Companies would have to register in Shanghai's FTZ for eligibility

Sources from China's Ministry of Culture confirmed on Thursday that the country is about to allow foreign game console companies to sell products in China if they register in Shanghai's new free trade zone, but denied lifting a decade-long ban on the video game hardware market in the country anytime soon.

An attendee plays the Xbox One game LocoCycle at the E3 (Electronic Entertainment Expo) in Los Angeles on June 12. Major game console vendors across the world made several attempts but failed to find a way to enter the Chinese mainland market officially. [Photo / Provided to China Daily]

Two officials from the ministry confirmed the accuracy of a South China Morning Post report. The story, which was published on Wednesday, quoted sources that if foreign companies agreed to register in the new free trade zone in Shanghai, they would be allowed to promote and sell their products on the Chinese mainland.

But before they start selling, foreign gaming companies have to seek approval for specific products from related regulators because the Chinese government wants to make sure the content is not too violent or politically sensitive, the SCMP report said.

"The detailed information (on foreign game console companies' entry into China) is incorporated in the policy package for Shanghai's free trade zone," an official with the Ministry of Culture told China Daily on condition of anonymity However, the Chinese government has yet to officially release the complete documents.

On July 3, the State Council, China's cabinet, approved Shanghai's free trade zone. It will cover 28 square kilometers and act as an experiment for deepening reform and opening-up.

"We will track the progress made in this Shanghai pilot program. No one doubts that Shanghai's performance will determine our future moves," the ministry source said. The source denied the Shanghai trial is a hint about the lifting of China's ban on video game hardware. "The ban is still effective," the source pointed out.

Because of fears of the potential harm to the physical and mental development of the young, seven Chinese ministries collectively banned the manufacture, sale and import of game consoles in China in 2000.

Major game console vendors across the world, including Microsoft Corp, Nintendo Co and Sony Corp, made several attempts but failed to find a way to enter the Chinese mainland market officially.

In a January interview with China Daily, an official from the Ministry of Culture disclosed the Chinese government was reviewing the policy and had held discussions with other ministries on the possibility of opening up the game console market.

Because the game console ban was issued by seven ministries, China needs to seek approval from all parties to lift it, which will take time, according to some industry insiders.

"The testing of the water in Shanghai is of course an example of major progress made by those ministries," the source said.

Microsoft did not respond to China Daily's interview requests by deadline on Thursday. The paper failed to reach Sony and Nintendo's news departments on the same day.

Xue Yongfeng, an analyst with Beijing-based research firm Analysys International, said all major game console suppliers are keen to lobby China to open up its market. "The global game console market has experienced flat growth in recent years. Manufacturers are desperate to find some new revenue drivers — and China, of course, has emerged as a major target," Xue said.

However, the long ban has forced Chinese game players to shift to online games. "There is a limited number of hardcore game console players in China. I think, the player figure is a mere 1 million or so," Xue pointed out.