Electronic sports games ("E-sports games") have been sweeping across China as elsewhere in the world, and the sector in China is developing at a rapid and accelerating pace. More and more foreign E-sports companies are taking aim at the Chinese market. With E-sports games gaining tremendous popularity in China, more and more foreign companies are aiming at the Chinese market. However, upon entering China with enthusiasm, foreign enterprises are often paralyzed by Chinese regulations.
In China, E-sports games has been formally recognized as the 99th sports event by the Chinese Government. Technically, E-sports games should be treated like any other professional sport such as tennis. However, authorities in China generally does not differentiate between E-sports games from common videogames. The same regulations are used to govern and control both.
The biggest obstacle for foreign companies to operate E-sports games in China is obtaining the necessary permits. To operate E-sports games, one needs the following three permits: (1) Internet Content Provider License; (2) Internet Culture Operation License; (3) Internet Publishing License.
The Network Culture Business Permit is often the hardest to obtain. According to “Some Opinions of the Ministry of Culture and the Ministry of Information Industry on the Development and Administration of Net Games” issued by State Ministry of Culture and Ministry of Information Industry, “An operational entity of network culture that applies for engaging in the business of net games shall, besides meeting the relevant provisions, have a registered capital of more than 10, 000, 000 yuan (USD $ 1,428, 571).” Further, the Ministry of Culture prohibits foreign-invested operational entities (including wholly owned or joint venture) from obtaining the Network Culture Business Permit.
A possible solution to these hurdles is a “creative” partnership with a domestic Chinese company who already has all three permits. Of course these creative partnerships are hidden with risks and challenges themselves.