China has approved the sale of a South Korean video game for the first time in nearly four years, raising hopes of a reopening for an export industry worth billions of dollars a year following a diplomatic dispute.
Chinese regulators have issued a licence for Summoners War, allowing South Korean game maker Com2us to officially sell its global hit in the world’s largest gaming market, the company said on Thursday.
China has banned sales of new South Korean games and other cultural products since March 2017 as part of a backlash against Seoul’s decision to host a US missile defence system.
The embargo sent a chill through South Korea’s cultural and tourism sectors, as actors and pop stars found themselves unwelcome. South Korean brands such as Samsung and Hyundai have lost market share in China, while retailer Lotte was forced to exit the market.
Beijing has imposed similar economic retaliation measures against Australia, including tariffs on wine, as diplomatic relations between the countries have soured.
China’s approval of Summoners War — a fantasy-themed role-playing game for smartphones — came a week after foreign minister Wang Yi met with his South Korean counterpart Kang Kyung-wha in Seoul.
The decision sparked a rally in the shares of South Korean game makers and entertainment companies.
Shares of Com2us and rival Netmarble rose 8 per cent and 3.6 per cent respectively in Seoul on Thursday. K-pop music agencies such as JYP Entertainment and YG Entertainment gained about 10 per cent.
Industry officials hope the move could herald a relaxation of Beijing’s cultural embargo of South Korea.
“It is certainly a positive signal for Korean game makers and entertainment firms as China is a very important market for them,” said Lee Jin-man, an analyst at SK Securities. “But it remains to be seen whether China will begin to open its market for Korean cultural exports in earnest, because their decision is closely linked to geopolitical issues.”
The popularity of South Korean cultural products from music to television dramas has grown worldwide, making them a big export driver for the country. The value of these exports has grown by roughly fourfold over the past decade, to $10.4bn in 2019.
China’s game market was worth about Rmb230.8bn ($35.2bn) last year, according to South Korea’s state-run Korea Creative Content Agency.
South Korea’s game exports reached $6.4bn in 2018, with China accounting for about 30 per cent of the total, on games authorised prior to the ban.
The market capitalisations of the country’s two biggest game makers, Nexon and NCSoft, now exceed that of LG Electronics, one of the world’s biggest appliance manufacturers. At $45bn combined, the pair is bigger than the country’s largest carmaker, Hyundai Motor ($38bn).
Wi Jong-hyun, president of the Korea Game Society, cautioned against optimism, citing Beijing’s strengthening regulations against the gaming sector, with caps on the number of new game releases and time limits for children.
“China currently issues only one-tenth the video game licences that it used to,” said Mr Wi in a Facebook post. “It would be naive to think that a string of South Korean games will now win licences.”
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