Shanghai has introduced a pilot policy that will enable games developed by foreign-funded companies within the city to be treated as domestic products.

The initiative aims to bolster Shanghai’s digital content sector. The city already hosts development studios for major foreign game companies like Riot Games and Supercell, known for titles such as League of Legends and Clash of Clans, respectively.

Previously, games developed by Chinese companies and those imported into China faced different approval processes. Imported titles, even if created by foreign firms with a local presence, typically endured a more complex and often lengthier review by central authorities.

Shanghai plans to establish specialized industrial clusters in various districts, focusing on digital gaming, film, music, livestreaming, and short video production. The pilot policy also supports copyright pledge financing, enabling companies to use intellectual property as loan collateral.

The initiative demonstrates Shanghai’s aim to strengthen its position as a hub for digital content while attracting both domestic and international investments.

🔗 Source: Huxiu

🧠 Food for thought

1️⃣ China’s softening stance on foreign games marks a potential market shift

Shanghai’s new policy represents a significant shift in China’s traditionally restrictive gaming regulations.

The Chinese government has historically maintained tight control over foreign game entry, including a console ban since 2000 that profoundly shaped the market toward PC gaming 1.

This regulatory environment has created substantial barriers. For example, foreign mobile games’ presence among top downloads decreased from 39% in 2014 to just 25% in 2016, as domestic publishers like Tencent and NetEase came to dominate 75% of the market 2.

The “Great Videogame Freeze” of 2018 halted all game approvals, causing a 2.1% market contraction and billions in losses for game companies, demonstrating the government’s willingness to prioritize control over industry growth 1.

Against this backdrop, Shanghai’s move to treat foreign games as domestic products potentially signals a recalibration of China’s approach to balance regulatory oversight with economic development.

2️⃣ Shanghai positions itself as a digital content hub amid massive market opportunity

This pilot policy aligns with Shanghai’s broader ambitions to become a leading digital economy center, evidenced by its position as the world’s fourth-largest data center market 3.

The prize is substantial: China’s gaming ecosystem includes 312 million PC gamers (projected to reach 354 million by 2023), who collectively generate $16 billion in revenue 1.