Shanghai Pilots Groundbreaking Policy: Foreign-Developed Games in Shanghai to be Treated as Domestic Games

On 7 July 2025, the General Office of the Shanghai Municipal People’s Government issued new incentive policies under the “Several Measures to Promote the High-Quality Development of the Software and Information Services Industry in Shanghai” (the “Pilot Policy”). One key measure under the Pilot Policy is to allow games developed by foreign-invested enterprises based in Shanghai to be treated as domestic games for licensing purposes. This groundbreaking move is expected to streamline the path for foreign game companies seeking entry into the Chinese market.

This Pilot Policy could significantly benefit international gaming companies with Shanghai-based development teams for globally popular games. Despite their strong local presence, these games have faced lengthy approval delays due to their “foreign” origins.

Under China’s current regulations, the approval process for imported online games is notably complex. It typically involves multiple time-consuming formalities, including filing with the National Copyright Administration and content review, which require a Chinese local publisher and operator. For instance, in 2024, the National Press and Publication Administration (“NPPA”) approved 1,306 domestic online game licences, while only 109 licences were granted for imported games—roughly equivalent to the average monthly approval volume for domestic games. This disparity highlights the substantial gap between licences granted under the domestic route versus the imported-game route.

This highly regulated environment has delayed the domestic launch of many games co-developed by Chinese domestic game companies and overseas game companies. A notable example is Call of Duty: Mobile (“CODM”), jointly developed by Tencent and Blizzard Entertainment. Whilst the international version launched in October 2019, the Chinese version did not receive its publication approval (also known as ISBN approval) until late 2020. If the Pilot Policy is successfully implemented, foreign-invested games developed or co-developed with local game companies in Shanghai could enjoy the same approval treatment as domestic games, significantly expediting their Chinese market entry.

Foreign investors should understand the “dual-management mechanism” in China for all games, not just imported online games. This mechanism comprises operation management and publishing management. 

Operation management falls under the supervision of the Ministry of Industry and Information Technology of the People’s Republic of China (“MIIT”). MIIT is responsible for all telecommunication related business in China, and offering online game services constitutes value-added telecommunication services in China. Entities that offer such services must obtain an ICP licence from MIIT. Although foreign investors may own less than 50% of shares in companies conducting value-added telecommunication business following  the opening of the telecommunication market in China, the Circular on Implementing the State Council's "Three-Set Regulations" and the Related Interpretation from the Central Institutional Organization Commission to Further Strengthen the Administration of the Pre-Approval for Online Games and Approval for Imported Online Games (“Circular No.13”), issued in 2009 to prohibit foreign investment participation in online game industry, still cannot be overridden. 

Circular No.13 explicitly states: “it is prohibited for foreign investors to invest or to engage in operational services for any online game within China in the form of sole proprietorship, joint venture, or cooperation or in any other form. It is prohibited for any foreign investor to actually control or participate in the operation of any online game of a Chinese domestic enterprise through establishing a joint venture, entering into a relevant agreement, providing technical support, or other indirect means. It is also prohibited for a foreign investor to control or participate in a disguised form, the operation of an online game of a Chinese domestic enterprise through means such as having the game’s user registration, account management, point card purchases etc., directly exported to a game networking or battle platform that is actually controlled or owned by the foreign investor.” Therefore, almost all feasible ways for foreign-invested companies to be involved in the operation of online games are strictly forbidden by Circular No.13. This also explains why a domestic game company in China must be involved as a game operator for imported games and why imported games are treated differently in China in comparison to domestic games even with local game companies acting as operators. The mandatory requirement for obtaining approval from NPPA for imported games also echoes the restrictions under the Negative List for Market Access (2025) (“Negative List”) in relation to conducting game publishing and operation businesses in China for foreign investors.

Publishing management is governed by the Regulations on Publication Administration and Network Publishing Service Management Regulations (“Network Publishing Regulations”). Article 2 of the Network Publishing Service Management Regulations defines “network publications” as digital works with publishing characteristics (such as editing, production, and processing) provided to the public via information networks, which explicitly includes “games”. Furthermore, providing online publications to the public through information networks also constitutes offering online publishing services, and Article 7 of the Network Publishing Regulations requires entities conducting online publishing services to obtain a Network Publishing Service Licence. Therefore, currently all games in China, whether online or offline, fall under the scope of publishing management. 

The Decisions of the State Council on the Entry of Non-public Capital into the Cultural Industry, promulgated in 2005, prohibit non-public capital from investing in or operating publishing houses in China. This means neither privately-owned Chinese domestic game companies nor foreign-invested companies can conduct traditional publishing businesses in China. Similarly, the Network Publishing Regulations also prohibit wholly or partially foreign-owned companies to conduct network publishing business. The common practice in China is therefore for domestic game companies to engage and appoint local publishers to publish games, after which the game companies may operate the games themselves. To date, the Negative List still lists the “publishing of electronic publications and online game works authorized by foreign copyright holders” (item 84) as a restricted business in China for foreign investors.

According to the General Office of the Shanghai Municipal People’s Government, detailed implementation rules of the Pilot Policy remain under consideration. The Shanghai local government cannot implement this Pilot Policy independently without NPPA support. However, the general regulatory environment has seen positive developments, with recent incentive policies lifting restrictions on foreign investment in the fields of telecommunications, medical treatment and other sectors. Therefore, it is highly anticipated that the NPPA will support this Pilot Policy to promote growth of the gaming industry in China by welcoming foreign-origin games to enter via the domestic route.