The Regional Comprehensive Economic Partnership (RCEP) has been finalized! The trade ministers of China, the ten ASEAN countries, Japan, South Korea, Australia, and New Zealand have signed the agreement. According to the bilateral tariff reduction arrangement reached by China and Japan, after the RCEP comes into force, China will implement zero tariff import on "video game controllers and equipment, amusement venues, table or indoor games, including pinball machines, billiards, entertainment tables, automatic bowling lanes" (Tariff No.9504), "tricycles, scooters, pedal cars and similar wheeled toys, doll cars, dolls, other toys, scaled down models and similar entertainment models, all kinds of intellectual toys" (Tariff No.9503) and other products. After the RCEP comes into force, China will not only implement zero tariff imports on the above categories of goods from Japan but also the ten member countries of ASEAN, Australia, South Korea, New Zealand and other countries.

We still don't know whether China's game and amusement industry under zero tariffs will usher in a resurrection with new momentum or a fiercely competitive market. However, we can try to explore the trend and direction of the industry market in 2021 from the various market links affected by the industry chain.

First of all, the most concerned issue is the zero-tariff import of the Japanese game and amusement equipment. Will it have a huge impact on the industry market? In terms of import sales, Japan’s SEGA, Bandai Namco, Konami, Taito and other internationally renowned manufacturers have long-term stable special agents in China for the distribution and the sales of their products, there is basically no chance that the scheme of expanding product import channels by adding agents will be realized in a short time.

If the agents are allowed to increase the type and quantity of imported equipment, they are not only tested by their abilities to bear pressure on funds, but also have to face a cultural content review and get approvals for amusement equipment before entering the Chinese market. The procedures are clumsy and time-consuming. As for the consumer groups, Japan’s game and amusement equipment has always been the international benchmark for high-quality products in the industry. Domestic players and consumers have always been passionate about it. The number of fans is very considerable. This is also an important factor for Qingdao JOYPOLIS Sega Urban Park, the first Sega Urban Park in China and the third in the world, to enter China in 2015. Since then, Sega Urban Parks in Shanghai and Guangzhou have opened one after another. Following this zero-tariff trend, the new market for 100% Japanese-style indoor theme parks will be established, which will occupy a more important position in the sector of high-end indoor parks in China.

In addition, Japan’s dolls are also listed in the zero-tariff agreement. IP derivatives such as popular Japanese animation and game characters, their figures, stuffed toys, and dolls will gain greater cost-effective advantages, and will be more popular among Chinese consumers of all ages. This will be a powerful stimulant for the current gift machine franchise store that focuses on IP content. South Korea’s commercial competitiveness in game and amusement equipment and dolls cannot be ignored either. Although the current Guochao animation, games, and cultural and creative products occupy a considerable share of the young consumer market, the “Korean” style is still a trend in Southeast Asia.

When we begin to be aware of the impact of the industry after a powerful opponent enters the Chinese market, we should also not ignore that the other party also opens its door to Chinese companies on the same terms. Japan, South Korea, Australia, New Zealand, Malaysia and other countries have high domestic consumption power, and China’s largest trading partner--the huge trade volume of the ASEAN region--are waiting for Chinese game and amusement companies with excellent products and international trade strength to go in and get a share at any time.

In 2021, competition in the market will not end, but remain cruel. The market trend of global integration is speeding up. China's game and amusement industry will usher in a new round of baptism by storm. Enterprises in the industry must "stand up and go out" to usher in a broader development space!

※The article is published in the GTI Magazine Issue No. 193 in December 2020