7 August, 2015
In a recent circular issued by the Ministry of Culture ( No. 576), China has finally lifted a 15-year restriction and is to allow the manufacture and sale of video console games throughout the country. China is the world's third biggest gaming market and may overtake the U.S. market by 2016 when sales are expected to exceed $22 billion, according to online reports. To date, as a result of the console ban most games have been directed at the PC market and sold online.
Consoles were first banned in 2000 as the government sought to protect youth and children from what it perceived to be the negative effects of video game playing. However, despite the ban devices continued to be illegally imported and domestic counterfeiting has been a relentless ongoing problem. The regulations first began to be relaxed last year, when in January 2014 the Chinese authorities allowed domestic and foreign-invested enterprises to manufacture and sell consoles inside the Shanghai Free Trade Zone (FTZ) as part of a pilot test. Following the changes in the FTZ it was widely expected that the government would extend the easing of the restrictions across the entire country.
The new rules will apply to foreign and domestic manufacturers, enabling them to produce and sell gaming devices throughout China. The rules apply to gaming equipment including video game machines, TV equipment used in video games, and hand-held electronic game machines. Foreign-invested companies will be registered with the State Administration for Industry and Commerce (SAIC) and the business scope of the business licence should include the production or sale of entertainment gaming equipment. Provincial administrative departments will be responsible for auditing gaming equipment. These latest developments should be very welcome news to international gaming manufacturers, as they look to expand and profit in the booming Chinese gaming market. However, foreign manufacturers are likely to face strong competition from the growing number of Chinese gaming companies.
For further information, please contact:
Rieko Michishita, Partner, Bird & Bird