"Ministry of Foreign Affairs and Ministry of Culture, Sports and Tourism Should Use Diplomatic Channels to Raise the Priority of the Pan-Ho Issue"
[Asia Economy Reporter Jin-gyu Lee] The export route of Korean games to China has been blocked for 3 years and 3 months, but with Chinese President Xi Jinping expressing his intention to visit Korea again, expectations are rising for the Chinese government's resumption of issuing game licenses (panho, distribution permits).
At the beginning of this year, expectations for the resumption of panho issuance increased around President Xi's planned visit to Korea. However, the unexpected outbreak of the novel coronavirus (COVID-19) made President Xi's visit uncertain, making it difficult to be optimistic about the resumption of panho issuance. Nevertheless, President Xi recently stated during a Korea-China summit call with President Moon Jae-in that "the firm intention to visit Korea within the year has not changed," creating an opportunity to discuss the resumption of panho issuance again.
According to the game industry on the 16th, Park Yang-woo, Minister of Culture, Sports and Tourism, expressed his determination to actively resolve the Chinese panho issue during a recent meeting with industry representatives held by the Korea Game Industry Association. Minister Park reportedly said at the meeting, "We are making various efforts, including unofficial discussions with the Chinese embassy behind the scenes to resolve the panho issue," and added, "The panho issue is one of the most important tasks for the development of the game industry, so we will do our best to solve this problem."
The industry expects that if President Xi visits Korea within this year, discussions on the resumption of panho issuance will take place. At the same meeting, Wi Jeong-hyun, President of the Korea Game Society, argued, "With President Xi's visit within the year becoming possible again, related agencies such as the Ministry of Foreign Affairs and the Ministry of Culture, Sports and Tourism should actively mobilize diplomatic channels to ensure that the issue of resuming panho issuance ranks high on the agenda of Korea-China discussions." Earlier this year, the Korea Game Society met with officials from the Ministry of Foreign Affairs to strongly urge the Chinese government to resume issuing panho upon President Xi's visit.
The Chinese government has not issued panho to Korean games since March 2017, using the THAAD (Terminal High Altitude Area Defense) conflict as a pretext. Panho is mandatory to service games in China. Overseas game companies receive foreign-invested panho, while Chinese game companies receive domestic panho. Until early this year, foreign-invested panho was issued to Japanese, American, and British games, but uniquely, Korean games have not been issued foreign-invested panho.
Some criticize that Korean games have been 'used and discarded' (tosa-gupaeng) by the Chinese government. In the 2000s, when Korean games dominated the Chinese market, numerous Chinese gamers enjoyed Korean games, and until the early 2010s, China imitated Korean games, but suddenly blocked Korean games altogether.
Meanwhile, domestic game companies are struggling to find a breakthrough as panho issuance has been suspended in China, their largest export market, but Chinese games' dominance in the domestic market is expanding day by day. According to the '2019 Korea Game White Paper' by the Korea Creative Content Agency, the export share of domestic game companies to the Greater China region (including Taiwan and Hong Kong) decreased by 14 percentage points from 60.5% in 2017 to 46.5% in 2018.
On the other hand, Chinese game companies recorded sales of about 2 trillion won in the Korean market last year, encroaching on the domestic market. According to the '2019 China Game Industry Report' by the China Audio-Visual and Digital Publishing Association Game Committee, Chinese game companies recorded sales of approximately 1.916 trillion won in Korea last year. Chinese mobile games such as Rise of Kingdoms by Lilith Games also occupy the top ranks in domestic application market sales.
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