China
Co-Opting China’s Online Game Pirates
The underworld that is China’s pirated online-game sector is a big drag on the country’s legitimate game market, affecting top titles like World of Warcraft and many others in the popular swords-and-sorcery genre. So how do you beat the pirates? Companies are generally aggressive about shutting down unlicensed versions of their games. But for China’s Shanda Games, the answer also includes efforts to win back users who have turned to unlicensed games – sometimes with help from former pirates themselves. The operators of pirated online games run them on what are called “private servers,” a term that simply refers to a privately-owned machine but which is common lingo for a server running an altered version of a proprietary online game. The pirates usually attract users both by offering the games free of charge and by changing the rules of the game. While someone playing the real World of Warcraft might have to grind for weeks to get their character up to the game’s highest level, the same feat may take just hours on a private server. Players can then dive right into the epic battles and treasure-hunting only available to top-level players. Analysts say Legend of Mir, a popular martial-arts adventure game operated in China by Shanda, is among the games most widely run on Chinese private servers. Shanda Games scans the Internet every day to find new private servers running its games and aims to shut them down, Chief Executive Alan Tan said in a recent interview. In rare cases, after a private server has been shut down, Shanda will set up its own server in the same geographical area in hopes of luring the private server’s users over to a legitimate Shanda game. Shanda may even rope the operator of the former private server into helping promote the licensed game. The other prong of Shanda’s strategy against private servers acknowledges user demand for the sort of games they offer—where the rules can be changed and players can level up without weeks of effort. For example, Shanda is developing a game platform called World Zero that will allow users to create their own game world and modify its rules, Tan said. A partner is also developing a game called “Jue Zhan Shuang Cheng” (roughly: “Decisive Battle of the Two Cities”) that imitates private server rules—allowing users to level up very quickly and engage in battles against other powered-up characters. World Zero may be tested next year and Shuang Cheng may be available this year, Tan said. Shanda’s strategy seems to have yet to catch on with the company’s biggest competitors in China. A spokesman for Netease.com said the Chinese online game company strictly combats private servers and won’t cooperate with their owners in any way. Netease operates the Chinese version of Activision Blizzard’s World of Warcraft through a licensing deal, but the company spokesman referred to Blizzard for questions about private servers running that game. Blizzard said in a statement it opposes the creation and use of unauthorized emulator servers. The private server market is sizable. Yu Yi, an analyst at Beijing research firm Analysys International, estimates the value of the online-game private-server market will be around 5 billion yuan ($776 million) this year, about one-seventh the size of the likely 36 billion yuan ($5.6 billion) legitimate market for online games running on software programs. The business can also be lucrative, as shown in a case last month in the western Chinese metropolis of Chongqing, where police said they broke up a circle called the “Knights Attack Group” that had distributed ads for private servers running a game called “Legend”—apparently referring to Legend of Mir. The group of 19 people, most of them born in the 1980s and either middle-school or high-school graduates, had made at least 70 million yuan in illicit revenue in about two years, the Chongqing police said in a statement. Among the group’s assets seized by police were several cars, including two Audis, a Porsche and a BMW. The Chongqing case also reflected how dirty competition can become in the private server business, where cyberattacks are common and victims are unlikely to seek police aid because their operations are illegal. The “Knights” group monopolized the market for Legend private-server ads because it disrupted rivals with cyberattacks, police alleged. At one point, all 20 of the top search results on Baidu for “Legend private server” were websites run by the group. The Chongqing police said they handed off the case to local prosecutors in June for further handling. The case was reminiscent of another in 2009, when police in Guangdong province said an attack launched by a private server operator escalated and, for unusual technical reasons, ultimately caused a brief Internet outage in areas of several Chinese provinces. – Owen Fletcher. Follow him on Twitter @owenfletcher
The underworld that is China’s pirated online-game sector is a big drag on the country’s legitimate game market, affecting top titles like World of Warcraft and many others in the popular swords-and-sorcery genre. So how do you beat the pirates? Companies are generally aggressive about shutting down unlicensed versions of their games. But for China’s Shanda Games, the answer also includes efforts to win back users who have turned to unlicensed games – sometimes with help from former pirates themselves. The operators of pirated online games run them on what are called “private servers,” a term that simply refers to a privately-owned machine but which is common lingo for a server running an altered version of a proprietary online game. The pirates usually attract users both by offering the games free of charge and by changing the rules of the game. While someone playing the real World of Warcraft might have to grind for weeks to get their character up to the game’s highest level, the same feat may take just hours on a private server. Players can then dive right into the epic battles and treasure-hunting only available to top-level players. Analysts say Legend of Mir, a popular martial-arts adventure game operated in China by Shanda, is among the games most widely run on Chinese private servers. Shanda Games scans the Internet every day to find new private servers running its games and aims to shut them down, Chief Executive Alan Tan said in a recent interview. In rare cases, after a private server has been shut down, Shanda will set up its own server in the same geographical area in hopes of luring the private server’s users over to a legitimate Shanda game. Shanda may even rope the operator of the former private server into helping promote the licensed game. The other prong of Shanda’s strategy against private servers acknowledges user demand for the sort of games they offer—where the rules can be changed and players can level up without weeks of effort. For example, Shanda is developing a game platform called World Zero that will allow users to create their own game world and modify its rules, Tan said. A partner is also developing a game called “Jue Zhan Shuang Cheng” (roughly: “Decisive Battle of the Two Cities”) that imitates private server rules—allowing users to level up very quickly and engage in battles against other powered-up characters. World Zero may be tested next year and Shuang Cheng may be available this year, Tan said. Shanda’s strategy seems to have yet to catch on with the company’s biggest competitors in China. A spokesman for Netease.com said the Chinese online game company strictly combats private servers and won’t cooperate with their owners in any way. Netease operates the Chinese version of Activision Blizzard’s World of Warcraft through a licensing deal, but the company spokesman referred to Blizzard for questions about private servers running that game. Blizzard said in a statement it opposes the creation and use of unauthorized emulator servers. The private server market is sizable. Yu Yi, an analyst at Beijing research firm Analysys International, estimates the value of the online-game private-server market will be around 5 billion yuan ($776 million) this year, about one-seventh the size of the likely 36 billion yuan ($5.6 billion) legitimate market for online games running on software programs. The business can also be lucrative, as shown in a case last month in the western Chinese metropolis of Chongqing, where police said they broke up a circle called the “Knights Attack Group” that had distributed ads for private servers running a game called “Legend”—apparently referring to Legend of Mir. The group of 19 people, most of them born in the 1980s and either middle-school or high-school graduates, had made at least 70 million yuan in illicit revenue in about two years, the Chongqing police said in a statement. Among the group’s assets seized by police were several cars, including two Audis, a Porsche and a BMW. The Chongqing case also reflected how dirty competition can become in the private server business, where cyberattacks are common and victims are unlikely to seek police aid because their operations are illegal. The “Knights” group monopolized the market for Legend private-server ads because it disrupted rivals with cyberattacks, police alleged. At one point, all 20 of the top search results on Baidu for “Legend private server” were websites run by the group. The Chongqing police said they handed off the case to local prosecutors in June for further handling. The case was reminiscent of another in 2009, when police in Guangdong province said an attack launched by a private server operator escalated and, for unusual technical reasons, ultimately caused a brief Internet outage in areas of several Chinese provinces. – Owen Fletcher. Follow him on Twitter @owenfletcher
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Co-Opting China’s Online Game Pirates
China
China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
China’s Ministry of Commerce announced new policy measures on April 19, 2023, to encourage foreign investment in the technology sector. The measures include facilitating bond issuance, improving the investment environment, and simplifying procedures for foreign institutions to access the Chinese market.
On April 19, 2023, China’s Ministry of Commerce (MOFCOM) along with nine other departments announced a new set of policy measures (hereinafter, “new measures”) aimed at encouraging foreign investment in its technology sector.
Among the new measures, China intends to facilitate the issuance of RMB bonds by eligible overseas institutions and encourage both domestic and foreign-invested tech companies to raise funds through bond issuance.
In this article, we offer an overview of the new measures and their broader significance in fostering international investment and driving innovation-driven growth, underscoring China’s efforts to instill confidence among foreign investors.
The new measures contain a total of sixteen points aimed at facilitating foreign investment in China’s technology sector and improving the overall investment environment.
Divided into four main chapters, the new measures address key aspects including:
Firstly, China aims to expedite the approval process for QFII and RQFII, ensuring efficient access to the Chinese market. Moreover, the government promises to simplify procedures, facilitating operational activities and fund management for foreign institutions.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
Q1 2024 Brief on Transfer Pricing in Asia
Indonesia’s Ministry of Finance released Regulation No. 172 of 2023 on transfer pricing, consolidating various guidelines. The Directorate General of Taxes focuses on compliance, expanded arm’s length principle, and substance checks. Singapore’s Budget 2024 addresses economic challenges, operational costs, and sustainability, implementing global tax reforms like the Income Inclusion Rule and Domestic Top-up Tax.
Indonesia’s Ministry of Finance (MoF) has released Regulation No. 172 of 2023 (“PMK-172”), which prevails as a unified transfer pricing guideline. PMK-172 consolidates various transfer pricing matters that were previously covered under separate regulations, including the application of the arm’s length principle, transfer pricing documentation requirements, transfer pricing adjustments, Mutual Agreement Procedure (“MAP”), and Advance Pricing Agreements (“APA”).
The Indonesian Directorate General of Taxes (DGT) has continued to focus on compliance with the ex-ante principle, the expanded scope of transactions subject to the arm’s length principle, and the reinforcement of substance checks as part of the preliminary stage, indicating the DGT’s expectation of meticulous and well-supported transfer pricing analyses conducted by taxpayers.
In conclusion, PMK-172 reflects the Indonesian government’s commitment to addressing some of the most controversial transfer pricing issues and promoting clarity and certainty. While it brings new opportunities, it also presents challenges. Taxpayers are strongly advised to evaluate the implications of these new guidelines on their businesses in Indonesia to navigate this transformative regulatory landscape successfully.
In a significant move to bolster economic resilience and sustainability, Singapore’s Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, unveiled the ambitious Singapore Budget 2024 on February 16, 2024. Amidst global economic fluctuations and a pressing climate crisis, the Budget strategically addresses the dual challenges of rising operational costs and the imperative for sustainable development, marking a pivotal step towards fortifying Singapore’s position as a competitive and green economy.
In anticipation of global tax reforms, Singapore’s proactive steps to implement the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) under the BEPS 2.0 framework demonstrate a forward-looking approach to ensure tax compliance and fairness. These measures reaffirm Singapore’s commitment to international tax standards while safeguarding its economic interests.
Transfer pricing highlights from the Singapore Budget 2024 include:
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
China has been the world’s largest manufacturer for 14 years, producing one-third of global manufacturing output. In the Emerging Asia Manufacturing Index 2024, China ranks highest among eight emerging countries in the region. Challenges for these countries include global demand disparities affecting industrial output and export orders.
Known as the “World’s Factory”, China has held the title of the world’s largest manufacturer for 14 consecutive years, starting from 2010. Its factories churn out approximately one-third of the global manufacturing output, a testament to its industrial might and capacity.
China’s dominant role as the world’s sole manufacturing power is reaffirmed in Dezan Shira & Associates’ Emerging Asia Manufacturing Index 2024 report (“EAMI 2024”), in which China secures the top spot among eight emerging countries in the Asia-Pacific region. The other seven economies are India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Bangladesh.
The EAMI 2024 aims to assess the potential of these eight economies, navigate the risks, and pinpoint specific factors affecting the manufacturing landscape.
In this article, we delve into the key findings of the EAMI 2024 report and navigate China’s advantages and disadvantages in the manufacturing sector, placing them within the Asia-Pacific comparative context.
Emerging Asia countries face various challenges, especially in the current phase of increased volatility, uncertainty, complexity, and ambiguity (VUCA). One notable challenge is the impact of global demand disparities on the manufacturing sector, affecting industrial output and export orders.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
- China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
- Q1 2024 Brief on Transfer Pricing in Asia
- New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
- Is journalist Vicky Xu preparing to return to China?
- Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
- China Unveils Plan to Upgrade Industrial Equipment
