Invite colleagues
In news that will give VC's and Western entrepreneurs an uncomfortable feeling, the Chinese regulators have banned foreign investment in the domestic online game industry. This is according to an announcement released over the past weekend by the central departments in charge of the press, copyrights and illegal publications (link, Chinese Language).
According to the announcement, no foreign investment is allowed in China’s online game operations through wholly-foreign owned enterprises, joint ventures and cooperatives. Foreign investments are also banned from “indirectly influencing” Chinese online game companies by providing technical support or signing relevant contracts.
The circular, jointly released by The General Administration of Press and Publication (GAPP), National Copyright Administration and the State Office of Sweeping Pornography and Illegal Publications, is part of the government effort to eliminate unhealthy and illegal online content. In July, the Ministry of Culture outlawed games that feature gangster themes or mafia-type gang activities.
Nobody official is saying it outright, but the implication is that foreigners have been behind some of the games with objectionable content. “In recent years, some foreign companies tried to get involved in China’s online game operations in various forms, which caused severe disorders in China’s online game industry,” said Kou Xiaowei, vice director of the technological and digital department of GAPP, according to Xinhua.
To date, operators of some 45 domestic online games that violated the regulations have been punished by GAPP, according to the Chinese language media.
As far as the approval process for online games is concerned, the latest announcement states that no organizations or individuals may run online gaming business without a permit from GAPP. And once approved by the GAPP, games can go online without any additional permissions from any government departments.
It is not new for the China’s government departments to tighten control over China’s online gaming business. Early last month, the State Commission Office for Public Sector Reform issued a notice clarifying the responsibilities of several state departments in the regulation of online gaming.
According to the notice, the Ministry of Culture is responsible for market supervision for online gaming industry, while GAPP is in charge of managing the pre-approval process prior to the publication and distribution of online games.
In a conference with domestic game operators late last month, culture officials said that their ministry is the main regulator of China’s online game industry, potentially fueling further tensions with GAPP.
Source: Wall Street Journal
Written on Sunday, 18 October 2009 12:18 by Matt McDougall