China Nixes Foreign Investment in Online Games

[John Funk]

China Nixes Foreign Investment in Online Games

In an effort to "tighten control of its virtual worlds," China has barred foreigners from investing money into its exploding online gaming industry.

The world's economy may be in the crapper, but there's at least one market that has been seeing explosive growth: Sales made in China's online gaming industry are expected to swell a staggering 30-50%, "to 24 billion yuan to 27 billion yuan ($3.5-4 billion)" according to the Chinese General Administration of Press and Publication (GAPP). Naturally, it would be outright foolish for non-Chinese makers of online games to completely neglect such a growing and potential valuable market - which is precisely what the Chinese government is afraid of.

That very same GAPP, described by Reuters [http://www.reuters.com/article/marketsNews/idCNSHA25296320091012?rpc=44] as a "video game industry regulator ... and copyright watchdog," issued a notice on Sunday that would prohibit "foreign investment in domestic online gaming operations through joint ventures, wholly owned enterprises and cooperatives."

The plan would further bar foreign individuals and companies from attempting to indirectly influence Chinese online gaming developers by providing technological assistance. While it's unclear what affect - if any - this would have on games like the megapopular World of Warcraft which are developed by Western companies but operated by Chinese ones that take a cut of the revenue, it's hard to imagine this as anything but a headache for foreign developers looking to make inroads to the growing Chinese gaming scene.

It's interesting to ponder exactly what sort of control the GAPP is worried about losing - is it worried about losing financial control over the markets, sending millions of RMB overseas? Or is it worried that foreign companies could influence the games to propagate "non-Chinese" ideology?

(Via Joystiq [http://feeds.joystiq.com/~r/weblogsinc/joystiq/~3/kR28RgKo_vI/])

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[ma55ter_fett]

hmm, its just another case of a foreign goverment trying to protect and isolate there economies. History has shown that this doesn't work at all for any product. it leads to shoddy products because of lack of competition with better products and high prices since the companies can charge whatever they want (again because other companies couldn't compete).

Free markets man, they can't provide good healthcare but they can churn out decent games.

 

[wolfy098]

Yes but do we want to get involved with chinas WOW

Communist(Sort of) rabid people who never leave the house

 

[obisean]

How would China like it if we used their rules in our country? "Only American made, everything else is illegal just in case the world will try to influence our culture." But I guess that will never happen since Corporate America is soo deep in the pockets of our gov't that it would take an act of God to make people stop exporting jobs.

 

[Capo Taco]

China wouldn't like it if you used their rules in America. Only America would like it even less: Open policies are good for attracting talent and entrepreneurship. Why are there so many brilliant Chinese minds active in America and so few brilliant American minds active in China? I think you know the answer.

The more people start to know and understand China, the more they will be repelled by it. Their huge untapped market helps a bunch, but not enough in the long run if you risk losing your investment by a whim of their government.

 

[Kollega]

Well,what did you expect from a dictatorship? China may be capitalistic,but it's not even remotely a democracy.

 

[Jou-LotD]

And China wonders why it hasn't been admitted into the WTO. They aren't part of the world, so they should be barred from making decisions.