Foreign Capital Forbidden in Online Game Operation

The foreign online game operators will feel disappointed because they may have no chance to share the big pie of the Chinese online game market.

The online game industry is growing at an extremely high speed in China. The online games from the foreign developers have been playing an important role in this process. Those game developers also earn a lot of money from the Chinese market.

In the foreign countries, the developer of an online game is usually the operator of the game. But in China, things become different. The foreign developers have to give the operation rights to the Chinese domestic operators. For example, the most popular online game in China – World of Warcraft – was developed by the US-based video game developer Blizzard. But its operation right in China previously belonged to the Shanghai-based City9 and then was transferred to NetEase. Blizzard shares the operation income with the Chinese domestic operators.

But the foreign operators are certainly not satisfied with the situation. They must want to operate the games they develop in China. But such a hope will not be realized.

On October 10, the General Administration of the Press and Publication of the People’s Republic of China (GAPP) published the Notice on Further Enhancing the Advanced Examinations and Approvals of the Imported Online Games (hereafter the Notice), forbidding the foreign investments into the operations of online games in China through exclusive-funded companies, joint ventures and cooperation.

According to the Notice, any foreign online game developers or operators can not control or take part in the operations of any online games in China via setting up joint ventures, signing relevant agreements and providing technological supports.

It was also pointed out in the Notice that the foreign investors are forbidden to put the user registrations, account management, point card consumption into the battle nets controlled or owned by the them, through which they can control or take part in the online game operation in a disguised form.

It is known that the Notice was issued by the GAPP together with the National Copyright Administration, aiming at improving the management over the online games from the foreign countries.

The Notice clarified two principles of the prestage examinations and approvals of the online games: any organizations or individuals can not be engaged in the online game operation without the prestage examinations and approvals of the GAPP. Any online games without passing the prestage examinations and getting the approvals can not be put into operation.

The Notice also told that the online game operators who have already passed the prestage examinations and  got the approvals must go through the approval process again if they plan to alter the operating units or add new versions and expansion packs of the online games. If not, they will be deprived of the previous approval certificates and their operation will be stopped. Their rights to offer access services can also be cancelled and their websites may be closed.

Besides the examination and approval of the foreign online games, the GAPP said in the Notice that it would try the best to protect the copyright of these online games. Any organizations or individuals engaged in the operations of the online games without the legal franchise of the developers will be accused of pirating and be seriously punished according to the laws and regulations.