China Tech Regulation: Beijing Demands Social Responsibility

China Tech Roundup: Gaming Restrictions and Social Responsibility

Welcome to this week’s digest of developments in the Chinese tech sector, brought to you by TechCrunch. We’ll be examining recent events and their global implications.

New Regulations for Gaming

Beijing has once more focused its attention on the gaming industry, implementing what are potentially the most stringent regulations globally concerning access for young players. These measures aim to significantly limit gaming time for minors.

The new rules represent a continued effort by the Chinese government to address concerns surrounding gaming addiction and its potential impact on youth development.

Tech Companies Respond to Government Directives

Simultaneously, China’s leading technology companies are actively responding to requests from Beijing. They are being urged to prioritize social responsibility initiatives.

This shift signals a move away from the previously emphasized pursuit of rapid and unrestricted growth for these tech giants. A pause in unfettered expansion is now expected.

The emphasis on social responsibility reflects a broader governmental strategy to align the tech sector with national priorities and address societal concerns.

Key Takeaway: The Chinese government is demonstrating increased control over its tech industry, balancing economic growth with social and political objectives.

Gaming Curfew in China

A significant change has been implemented regarding gaming for young people in China. Effective September 1st, individuals under 18 years of age are now restricted to a maximum of one hour of online gaming per week.

This limited playtime is permitted only on Fridays, Saturdays, and Sundays, specifically between the hours of 8 p.m. and 9 p.m. The new regulation represents a further tightening of existing policies aimed at controlling minors’ access to video games.

The Chinese government attributes concerns about myopia, alongside declining mental and physical well-being, to excessive video game use. This action follows recent restrictions placed on after-school tutoring programs, leading to observations about the challenges faced by working parents in finding alternative activities for their children.

Details of the New Regulation

The new rule was enacted by the National Press and Publication Administration (NPPA). This organization is responsible for approving video game titles within China.

Notably, the NPPA previously paused the gaming approval process for nine months in 2019, which resulted in a decline in the stock values of companies like Tencent. The directive regarding playtime originates from the body that manages content review and publishing licenses.

Like many other sectors in China, the video game industry is subject to oversight from multiple governmental bodies. These include the NPPA, the Cyberspace Administration of China (CAC), and the Ministry of Industry and Information Technology.

Analysts have noted that the CAC, operating under the Central Cyberspace Affairs Commission and led by President Xi Jinping, has encountered “bureaucratic struggles” with other ministries reluctant to cede control.

This dynamic may be a contributing factor in the regulation of the profitable gaming industry.

Impact on Gaming Companies

The financial impact of this new rule on companies like Tencent may be minimal. Several Chinese gaming companies, including NetEase and 37 Games, have reported that revenue from underage players represents less than 1% of their total income.

Tencent disclosed in its Q2 earnings report that players under 16 years old accounted for only 2.6% of its gaming revenue within China, while those under 12 represented just 0.3%.

However, these figures may not accurately reflect the situation, as minors have historically circumvented gaming restrictions. This has included using adult identification for registration, mirroring past practices of borrowing IDs to access internet cafes.

Tencent and other firms have pledged to address these loopholes, potentially driving minors to employ more advanced methods, such as utilizing VPNs to access international versions of games.

This ongoing effort to regulate and circumvent regulations creates a continuous cycle of adaptation and response.

Shared Growth and Responsibility

As China regulates its large technology companies, it is simultaneously encouraging them to embrace greater social accountability, particularly concerning the rights of workers within the gig economy.

The Supreme People’s Court of China recently ruled the “996” work schedule – 9 a.m. to 9 p.m., six days a week – as unlawful. This decision stemmed from sustained employee opposition to the tech sector’s culture of overwork, evidenced by initiatives like the GitHub project cataloging companies employing the “996” system.

Historically, a diligent and compliant workforce has been considered a key advantage for China’s technology industry. This is a contributing factor to why certain Silicon Valley firms, especially those with leadership familiar with China, have established operations within the country to access its skilled tech personnel.

The era of celebrating and accepting excessive working hours appears to be concluding. Both ByteDance and Kuaishou, competitors in the short-video market, have recently eliminated mandatory weekend overtime.

Meituan has also responded to criticism by announcing the implementation of required rest periods for its food delivery personnel. The company has faced accusations of utilizing algorithms that are “inhumane,” pushing riders to work excessively long hours or engage in risky driving behaviors.

In significant developments, Didi, a leading ride-hailing service, and JD.com, a major e-commerce platform rivaling Alibaba, have established unions for their employees. The practical effect of these organizations on protecting worker rights remains to be seen.

Both Tencent and Alibaba have taken action following President Xi Jinping’s August 17th address advocating for “common prosperity,” which garnered substantial attention from the nation’s wealthiest individuals.

President Xi stated, “As China progresses towards its second centenary goal, prioritizing the well-being of the people requires fostering common prosperity to solidify the basis for the Party’s sustained governance.”

This week, both Tencent and Alibaba committed to investing 100 billion yuan ($15.5 billion) to support “common prosperity.” The objectives of these funds are consistent with Beijing’s national development priorities, encompassing initiatives such as rural economic growth and improvements to the healthcare infrastructure.