Red Steal?

As reported in the China Daily, video game production outsourcing to China is predicted to exceed $2.5 billion by 2010. Given that China is currently the fourth-largest economy in the world, with recorded economic growth reported as 10.7% last year, it’s no surprise that interest from game developers and publishers in establishing a long-term presence in China is high, given that production costs are significantly lower than the West and investment opportunities are common. However, the Chinese government’s position on the moral issues surrounding video games as an entertainment medium – especially within the context of internet use – is no secret, with Beijing displaying little tolerance towards Western companies seeking to capitalize on the rapidly-growing market for online gaming and cheaper labor. Is a backlash inevitable?

With potential revenues proving especially enticing to Western companies, it’s unlikely that pursuit of this lucrative market share will wane, even with fierce opposition from Beijing. Companies like Ubisoft are already building branch offices in China for development reasons, and Electronic Arts recently expanded their Pogo casual gaming service to offer their services to Chinese gamers. However, could intense interest from foreign investors (particularly Westerners) be met with stern response from the Chinese government? Never one to bow to popular opinion, Chinese President Hu Jintao has regulated the Chinese media (particularly internet usage and television broadcasts) in a manner deemed stricter than his predecessor, and also favors some rather hard line views in terms of political reform.

It is this that could prove to be a conflict of interest for Jintao, and the Chinese as an economic power. I’m sure that Beijing won’t pass on the chance to capitalize on the West’s need for cheaper production costs long associated with Chinese outsourcing, but will traditionalism and the iron grip on the country’s media be won over by aggressive business interests of Western media companies and China’s desire for economic growth? China’s internet usage statistics indicate a strong increase, despite heavy censorship and media control and video gaming is gaining in popularity at a steady rate – something has to give, especially given the speed at which the Chinese economy is growing. Will Beijing listen to the voice of The People? Or will China’s continued growth be met with ever-tightening control?

Expansion comes at a cost – but will Beijing be willing to pay?

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