China Bans Foreign MMO Investment

By Jim Rossignol on October 14th, 2009 at 2:42 pm.


The exploding MMO market in China is being cut off from Western economic influence as Chinese regulators ban foreign investment in virtual worlds. This Reuters report states that: “The new directive also disallows foreign firms from indirectly influencing Chinese gaming firms through agreements or technology support.” This is a move which presumably has something do with predictions that the Chinese MMO market will be worth $3.5-4 billion this year. I wonder what the ramifications of this will be for China’s game culture, and whether we’ll see them having a rather isolated and unusual MMO focus like South Korea has done in the past.

Spotted over on VG247.

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31 Comments »

  1. Fat says:

    What does this mean exactly? I think my brain is on a vacation today.

    Does this mean that companies from the USA/EU (etc) cannot ‘invest’ in the growth of a chinese-made MMO? Or does it mean that chinese companies cannot invest in outside-of-china MMO’s, such as WoW? If the latter, that would hurt china more than the MMO devs, imo.

  2. Jim Rossignol says:

    I think MMOs can be licensed for use in China, by Chinese companies, as per WoW, but foreign companies can’t invest in their Chinese operation. Something like that.

  3. Spoon says:

    At least one person thinks the Reuters article is full of bull:

    http://thenextweb.com/asia/2009/10/13/china-bans-foreign-investment-online-games-rly/

  4. Malibu Stacey says:

    China’s video game industry regulator the General Administration of Press and Publication (GAPP) and copyright watchdog issued a circular on Saturday prohibiting foreign investment in domestic online gaming operations through joint ventures, wholly owned enterprises and cooperatives.

    Sounds like the great firewall of China is getting bigger. I guess someone in the Chinese government realised they can’t block content they don’t like in these games so they’re just going to block the games instead.

    Good luck with that. Prohibiting things which young people want to do has worked so well in the rest of the world for the last few centuries.

    What was it Ewan MacGregor’s character in Trainspotting said? Something like “if they made Vitamin C illegal we’d be shooting that into our veins”.

  5. Jim Rossignol says:

    More accurately, I guess, this is just protectionism for Chinese MMO companies. It stops them being bought up by large Western corps.

  6. Yargh says:

    There’s probably also a cultural defence thing in there too. Wouldn’t want any subversive ideas or concepts to slip through the net after all…

  7. Graeme says:

    The WTO will save us! Oh, wait…

    Some more interesting details on this here:

    http://www.insidesocialgames.com/2009/10/12/china-bans-foreign-investors-from-online-games/

  8. K says:

    Odd, really. Because the normal course of action for the Chinese government would be to allow the foreign company/investor to become successful. And then screw them over with extortion.

  9. Theory says:

    Protectionism made we western nations strong. Can’t really complain when others do it back to us.

    • Gap Gen says:

      Except it’s hurting Chinese game companies, in this case (as I understand it from reading the links).

    • Jad says:

      Except not really. Sure, back in the day you had your colonies and mercantilism and whatnot, but the real growth and wealth of the West recently (especially the United States & the EU) has come from the loosening of trade barriers. (which isn’t to say that there aren’t problems that arise from free trade — there are — but protectionism is not why the West is strong)

    • Poindexter says:

      “When goods do not cross borders, soldiers will.”
      -Frederic Bastiat

    • Ybfelix says:

      Oh yeah? Soldiers? Where would they come from? China’s a WTO member, why no one file a complaint for this? Who is like unto the beast? Who is able to make war with him?
      So why nobody actually do something about it, if this is deemed important.

    • Theory says:

      Global exports are certainly where the money is, Jad. But you need strong domestic industry in the first place to take advantage of them. That can’t develop as effectively (or at all in some cases, I expect) if it has to compete with everyone in the world.

  10. PC Gaming Compendium says:

    Ah, the wonderful intersection of games and politics. When will all these idiots just leave us alone?

  11. Tei says:

    Not all MMO’s are banned, only these beyond his control (the foreigner ones) so I suppose what china wants is control.
    The western culture is powerfull and dynamic. It probably look to then, and the simple contact of western ideas with his country will change the dinamics of his country. So want his people to stay in the ignorance of these ideas.

  12. Carra says:

    Protectionism to the extreme.

    I’ve read a while ago that a lot of Chinese WoW players had already migrated to Taiwanese servers since the WoW TLK expansion didn’t get clearance. What’s to stop them from just playing their games on those servers?

  13. TeeJay says:

    Various analyses:

    Protectionism of domestic companies
    Censorship of objectionable content
    Censorship of onlne comunities
    Linked to online gambling
    Part of a turf war fight between two rival government departments

    It isn’t yet clear which is the most accurate.

  14. Ybfelix says:

    Considering the quality of most Chinese MMOs they put out each day, I’d rather they all wither and die…

    But then people will turn to SNS gaming applications(lots already did), which is even horrible. Browser based car-parking and Vegetable stealing? Really?

  15. Pantsman says:

    The marxist-leninist club at my university claimed that the Dalai Lama is a tool of Western agitators who only wants independence for his country so that he can use it to undermine the glorious people’s republic of China.

    Ugh.

  16. Heliocentric says:

    To be fair, i’m sure he’d love to undermine china.

  17. Wisq says:

    Obviously, China is trying to compete with Australia to see who can impose the greater number of gaming-related bans.

    Next up: Australia bans everything; China bans the mere concept of “everything” …

  18. Anonymous Coward says:

    I think the theory is that this will allow their weak domestic game production some relief from having to fight with World of Warcraft et al. They won’t convert everyone to Made in the PRC games, obviously, but WoW’s a hard opponent even for established Western companies. Ultimately, China wants to be a superpower in every conceivable sense, and they do have the potential to become one in about one to one-and-a-half more generations if they play their cards right. That’s going to mean building their domestic industries and keeping some capital at home, and video-games are one itty bitty little piece of that. I don’t buy their flavor of “think of the children” moral paternalism as anything but an excuse for service to the Chinese economy. Also, prohibitions on foreign investment mean even less international scrutiny toward Chinese industrial espionage and intellectual property theft, since fewer foreigners will be in place on the mainland to notice these funny little things or to cultivate the connections necessary to fight infringement. It worked for the beginning of the United States’ Industrial Revolution, and it could easily work for Chinese modernization. Given that there have long been pirate WoW servers all over the darn place, it’s no stretch to think that some company out there could reinforce their shitty product with some solid internal code designed by a better-funded firm. Yes, I’m a pessimist; so sue me.

    • Tei says:

      “China wants to be a superpower in every conceivable sense, ”

      It could be, that in the modern world you need democracy for that.
      A uninformed horde of “Yes, party” people could be not creative enough to give you the real boost you need to make your country the best one. This is not the Cold War, where building more missiles, or launching a big rocket to the moon was enough. Freedom and creativity have a strong relation, so you can’t really have one with the others. If China want to be a superpower, sould be ready for a surprise.

  19. anonymous17 says:

    Never underestimate the lengths to which minor officials in China completely and utterly screw up the country. Cutting of games funding will just mean developers in China can continue turning out the shit they already constantly do without any reason to innovate. No innovation, no development, (capitalistic/creative thinking) backwardsness is continued (amplified).

    It’s like 1949 all over again. ~(except digital and more teenage angst)

  20. anonymous17 says:

    Never underestimate the lengths to which minor officials in China completely and utterly screw up the country. Cutting of games funding will just mean developers in China can continue turning out the shit they already constantly do without any reason to innovate. No innovation, no development, (capitalistic/creative thinking) backwardsness is continued (amplified).

    It’s like 1949 all over again. ~(except digital and with more teenage angst)

  21. what says:

    I find it interesting that most (looks like all but 1 person) people here don’t understand how free trade works. You use free trade to oppress poorer less developed nations. You put up trade barriers when you want to develop your own industry. This is how the west has worked for hundreds of years. China knows how the game is played. They protect their own industry in order to develop it and then unleash it once it’s better than WoW or Wow2.

  22. Nurdbot says:

    Oh god no, will this effect WW2OL?

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