Launching the game in China. FAQ from Versus.legal and Playkot

The material was prepared by Alina Davletshina, Senior lawyer at Versus.legal.

Alina Davletshina

Talking about the specifics of entering the Chinese market is becoming more and more relevant from year to year, because an increasing number of platforms are beginning to comply with the requirements of local authorities. One of the latest examples is the story with Valve.

In February 2021, the American company announced the launch of Steam China, a special Chinese version of the store, where only about 40 games are available so far. Valve took this step in order to satisfy the requirement of local regulators: only those games that have a publication license (ISBN) should be on the platform.

Steam is far from the first platform that has met this requirement. Albeit with a noticeable delay.

The ban on the sale of games without an ISBN has been in effect in China since July 2016. Despite this, for a long time it was effectively applied only to local Android platforms (there are a lot of them in China, and the 15 largest local app stores cover about 90% of the market – and all follow the licensing rules).

International stores remained “gray areas” for publishing applications without an ISBN. This was used by foreign companies that launched their games without Chinese publishers and licenses. However, over the past few years, the Chinese authorities have begun to take an increasingly strict position on this issue – now they oblige foreigners to play by the rules on their own field.

Even before Steam — in 2020 — the “new rules of the game” was adopted by the App Store, which obliged developers to receive an ISBN before publication. Apple also removed about 95,000 games from its store in China that did not provide license data in time.

In more detail about the current situation and what can be done to get out in China, I tried to answer in this article together with Evgenia Artemova, bizdev manager of Playkot.

Steam China Store

What should be done first if the decision to enter the Chinese market is made?

You need to find a local publisher who will help you with entering a new market.

It is almost impossible to get a license without the help of a Chinese publisher, because they are issued only to Chinese companies.

Of course, you can open your own Chinese company, but it must have at least 51% of the Chinese capital: you will still need a local partner whom you trust.

At the same time, you should take into account that the publisher will receive a license for your game, but on his own behalf. Therefore, if you decide to “part ways” in the future, the publisher will not be able to transfer this license to you.

Usually a publisher receives a fixed fee for starting work and obtaining a license. And when the project is launched – a percentage of the profit of the Chinese version of your game. In fact, he will pay you the profit “cleared” from the Chinese income tax (18%) and his commission. Often the commission amount reaches 60-70%.

After the game is launched, the publisher is usually responsible for interacting with advertisers, integrating payment systems (WeChat, AliPay, etc.), fighting clones and unfair competitors, working with reviews, analytics and traffic procurement.

The publisher is selected. What’s next?

It is necessary to decide whether you need an ISBN license or it is enough to get a patent.

In order to understand this, you need to decide how your game will be monetized in China.

There are two main ways:

1. Direct payments. For example, a fee for downloading or in-app purchases. That is, it assumes a direct transfer of funds from the user’s account to the author’s account (or to the account of the store, which will then transfer the remuneration to the developer).
2. Remuneration from advertisers. Assumes making a profit from displaying ads in a free application.

For games with direct payments, an ISBN license is required. But getting it requires both a lot of money and time.

For advertising monetization, a patent (also known as a copyright certificate obtained from the National Copyright Administration) is sufficient. It is much easier to get it, and most importantly – cheaper and faster.

You can start by obtaining a patent, launch a free version of the game with advertising monetization and simultaneously start the process of obtaining an ISBN.

I still need an ISBN. How to get it?

To get an ISBN, your publisher needs:

• register the copyright for the game through the National Copyright Administration (more on this below);
• verify that the game complies with Publisher Management Regulations, Internet Information Service Management Measures, Network Publishing Service Management Regulations, and that it complies with laws on the protection of minors and personal data;
• The game must pass the NPPA qualification selection and receive permission to assign an ISBN.

Please note that the application must be accompanied by a description of the system operating in the game to combat gambling addiction and the principle of its operation. But so far this is not required for mobile games.

How long does it take to get an ISBN?

Getting an ISBN is not a quick and easy way. However, it is quite possible to achieve a positive result. It all depends on the requirements of the regulator, the correctness of filling in the source data, submitting forms, translating the necessary documentation into Chinese and other possible requirements.

Formally, obtaining a permit takes 80 working days. But the new NPPA rules set a limited number of games that can be released in China monthly. Therefore, there is a “queue” for obtaining a license. In fact, the term can be from 1 to 3 years.

I’ll start with the patent anyway. What should be considered?

To do this, you need to register the copyright for the game through the National Copyright Administration.

Your project must pass the inspection of the China Copyright Protection Center (CPCC), authorized by the NCAC administration.

To do this, in addition to the application and formal documents, you will need to provide a sample of your work: at least 30 pages of the original program. You need both the server code and the client code.

According to the terms, this process takes 2-4 months.

How to localize the game?

It is worth remembering that the choice of the translation language may depend on the way the application is distributed. iOS uses two languages: Traditional Chinese and Simplified Chinese. There are three in Android: Chinese (Hong Kong), Chinese (Traditional) and Chinese (Simplified).

In addition to the texts inside the game, we recommend translating all the accompanying documentation (EULA, Privacy Policy), as well as the description of the game for stores and promotional materials.
It is also worth remembering about cultural adaptation and the peculiarities of the local mentality.

And also remember that many Western social networks, for example, Facebook, do not work in China. Therefore, it is better to disable authorization through them.

What are the requirements for the content of the game?

They are quite tough, but they are formulated vaguely.

Your game should not pose a threat to the national unity, sovereignty and territorial integrity of China, incite ethnic hatred, discrimination, endanger ethnic unity or encroach on ethnic traditions and customs, promote cults and superstitions, undermine social order and disrupt social stability.

It is important that games cannot “promote indecent behavior, gambling, cruelty or support criminal acts.” In games with a rating below 18+, there should be no demonstration of criminal behavior and violation of public morals. Also, they should not include scenes of terror, cruelty and content that can harm the physical or mental health of the child.

Also recently there was information about a new system of “ratings” of games based on their content and quality. A special commission will evaluate the projects according to the following criteria: “concept”, “originality of design”, “quality of execution”, “cultural value” and “quality of development”. For each parameter, the game is rated on a five-point scale, and then the average is output. The passing score for leaving the country is 3.

Are there any examples of games banned in China because of their content?

Not so long ago, the famous pandemic simulator Plague Inc. was banned and removed from the App Store.

The game’s developer, Ndemic Creations, explained this by saying that the game “contains content that is illegal in China according to the definition of the Chinese Cyberspace Administration.”

Plague Inc

Battlefield 4 has also been banned in the country, and even before the launch. The Chinese Ministry of Culture has banned the distribution of all materials related to the game. This is due to its plot, where the Chinese military is shown as the player’s opponent.

Are there any restrictions in the field of personal data of Chinese users?

Since 2017, China has a law prohibiting providers from collecting and selling users’ personal information without their consent. In March 2018, the state standard “Personal Information Security Specification” was released. The document covers the collection, storage, use, exchange, transfer and disclosure of personal information. There is an opinion that its requirements are similar to the GDPR conditions.

Please note that recently the Chinese Advertising Association, with the support of the government of the country, has developed a new standard for tracking users in applications – CAID. This is an analogue of the unique device identifier (IDFA), which allows you to bypass Apple’s new privacy policy (more about it here). According to rumors, large Chinese corporations – ByteDance, Tencent and Baidu – are already involved in testing the technology. It will probably soon become the main standard for applications in China.

Also, from May 1, 2021, it will be prohibited in the country to close access to the application if the user refuses to share excessive personal data. Information that is needed not just for identification or direct functions of the program, but for advertising purposes is considered redundant. Although the mechanism of regulation is not completely clear. It seems that the rules are still advisory in nature.

Are there any features of publishing in the local App Store?

The ISBN certificate does not mention the name of the developer or even the original non-Chinese name of the game. Therefore, if you publish the game yourself in the China iOS App Store, you will need authorization from the licensed publisher. It sounds strange and unfair, but you really need your Chinese publishing partner to grant you a license to publish your own game.

And these are not the only contractual rights that will be needed. The game operator must also provide you with a variety of supporting documents, such as:

• permission letter;
• a copy of the business license;
• a copy of the actual ISBN license;
• other documents.

Today, Apple still allows foreign developers to send games to the China App Store themselves. Although, according to Chinese law, only local companies with an ICP license should have this opportunity.

However, everything can change at any time, so we recommend that you monitor changes to this rule.

Playkot Blitz Interview

Evgenia Artemova

Davletshina: How did you get to your publisher? Why did the choice fall on him?

Artemova: Our publisher has its head office in China, but there is also a European office. This usually indicates that the company is striving to create comfortable conditions for Western partners, it can say that communication will be built well. Plus, of course, reviews from colleagues in the market about the experience of working with this publisher.

Davletshina: How long did the whole process take (from the decision-making to the official launch)?

Artemova: If we take into account the time from preparing to apply for an ISBN to the moment of actually obtaining a license, then it was a very long and complicated process. In our case, it took almost two years.

But I note that at the moment our games are not represented in China for a number of reasons.

Davletshina: What was the most difficult/unexpected?

Artemova: It was difficult to come to terms with the fact that the rules are very vague. No one knows 100% how to interpret them, how to implement them in the application build.

Additional stress is caused by frequent changes in regulations, especially those concerning underage players. We have to adjust and make decisions quickly. If the work on the Chinese build goes in parallel with the development of the prod build, the load on the team is very high.

Davletshina: Do you recommend other developers to go to China and under what conditions?

Artemova: The decision on whether to go to China should be made based on several questions:

• Is the game genre popular in China? How much money can it potentially bring in? Will it be possible to do marketing in plus?
• ISBN is expensive and long. Does the company currently and in the future 1-2 years have enough resources (human and financial) to prepare an application?

***

As you can see, the process of entering the Chinese market is extremely time-consuming and lengthy, and new legislative initiatives appear quite often. A country with a population of almost one and a half billion inhabitants and a lot of paying players is really a tasty morsel for any developer. But before you plan an exit in China, you should soberly assess your capabilities.