The Shanghai Municipal Government recently unveiled a series of incentive policies aimed at fostering the growth of software and information service industries. Notably, a pilot policy allowing game products developed by international game studios based in Shanghai to be classified as domestic games has garnered great attention. Although the implementation details and timeline are yet to be disclosed, this proposed rule directly addresses a major challenge faced by international game companies, thereby attracting substantial attention from global game market.
Imported Games VS Domestic Games
Currently, China’s National Press and Publication Administration (“NPPA”) which oversees the gaming industry in China classifies all games into two categories—imported and domestic—when issuing game approvals, also known as ISBNs. Though there is no official definition distinguishing these two categories, imported games are generally understood to be those whose copyright (including game software and content) is held by foreign entities, including foreign-invested companies established in China. While domestic games are those whose copyright is fully owned by Chinese companies or individuals.
In theory, the NPPA applies the same set of content censorship criteria when reviewing all games and granting the ISBNs. However, in practice, international game developers face more difficulties in obtaining approvals compared to the relatively smoother and faster process experienced by Chinese game companies that seek approvals for domestic games.
In contrast, the difficulties include:
-Much less ISBNs for imported titles due to quota control. As indicated below, over the past 4 years, the number of ISBNs for imported titles has averaged less than 10% of the domestic titles, as a result of the quota control implemented by the NPPA. This indicates that obtaining an ISBN for an imported game is considerably more challenging than for a domestic game.
| ISBNs for Domestic Games | ISBNs for Imported Games | |
| 2024 | 1,306 | 110 |
| 2023 | 978 | 98 |
| 2022 | 468 | 44 |
| 2021 | 679 | 76 |
| Average | 858 | 82 |
-More complex documentation requirements. While the majority of the required documents and materials for imported and domestic titles are similar, imported titles must include additional information, such as the status of publishing and operation of the game outside of China, as well as the chain of title related to the licensing agreements.
-Extended and unpredictable timelines. Unlike domestic titles tailored for local users, imported titles must be localized to obtain approvals and meet local users’ expectations. It involves not only text translation but also cultural adaptation and content modifications to satisfy the NPPA’s standards, and such features of localized foreign titles significantly extend the review and examination period. Furthermore, the timing for the issuance of an ISBN for an imported game can be influenced by factors beyond the control of game companies, such as the diplomatic relationship between China and the game’s country of origin.
-Ineligible for the faster track approval applicable for qualified casual games. A significant number of domestic casual games can benefit from faster track approval, with ISBNs typically granted within 20 working days. This is designed to accommodate the short lifespan and development cycles of casual games. However, imported casual titles are explicitly excluded from this beneficial treatment according to the NAAP’s current rules, thus it makes little sense to obtain ISBNs for foreign-copyrighted casual or hyper causal games.
Implications of the New Policy
This new policy will significantly accelerate the game approval process for titles developed by Shanghai offices of international game companies, allowing them to compete on equal footing with domestic titles, including simultaneous global launches. This initiative aims to encourage international game studios to establish and expand their development teams in Shanghai, as well as to register their game copyrights under their Shanghai entities. Considering China’s rich talent pool and top-tier mobile game production capabilities, this policy is highly appealing to international game companies., in particular, those focus on mobile games.
Having said the above, it is important to note that the new policy in Shanghai does not fundamentally change China’s game approval regime. International game companies are advised to consider the following factors when deciding whether and when to make new or more investment in development teams in Shanghai:
–The Shanghai branches cannot apply for the ISBN or publish the games directly. Due to the restrictions on market entry, foreign investors and their subsidiaries in China are not allowed to engage in game publishing and operation business. Consequently, the prevailing model—licensing foreign-copyrighted games to Chinese partners who handle ISBN acquisition as well as game publishing and operation—will remain unchanged. Once the new policy is carried out, an international studio’s Shanghai team will be able to work more closely with its Chinese partner to localize the game and assist with the game publishing and operation to the extent permitted by laws.
–It is unknown how to define games developed in Shanghai. Pending the implementation details, the specific standards on games developed in Shanghai remain ambiguous. This includes requirements concerning game copyright registration or the size of the development team based in Shanghai. Furthermore, it is unclear what standards would apply if software development occurred in Shanghai but the game is based on other licensed works, such as internationally renowned TV series or novels.
–It is unknow whether being regarded as domestic titles will ensure the same treatment. As mentioned above, the approval process of an imported game is usually lengthy, untransparent and unpredictable. Beyond quota control, imported titles appear subject to stricter review criteria. Consequently, it is uncertain whether the new policy will place Shanghai-developed games by international companies in an entirely equal position with those from domestic developers, including faster track approval for casual games.
The announcement of the new policy underscores Shanghai’s long-standing ambition to position itself as a leading game production hub globally. Until the implementation details are clarified or the first domestic ISBN is granted for a game produced by Shanghai team of an international developer, it remains to be seen how the new policy will be carried out and the concrete advantage the international game companies will gain from producing their games in Shanghai.
