Welcome back to TechCrunchs China Roundup! This digest contains the most recent developments in China's tech landscape, and what these mean for people around the globe.
Beijing imposed the most stringent restrictions on gaming players in the world this week. China's tech giants, on the other hand are responding quickly to Beijing's request for more social responsibility and a pause from their unfettered expansion.
Gaming curfew
China has dropped a bombshell about young gamers. Users under 18 years old can only play online for one hour from September 1st, between 8-9 pm on Fridays, Saturdays, and Sundays.
This stringent rule is in addition to the already strict gaming policies for minors. The government claims that video games are responsible for myopia and deteriorating mental or physical health. China has recently announced restrictions on tutoring after school. It is being joked that working parents will find it even more difficult to keep their children occupied.
It is worth examining a few aspects of this new regulation. The National Press and Publication Administration (NPPA) is the regulatory body that approves Chinese gaming titles. In 2019, the NPPA froze the approval process for nine more months. This led to plunges in Tencent's gaming stocks.
It is interesting that the NPPA issued the directive regarding playtime. This agency reviews gaming content and issues publishing licences. Video games, like other industries in China are subject to regulation by multiple authorities. These include the NPPA, the Cyberspace Administration of China(CAC), which is the country's top internet watchdog, and the Ministry of Industry and Information Technology (MIIT), which oversees the country's industrial standards and telecommunications infrastructure.
Analysts have long observed that the powerful CAC, which is under the Central Cyberspace Affairs Commission headed by President Xi Jinping has been in bureaucratic battles with other ministries who are unwilling to give up their power. This could be true for regulation of the lucrative gaming industry.
The new rule may have a minimal impact on Tencent and other gaming giants. Many listed Chinese gaming companies, including NetEase, 37 Games and 37 Games, announced that less than 1% of their gaming revenue was made up by underage gamers.
Tencent saw the changes coming and reported in Q2 earnings that China-based grossing receipts from games were only 2.6% and 0.3% respectively.
These numbers might not be accurate as minors have used IDs of adults to register for gaming accounts. This is similar to how the older generation used IDs that were given by adult friends to get into internet cafes. Tencent and other gaming companies have pledged to crack down on such workarounds. This will force kids to use VPNs to access foreign gaming titles. The game of cat and mouse continues.
Together, prosper
China has slowed down the tech giants' power, but it also forced them to assume more social responsibilities, including respecting workers rights in gig economy.
The Supreme Peoples Court of China declared illegal the 996 schedule. It allows workers to work from 9 a.m. until 9 p.m. six times a week. This declaration came after years of resistance by workers against the tech industry's burnout culture.
China's tech industry has long cited its competitive advantage as hardworking, compliant employees. This is why Silicon Valley companies, particularly those that are familiar with China, set up branches in China to tap the country's talent pool.
Overworking is no longer acceptable and celebrated. ByteDance, and Kuaishou, its short-video rival, recently ended their weekend overtime policies.
Meituan also announced it would introduce mandatory breaks for food delivery drivers. On-demand giant Meituan has been criticised for its inhumane algorithms, which force riders to work long hours and dangerous driving.
Didi, the ride-hailing company, and JD.com, Alibaba's e-commerce rival, have created unions for their employees in a groundbreaking move. However, it is still not clear what impact these organizations will have on employee rights.
Tencent and Alibaba also took action. The speech by President Xi Jinping calling for common prosperity was heard widely by the country's ultra-rich on August 17.
China is moving towards its second century goal. The focus should be on improving the well-being of the people to help strengthen the foundation for long-term Party governance.
Tencent and Alibaba both pledged this week to invest 100 billion Yuan ($15.5 Billion) in common prosperity.
