Tencent Cracks Down on Age Limit Circumvention in China
China Tech Roundup: Recent Developments
Welcome to TechCrunch’s latest overview of the Chinese tech sector, providing a summary of recent happenings and their global implications.
New Gaming Regulations and Enforcement
The implementation of China’s revised gaming rules is proving to be a dynamic process, resembling a strategic contest between major internet companies and gamers.
Both entities are continually seeking methods to navigate and circumvent the new restrictions.
Ride-Hailing Market Shifts
In the wake of the app ban imposed on Didi, smaller ride-hailing services are capitalizing on the resulting opportunity.
These companies are actively seeking to fill the void left in the market.
Key Takeaways
- The Chinese government’s regulatory actions are significantly impacting the tech industry.
- Companies are adapting to the changing landscape through innovative strategies.
- Market opportunities are emerging for smaller players as larger entities face challenges.
These developments highlight the ongoing evolution of the Chinese tech ecosystem and its increasing influence on the global stage.
Continued monitoring of these trends is crucial for understanding the future of technology worldwide.
Tencent's Response to Gaming Regulations and Young Players
A traditional Chinese proverb highlights the current situation surrounding the increasingly strict regulations impacting the video game industry within the nation. The phrase, meaning that every rule invites a workaround, aptly describes the response to China’s newest, most stringent playtime restrictions for minors.
New Playtime Limits for Underage Gamers
This month saw the implementation of rules limiting gaming time for individuals under 18 years of age. Young players quickly sought ways to circumvent the imposed three-hour-per-week limit.
Tencent Takes Action Against Account Trading
In a swift response, gaming giant Tencent has begun actively addressing these attempts to bypass the regulations. The company has initiated legal action, or issued formal statements, against more than 20 online platforms facilitating the sale or exchange of adult gaming accounts to underage individuals, as announced by its gaming division on Weibo.
Circumventing Age Verification
These accounts were being rented by children, allowing them to play games for approximately two hours for a small fee, effectively avoiding standard age verification procedures. Tencent asserts that these services pose a significant risk to the integrity of the real-name registration system and the safeguards designed to protect young gamers.
Protecting the Gaming Ecosystem
The company has publicly called for the cessation of these practices, emphasizing their detrimental impact on the established gaming framework. Tencent views these workarounds as a serious challenge to maintaining a secure and regulated gaming environment for all players.
The situation demonstrates the ongoing tension between regulatory efforts and the ingenuity of those seeking to navigate them.
Educational Games in China
The primary focus of Chinese regulation regarding video games has been on those considered addictive or potentially detrimental to the well-being of young people. However, consideration is also being given to the role of games that offer educational benefits.
The 2019 joint venture between Tencent and Roblox sparked interest in the potential for developing educational gaming experiences. It was anticipated that this partnership could position Tencent favorably in creating games that foster creativity and contribute to broader societal goals, as encouraged by Beijing.
The Potential of Creator-Focused Platforms
A key aspect of this strategy involves leveraging platforms like Roblox to inspire Chinese youth to design games with global appeal.
Such initiatives could be viewed by Chinese authorities as a means of promoting Chinese culture and expanding its international influence through soft power.
The gaming sector recognizes the importance of aligning with the priorities of the Chinese government to secure regulatory approval and support.
In June, a representative from the Chinese People’s Political Consultative Conference – a body facilitating input from various sectors on key issues – highlighted video games as “an effective channel for China’s cultural exports.”
Monitoring Beijing’s Perspective
The development of Roblox within China will be closely observed to gauge how Beijing’s stance on games designed for educational and export purposes evolves.
Understanding this evolving attitude is crucial for navigating the regulatory landscape and capitalizing on opportunities within the Chinese gaming market.
Emerging Competition for Didi
Throughout its history, Didi has faced numerous competitors, yet none have successfully challenged its leading position within China's ride-hailing market.
However, recent regulatory actions – specifically, the prohibition of new app downloads due to cybersecurity considerations – have presented a potential opening for rival companies.
Cao Cao Mobility is emerging as a significant contender in this shifting landscape.
Cao Cao Mobility's Recent Funding
Cao Cao, a ride-hailing service positioned as a premium option and operating under the umbrella of Chinese automotive manufacturer Geely, recently announced the completion of a $589 million Series B funding round.
This substantial capital injection is intended to facilitate driver and passenger subsidies, bolstering Cao Cao’s competitive capabilities.
The current regulatory climate, characterized by increased scrutiny of anti-competitive practices, suggests that aggressive, capital-intensive growth strategies – similar to those employed by Didi around 2015 – may be less prevalent among internet platforms today.
Impact of the App Ban on Didi
Initial indications suggest the app ban has had a constrained impact on Didi’s overall performance.
Data from the Ministry of Transport reveals a 13% increase in orders during July, despite the restrictions.
Users acquiring new mobile devices are now unable to directly download the Didi application, but continued access is available through Didi’s mini app integrated within WeChat, a widely used platform in China with an extensive third-party application ecosystem.
The precise number of active users lost by Didi remains uncertain.
Nevertheless, its competitors will likely need to offer considerable incentives to attract both drivers and customers away from the established market leader.
- The ban on new app downloads created an opportunity.
- Cao Cao Mobility secured significant funding.
- Didi's mini app on WeChat maintains user access.
Direct-to-Consumer Fast Fashion from China
Investment firms are significantly increasing their funding of China-based direct-to-consumer (DTC) companies. The expectation is that China’s robust supply chains, combined with a growing number of skilled marketing professionals, will successfully attract customers in Western markets.
In July, PatPat, a brand specializing in baby apparel, completed a substantial funding round, securing $510 million. More recently, Cider, a rising DTC brand focused on fast fashion for Generation Z, manufactured in China and sold in the United States, has obtained $130 million in Series B funding.
This valuation places Cider’s worth at over $1 billion. The initial report of this funding came from 36Kr, a prominent Chinese technology news platform, and has been independently verified.
Investor Confidence and Market Dynamics
DST Global spearheaded Cider’s latest funding round. Existing investors, including A16Z and Greenoaks Capital, also participated in this financing.
The success of Shein globally is a major driver of investor enthusiasm. Shein’s app download numbers have exceeded those of Amazon in numerous countries.
It is frequently benchmarked against established industry leader Zara.
Export-focused e-commerce differs from a purely digital business. It involves a lengthy and intricate value chain encompassing design, manufacturing, marketing, shipping, and post-sale support.
While Shein’s achievements have motivated many aspiring companies, replicating its success will present considerable challenges.
