[Exclusive] National Assembly Also Moves to Regulate 'Makjang Operation' of Chinese Games

[Asia Economy Reporter Buaeri] The National Assembly has taken a strong stance against the ‘reckless operations’ of Chinese game companies. As Chinese game companies actively enter the Korean market, they have sparked controversy by engaging in various illegal and improper practices such as sudden service terminations without notice, provocative advertisements, and suspected illegal collection of personal information.

‘Introduction of Domestic Agent System’ National Assembly Also Moves to Regulate

According to the National Assembly and the gaming industry on the 5th, Song Jae-ho, a member of the Democratic Party of Korea and the Political Affairs Committee, plans to propose an amendment to the Electronic Commerce Act that includes the domestic agent system. This bill aims to strengthen the current domestic agent system, which has been criticized as ineffective due to Chinese game companies’ failure to properly comply. The purpose is to designate and manage ‘domestic agents’ to represent overseas game companies, including those from China, with whom communication has been difficult, and to prevent ‘take it or leave it’ style operations.

The amendment mainly requires business operators without an address or office in Korea who meet certain criteria such as sales volume and number of users to designate a domestic agent. In particular, the amendment mandates notifying the Fair Trade Commission of the designation results and any changes regarding domestic agents. This is based on the judgment that if the Fair Trade Commission, which has investigative authority, takes charge, the regulations will become more binding. Additionally, the Fair Trade Commission will be able to request submission of data on sales, number of users, and other matters prescribed by Presidential Decree to verify whether the domestic agent designation applies.

The penalty for failing to designate a domestic agent has also been strengthened from the existing ‘fine of up to 30 million KRW’ to ‘fine of up to 100 million KRW.’ Song’s office explained, "Applying current regulations only to domestic businesses and not to overseas businesses causes reverse discrimination against domestic businesses and moral hazard for overseas businesses."

What Are the Reckless Operations of Chinese Game Companies?

Chinese games have entered the Korean market but have been under scrutiny every year for engaging in various behaviors that may violate domestic laws. For example, Chinese game company Paper Games sided with Chinese users amid controversy over the Northeast Project theory related to hanbok in the game ‘Shining Nikki.’ When domestic users strongly opposed this, the company suddenly announced the termination of Korean service, sparking controversy over violations of the Fair Trade Commission’s mobile game standard terms and conditions.

The Chinese mobile game ‘Chaos Academy’ included a clause in its membership agreement stating that it would collect and use users’ related personal information without consent if it concerns national security or other matters of the home country. This means that if the game company interprets the matter as related to China’s security or public interest, it can collect and use personal information without consent. This potentially violates Korea’s Personal Information Protection Act. Last year, provocative advertisements by Chinese game companies, including misogynistic and sexual objectification content, became problematic. Representative examples include ‘The King’s Avatar,’ which aired ads that seemed to buy and sell women, and ‘Taste of the Queen,’ which compared women to rose and lemon flavors.

However, it has been difficult to punish overseas businesses under domestic law, so there have been continuous calls to supplement the domestic agent designation system. For this reason, various discussions are expected to take place at the National Assembly level. This bill was also made possible through cooperation with Lee Sang-heon, a Democratic Party member known as a ‘game expert’ in the National Assembly. The offices of the two lawmakers plan to hold a forum related to the domestic agent designation system as early as the end of this month. A representative from Lee’s office said, "If the bill passes, it will be possible to impose swift and strong regulatory measures on most of the overseas games that have caused trouble in Korea so far, making it highly effective."