactics in order to make the internal market grow. That’s NOT a reason to impose sanctions against a nation.
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And they are mad at us for tire tariffs. Maybe we should just outright ban all foriegn tire companies.
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@Johnny: They are under the impression that keeping all the money in the country (instead of letting some of it funnel to foreign companies) is good for the country.
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Chinese gaming iron curtain?
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@Islandkiwi: she looks normal, it is just a weird perspective and her outfit that makes her leg look super thing.
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@kitsuneconundrum: that would be 300 years ago, before colonial invasion, enforced trade, and the Opium War. Yes, China became so uncool after being subjugated to colonial rule.
The problem I find with most armchair commentators on anything that China does is they don’t really understand how much an authoritarian style of government is intrinsically a part of Chinese nationalism. Similarly, those who aggressively attack such comments in China’s defence usually do so under a ‘China as a victim’ banner, without taking into account just how much ideas of liberty and ‘freedom’ are a part of US nationalism.
If we all took some time to understand the history and ideas of each other’s cultures, we could all learn to get along and discriminate women and homosexuals together.
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This isn’t the first time a country has hastily moved to lock down rapidly growing online business segments to prevent the money going overseas. US online poker, anyone?
I’m not a defender of the Chinese government but compared to some of their other actions, this doesn’t even register.
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@eskimo103: Well I can understand if they imposed more taxes for online games to take a larger share of that pie and they already have control anyway without needing to do this – they shut down any online games they want too when they want already for whatever reason.
This more causes a lob sided unfair business model when dealing with foreign businesses that should cause the other countries to really consider countering this – and paying closer attention to the issues of outsourcing Western jobs to countries such as China.
Also it doesn’t quite make sense to me as if anything China should be encouraging foreign investment but be aiming to keep the money mostly locked in the Chinese market.
Saying the Chinese government has a backward view of gaming isn’t quite true as they do have many grants to help foster such businesses. But they do want to control the creative direction of such companies with clueless people.
There is still a scary number of games companies in China that simply don’t have a clue and if anything need foreign involvement to prevent the market from stagnating with the same old 3 kingdom clone rubbish.
Strategies involving the Chinese market have always relied on its size which slows down its evolution to count against the most quite frankly awful quality mainland online games. Its basically the root cause of the clone and rip off mentality.
But I think here they are underestimating the rate of technology pick up and how Chinese consumers tastes are requiring more sophistication.
Some Chinese companies also have their sights beginning to be set on the foreign market. Which obviously won’t welcome them if they do things like this and unless they learn to make better games.
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@Draco_2k: Well no more corrupt than any other large body of government anyway. Back 10-15 years ago, they would probably just have shot all them online gaming people dead instead. .
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Hahaha, giant-head elf!
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@Paradice: Wrong, this actually does register, just not with the general populace (not trying to mean or condensing here at all, just blunt).
Economic imbalances created by government interdiction can cause some very serious repercussions across the world.
The US dollar is being held down in part by the trade difference that favors China. We send money by the truckload over there, but they won’t let us pull anywhere near the same amount back out. Things like software, where the US holds a competitive edge, would have been an excellent place to help address this imbalance.
China, though, thinks it can continually dictate the terms by which the rest of the world interacts with them. At some point this will backfire, and that backfire could be *very* bad news.
I’m not saying this incident will be the cause, but I’d bet the economists are raising holy hell with the State Department over this.
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@Johnny: Isolation is not what they want. They want the rest of the world to keep sending them money and build their infrastructure, and then they want to impose conditions that prevent any of the money that came in from ever going back out.
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@SpacePirateCaine: It isn’t controlling rights they are worried about, it is money flowing back out.
If Microsoft, for example, had a 49% in an online gaming company, then they would also be taking 49% of the profits back to the US.
China likes to have people send them money, but then tries to prevent anyone from ever taking any out.
This is obviously bad, since trade imbalances end up killing a trade relationship in the long run.
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@TurtleSoup: This has absolutely zero to do with creative direction, quality, etc.
It is purely about China keeping money in China. They don’t want outside investors because they are afraid (rightfully so), that other countries with more mature software businesses will be able to come in and make the lion’s share of the money. Large amounts of that money would then flow out of China and into the countries of the investment companies.
The above would be normal fair trade, but China doesn’t like fair trade. They like to take all the money sent to them, and then keep it within China.
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@Yossarian: China thrives in trade imbalances. Any action that supports those imbalances must be deemed acceptable by the Communist Party. Short sighted, with dire potential consequences not only for China but for the whole word, but it works for them now.
When it snaps, we better be on Mars.
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@noesmano:
lol
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@hismastersvoice: Agreed.
If anyone is interesting in some fiction that is grounded in reality, but deals with this very subject, Tom Clancy wrote a very good book called The Bear and the Dragon. It *is* fiction, but like all Clancy stuff, its basis is real, and it is more fun to read than an economist’s dissertation.
Of course war is not the only outcome, the book goes to the extreme because war is what Clancy writes about. *But*, the chance that they suffer an economic meltdown due to a change in how money flows into the country is a very real threat.
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@knuckvice: Yes it is, because imbalances end up hurting both sides in the end.
Fair is fair. That is not a western view, that is an economic view.
China is getting away with imposing laws that rest of the world is not imposing back. Laws like this erode the buying power and cash flow of the more open countries, leading to increased unemployment, reduction in the value of their currency, and reduced market infrastructure. As those things progress towards zero values they reduce the amount of money going into the restrictive country.
China could very well end up hoisting themselves on their petard, and taking the economies of the western world with them. It is all well and good now, but a collapse (or even double digit percentage reduction) of this parasitic relationship could undo everything they’ve gained in short order.
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@Islandkiwi: Come to think of it… Her foot is four times the normal size as well. The fuck.
@Lyner: I’d say more but considering the very scale of phenomenon it’s only a marginal difference anyway. And, yeah…
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@Yossarian: Don’t also forget the CCP has always tried to control the value of their currency. Keeping the renminbi yuan down had a large effect on the national export boom and made importing pretty much pointless; which leads to the cashflow issue as you described.
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@knuckvice: China is hardly an underdeveloped country. It’s a super power with the largest economy in the world.
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@Islandkiwi: No it isn’t. Look carefully, past the gold shinguard; she has a purple tunic on that defines the rest of her leg. She’s sitting in a pseudo-fetal position, hugging her knees. She’s perfectly normal sized.
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@Yossarian: A couple of weeks or so ago the US imposed a 35% tariff on Chinese tires. This move seems like retribution more than anything. The US wants to close in the trade deficit, but the nation only exists because of a constant influx of foreign and mostly Chinese money thanks to soaring budget deficits.
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@Yossarian: I think there is more at stake than just money for China, I would guess that social reasoning also plays a large part.
It seems to me that the Chinese govt sees gaming as a health risk to its citizens, and this will help them control these factors even more than they already do. If I recall, there are time limits imposed on how long people can play WoW in China.
Plus all of the worrisome cultural interaction with outsiders. Who knows what sort of revolutionary groups could form inside something like Second Life.
They must be shitting themselves and wondering how the rest of the world can sit by while the scourge of gaming is left to fester unchecked.
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@hismastersvoice:
‘When it snaps, we better be on Mars.’
That made me laugh, thank you.
Good statement also. :P
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@eskimo103: But risk/control can be regulated with policies that only affect Chinese users.
This isn’t about limiting time played, or communication with the outside world. All of those issues can be addressed during the mandatory testing/QA/localization process that all games there are required to go through already.
This is purely about trying to limit cash and technology flow in and out of the country.
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This is actually a turf battle for control over the online gaming industry between the GAPP and the Ministry of Culture. MOC claims to have sole proprietership over online games, but the GAPP is claiming that they still matter.
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@eskimo103: they do have that whole "NO SKELETONS!!!" thing… whatev.
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By doing this too, there is no pressure now for them to enforce any form of copyright, IP, or trademark infringment when their people rip-off Western Games because there will be no western companies using that legal enforcement as a bargaining chip.
Now the Chinese will be riding around in their new Hummers, with their kids in the back playing Chinese clone DSi and PSPGo, and ad hocing World of WarCraft clone!
(chinese are buying the hummer design brand – it was relevant promise!)
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@KaneBaker: O RLY? Your understanding of economics is lacking.
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Odd. Until I saw this poster, I never had any interest in WoW.
That elf, though, has completely changed my mind. I wonder why… It’s a complete mystery.
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The title of this article should read "Foreign companies are not entitled to hold game licences in China"
God, what a political toilet of a country. Between the corrupt government, rampant piracy and shady business dealings (not to mention companies losing the rights to their IPs when releasing in China), I think a piece of the elusive "largest gamer population" pie is just not worth it anymore with all these barriers imposed.
There could have been a potential for large profits but the country’s crooked policies have seen to screwing that possibility up like some Great Leap Forward in head-up-the-arse business policies.
Congrats, China. You’ve officially convinced foreigners to leave your over-crowded, organized-crime-run cesspool alone.
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@TurtleSoup: Considering how fast and free China is with copyright in general I somehow think this won’t be an issue. Chinese gamers will just have to wait a couple months for the crazy knockoff version of the latest games to hit their market.
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I wonder if Microsoft or Sony will pull hardware manufacturing out of China and bring it elsewhere in retaliation. Most game makers don’t have something like that to use as leverage but those two sure do. Particularly Sony, since they have a hell of a lot more than just game consoles being made over there.
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gamine? really?
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@kellyhelene:
doubt it, this is more aimed at blizzard/activision than any of the console makers
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@resvrgam:
harsh? Last time I checked countries are allowed to do whatever the hell they want. Even if only a million more people have access to a certain companies software/hardware, they’ll probably jump through the hoops to get to those consumers. NA is tapped out, Europe is tapped out, Asia is the last frontier.
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@anduin1: China is not it. Korea and Japan is. China may have a large population of gamers, but it’s just not worth losing a huge chunk of your money over – especially your intellectual property rights.
I am sick and tired of China’s people ripping off foreigners. No wonder they can’t be original themselves.
And people wonder why I’m lightly racist towards mainland chinese.
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Hurray for more Chinese protectionist activities.
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Well, now I can safely avoid giving a dime to any Chinese developed game, not that I ever planned that to begin with, but assuming something decent ever does come from China, I know I can steer clear.
That said, I do hope they put IP bans on connecting to non Chinese game servers as the last report claimed they were cracking down on online gaming.
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thats a bunch of crap man.
if people want to invest in their country, they should be allowed to foreign or not.
this has a good chance to stifle Chinese game studios that would of had a chance to be new start ups over there.
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I don’t think China is communist.
It’s like saying Iran is a democracy.
They’re both just run by a bunch of people who want to stay in power and do things their way.
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@KaneBaker: Superpower? It’s a regional power, but certainly not global.
They have a large economy, but their per capita GDP is far behind the West.
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Eventually, China’s protectionist policies will annoy the rest of the world enough that you’ll see a return to protectionism in the West along the lines of the Smoot-Hawley tariffs. I wouldn’t be surprised if the 1930’s plays out all over again.
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Hot Chinese Blood Elf!!
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@Elite80: For the Horde!
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china should relocate to the moon.
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Man China relaly likes to block their peopel from any possible outside influence. Really sad.
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@Kobun: Its not really that simple. China doesn’t invest in America out of the goodness of its heart. They invest in America because they need us as consumers to keep their economy afloat.
America dissolves into economic chaos and China suffers. When China’s steady increase in prosperity wavers its people stop accepting whatever the government does.
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OK, let me be the racist jerk here… *Oh, reary?*
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I don’t know about racist jerk, but at very least unfunny and ignorant idiot. Spoken Chinese often contains an "L" sound. Maybe you’re thinking of Japanese or Korean.
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I know. OK, look… I was making of the fact that people tend to see asians as one nationality and blah blah blah. Anyway, peace, bro.
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They are trying to stop other countries from getting wealthy off of their citizens. Protectionism is what made America and the U.K. originally prosper.
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Lies, you’re a neo nazi out to destroy the good name of asia!
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I don’t have tatoos.
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