Foreign companies and their Chinese partners have always been major players in the Chinese online gaming market. The partnership normally is has the foreign company licensing rights to a Chinese partner. The Chinese partner is then responsible for developing the local market. The Chinese partner is required to apply to the Ministry of Culture’s Content Censorship Commission (“CCC”) and the China’s General Administration of Press and Publication (“GAPP”) for pre-approvals to distribute the game. CCC censors game content and reviews the license agreement, which becomes effective upon CCC approval. GAPP examines the qualification of the Chinese partner to provide foreign online game services and decides whether to issue a License for Internet Publishing Service to the Chinese partner.
Chinese companies have accused foreign gaming companies of abusing their copyrights via unfair and arbitrary contractual terms. The Ministry of Culture and GAPP seem to be responding to these accusations by cracking down on foreign online gaming companies. On April 24, 2009, the Ministry of Culture issued the “Notice of Regulating the Censorship and Reporting Mechanism on the Content of Imported Online Games” (“MOC Notice”), and on July 20, 2009, GAPP issued the “Notification on Strengthening the Administration of Approval of Imported Internet Games” (“GAPP Notification”).
These two sets of regulations seek to tighten the control over the activities of foreign online gaming companies in China:
- Each foreign online game must be distributed in China by a single Chinese partner with exclusive rights.
- In the event that the Chinese partner is changed, the game is renamed or new game versions are released, the Chinese partner must re-apply with CCC and GAPP for approvals.
- Foreign operators who are deemed to have included arbitrary contractual terms in their distribution agreements will be sanctioned and CCC may suspend its approval of the relevant foreign online game.
- GAPP has expanded its authority to review the import of foreign online games for exhibition, demonstration, trade or promotional activities, all of which are now prohibited without GAPP pre-approval.
Kou Xiaowei, Deputy Chief of the Sci-tech and Digital Publishing Department at GAPP, stressed that GAPP would not discriminate between Chinese and foreign game service providers during the approval process. Still, Chinese produced online games only require filing with the GAPP before distribution, approval with GAPP or CCC is not a requirement.