China: Cultural Market Opening To Foreign Investment In The Shanghai Free Trade Zone

Last Updated: 7 May 2014
Article by Richard Ma and Brendon Wu

On 21 April 2014, the Shanghai municipal government promulgated the Implementation Rules for Opening the Cultural Market in the China (Shanghai) Free Trade Zone ("Rules"), which set out new entry requirements and application procedures for foreign investment, within the Shanghai Free Trade Zone ("FTZ"), in three previously closed or restricted sectors: (i) the sale and service of gaming and entertainment consoles, (ii) performance agencies, and (iii) entertainment venues.

Applicable Laws and Regulations

On 27 September 2013, the State Council promulgated the Overall Plan for the China (Shanghai) Free Trade Pilot Zone ("Plan"). Soon after, on 30 September 2013, the Ministry of Culture promulgated the Notice of the Ministry of Culture on Implementing Cultural Market Administration Policies in the China (Shanghai) Pilot Free Trade Zone ("Notice"), making specific adjustments to the relevant policies concerning administration of the cultural market in the FTZ in accordance with the Plan.  Then, on 6 January 2014, the State Council issued theDecision of the State Council on Temporary Adjustment of Relevant Administrative Regulation and Administrative Approval or Special Administrative Measures on Foreign Investment in China (Shanghai) Pilot Free Trade Zone ("Decision"), which announced 32 reform measures concerning foreign investment policy in the FTZ, among which are the three sectors that have now been opened up.  As of today, the relevant laws and regulations specific to foreign investment in the cultural sector in the FTZ include the Plan, the Notice, the Decision, and the Rules.

Opening-up of Three Sectors

The Rules provide that three sectors (gaming consoles, performance agencies and entertainment venues) will be opened up to foreign investment as follows:

  • Foreign invested companies will be permitted to manufacture and sell gaming and entertainment consoles.  The consoles can be sold across China if the content has been cleared by the cultural regulators.
  • The equity caps for foreign-invested performance agencies will be lifted and wholly foreign-owned performance agencies will be allowed to be set up and provide services throughout Shanghai.
  • Foreign invested companies will be permitted to set up wholly foreign-owned entertainment venues inside the FTZ.

Application Details

According to the Rules, the application procedures for foreign investment in the three newly-opened sectors are as follows:

  • Sale and service of video game and entertainment consoles.
    • Eligible Applicants. Foreign-invested enterprises ("FIEs") which have obtained a business license containing "the manufacture and sale of gaming and entertainment equipment" in its business scope from the local Administration of Industry and Commerce.
    • Approval Authority. Shanghai Municipal Administration of Culture, Radio, Film and TV ("Administration of Culture, Radio, Film and TV").
    • Timeline. 20 business days after an application has been accepted.
    • Content Review Confirmation. Gaming and Entertainment Console Content Review Confirmation will be issued to FIEs if their consoles satisfy certain requirements. Application for the review should also be filed with the Administration of Culture, Radio, Film and TV; consoles that do not pass the review will receive a written explanation.

In addition, the Rules expressly provide that the local Administration of Culture, Radio, Film and TV will conduct content review, requiring that the video game and entertainment consoles cannot contain any prohibited content as specified under Article 13 of the Regulations on the Administration of Entertainment Venues,1 nor can they contain any gambling elements such as the betting of points and the return of coins or tokens.

  • Performance agencies.
    • Eligible Applicants. FIEs which have obtained an appropriate business license from the local Administration of Industry and Commerce.
    • Approval Authority. Administration of Culture, Radio, Film and TV.
    • Timeline. 20 business days after an application has been accepted.
    • License Review. Commercial Performance Licenses will be issued to agencies which pass the review; agencies that do not pass the review will receive a written explanation.

In addition, the Rules provide that FIEs intending to set up performance agencies in the FTZ shall make a filing with the Administration of Culture, Radio, Film and TV to obtain a Performance Venue Operator Certificate within 20 business days after obtaining their business licenses.

  • Entertainment venues.
    • Eligible Applicants. FIEs which have obtained an appropriate business license from the local Administration of Industry and Commerce.
    • Approval Authority. FTZ Administrative Committee.
    • Timeline. 20 business days after an application has been accepted.
    • License Review. Entertainment Operation Licenses will be issued to FIEs which are given an approval; agencies that are not given an approval will receive a written explanation

Additionally, the Rules further simplify the relevant review procedures regarding the establishment of foreign-invested entertainment venues.


With the promulgation of the Rules, the relevant policies in respect of the cultural market in the FTZ have become more developed and complete. The lifting of the 14-year ban on gaming consoles in China, originated in June 2000,2 as well as the liberalization of foreign investment policy with respect to the entertainment sector, etc., will certainly bring new business opportunities in the FTZ and will no doubt boost the prosperity and development of the media and entertainment industry in Shanghai and even the whole of China.

It should be pointed out that although the FTZ now allows for foreign investment in the sale and service of gaming and entertainment consoles, foreign investment with respect to gaming software development is still prohibited.  In particular, there is no sign that the online gaming market will be opened to foreign investment any time soon.3


1 Article 13 of the Regulations on the Administration of Entertainment Venues: The State promotes the excellent culture of the nation, and prohibits entertainment activities at any entertainment venues which involve the following: (1) violating the fundamental principles specified in the Constitution of the People's Republic of China; (2) disserving the unity, sovereignty and territorial integrity of the State; (3) disserving the security, honor or interests of the State; (4) instigating ethnic animosity or ethnic discrimination, damaging national sentiment or aggrieving ethnic customs and habits, or destroying ethnic solidarity; (5) violating religious policies of the State, or instigating heresy or superstition; (6) instigating obscenity, gambling, violence or drug-related crimes, or abetting others to commit crimes; (7) anything in violation of social morality or excellent ethnic cultural heritage; (8) insulting or defaming others or infringing on the lawful rights and interests of others; and (9) any other content prohibited by laws or administrative regulations.

2 In June 2000, the State Council promulgated the Opinions concerning the Launch of a Special Campaign to Bring Electronic Gaming Business Venues under Control, which require that the production and sale of electronic gaming equipment, spare parts and accessories aimed at the domestic market was immediately ceased. No company or individual was allowed to continue to engage in the production and sale of electronic gaming equipment, spare parts and accessories aimed at the domestic market. Apart from trade processing, the import of electronic gaming equipment and spares or accessories was strictly restricted.

3 Under the current regulations, Chinese companies conducting online gaming businesses are required to apply for an Internet Publishing License from the General Administration of Press and Publication and to apply for an Internet Culture Business License from the Ministry of Culture.  In addition, Chinese companies operating foreign online games are required to make additional filings in respect of the import of foreign games with the Ministry of Culture and the General Administration of Press and Publication Foreign. None of the above has been opened to wholly foreign-owned enterprises or Sino-foreign equity joint ventures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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