China to allow game console sales through free-trade zone

SHANGHAI (AFP) - China has formally authorised game consoles made in a new Shanghai free-trade zone to be sold in the country, potentially opening its lucrative market up to the likes of Sony's PlayStation and Microsoft's XBox.

The move effectively lifts a decade-long ban on domestic console sales - although imports remain officially blocked, while illicit machines are already widely available.

Foreign firms will be allowed to make machines in the free-trade zone (FTZ) and sell the equipment into the domestic market after passing inspection by cultural authorities, China's State Council, or cabinet, said in a statement dated Dec 21 but publicly released this week.

The State Council has "temporarily" suspended a regulation introduced in June 2000 on the grounds that, the government said at the time, games had an adverse effect on the mental health of young people.

A plan released by the State Council in September shortly before the founding of the FTZ also said that game consoles produced in the zone could be sold domestically.

The latest statement, contained in a raft of measures regarding foreign investment approvals for the FTZ, said cultural authorities still needed to formulate "related regulations" to allow sales.

The relaxation does not apply to imports of game consoles, but only those manufactured in the FTZ, according to the guidelines announced so far.

The move could potentially give foreign companies such as Microsoft of the United States and Japan's Sony and Nintendo - maker of the Wii - greater inroads into China.

China's game revenue jumped 38 per cent year-on-year to 83.2 billion yuan (S$17.5 billion) in 2013, according to one industry estimate, although the market was dominated by online computer games.

But some commentators point out that the machines already available can play pirated games that cost very little, and consumers are unlikely to want to pay the much higher prices of official software.

Microsoft is planning a US$237 million joint venture in the FTZ to make home entertainment equipment, its Chinese partner BesTV New Media has already announced.

"We both have great interests in providing home entertainment products and services in China," BesTV chief operating officer Guo Jingshen told reporters in late November.

"It's not just a whim, both parties have made technical preparations," Mr Guo said, but gave no timetable.

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