Two weeks after a crackdown on imported console gaming products, it’s still easy to buy them in China. Games remain widely available in offline stores and online, and prices have returned to normal after a brief spike.

The tight supply led to an increase in prices across other online stores, but this was short lived, according to Daniel Ahmad, a senior analyst at Niko Partners, a firm that monitors China’s gaming market. 

Prices for imported consoles and individual games have returned to pre-crackdown levels, which are slightly above international ones, TechNode has found on Taobao. The analyst said that on other online retail platforms such as JD.com, there wasn’t much of an impact.

Physical stores that TechNode visited in Shanghai in the last week seemed unaffected by the crackdown on console gaming. They were still advertising imported consoles and titles banned in China—including a US version of Animal Crossing, which was removed from Taobao last year, reportedly because of its use by protesters in Hong Kong. 

Some particular games are still very hard to find on Taobao. These include Nintendo’s Animal Crossing, and The Last of Us, an intensely violent two-part series developed for PlayStation. Special edition Animal Crossing Switch consoles are still widely available throughout the online marketplace, but don’t come with the game. 

Imported Nintendo Switch games from Hong Kong, Japan, and the US, on display at a store in Shanghai on April 13. (Image credit: TechNode/Eliza Gkritsi)

Grey imports

China’s Anti-Smuggling Bureau said on April 2 that authorities in Guangdong had arrested 54 importers and seized RMB 78 million ($12 million) worth of Nintendo, PlayStation, and Xbox gaming consoles.

While such events are “not unusual,” this was the largest anti-smuggling operation in recent memory, Ahmad said. 

“It’s not really part of a wider, larger crakdown, but of course the government always reserves the right to do that, given the grey area,” Ahmad said.

Chinese console gamers usually have to wait several months before international hits are released domestically, if ever, due to stringent censorship of imported gaming titles. Some famous titles never get released domestically due to graphic violence or sexual content. 

This has created a small but active market for consoles and cartridges imported from nearby Hong Kong or Japan.

READ MORE:  INSIGHTS | No country for console gamers

Taobao ghost town 

In response to the crackdown, several shops on Taobao removed listings for the imported console gaming products. Some told customers they would not be delivering for a while. One of the biggest Taobao stores, called TGBus, told customers that deliveries would be halted temporarily because a water leak had damaged some of the goods and had led to power outage in its warehouse, Chinese media reported

The hashtag on social media site Weibo about Nintendo Switch being targeted has been seen over 150 million times, peaking at 136 million on March 31. That was when local media reported that popular Taobao stores selling imported consoles were down.   

The shop that had claimed water leak damage remained offline as of April 12, but its affiliates are still live on the e-commerce app. Another popular shop based in Shanghai merely told customers it couldn’t deliver due to “exceptional circumstances.” The shop remains live on Taobao, but is empty of listings.

Some of the shops that removed their listings or disappeared altogether from Taobao said they were directly supplied by the importers who had their products seized. Others were exercising an “abundance of caution. They felt like they may be indirectly implicated in some way if they were to keep these products up,” Ahmad said.

A popular Taobao shop for imported games shows no listings on April 13. (Image credit: TechNode/Eliza Gkritsi)

Even in the immediate aftermath of the crackdown, most shops didn’t disappear from Taobao, and the impact on other e-commerce apps was minuscule. Two weeks on, business is back to normal.

The Monster Hunter effect

The Hong Kong release of a new entry in a popular series might have have triggered the crackdown.

The week leading up to the crackdown, the first entry for Nintendo Switch of the long-running series Monster Hunter was released in Hong Kong. Monster Hunter: Rise was developed by Capcom, the Japanese studio behind the Resident Evil series.

The series has met massive success throughout East Asia, as has the Switch console.

Prior to 2014, when sales of console gaming products were completely banned in China, authorities would clamp down on imported products when there was a surge in interest: “If you hit a certain threshold, that would trigger a reaction,” Ahmad said. 

It is likely that “there would be a high number of imports” of Monster Hunter: Rise, which could have triggered a reaction,  Ahmad said. 

Three hashtags related to the Capcom game, #MonsterHunter, #MonsterHunterRise, and #MonsterHunterWorld, have been viewed at least 470 million times on Weibo. The hashtag numbers peaked in the runup to March 26, when Monster Hunter: Rise was released in Hong Kong. 

The Switch has been a big hit in China, driving growth in the mostly niche console market. Nintendo has delivered 1 million units of the console in China since it launched in December 2019, according to Tencent, which has partnered with the Japanese game developer to sell the Switch in China.

This is roughly double what Sony’s PlayStation and Microsoft’s Xbox sold in the same time period, according to data from Niko Partners. 

Catching up 

All major consoles are now sold legally in China in local versions, but few games are available for these outside the grey market. Eager to get their hands on a wider variety of releases, gamers turn to imported goods.

“We are now at a point where every major console manufacturer has launched a product in China,” and once something is released overseas, it will get an official release in China, albeit with a delay, the Niko Partners analyst said. 

Sony has announced plans to launch the PlayStation 5 in China in the second quarter of 2021. The console’s global release was in November 2020. 

A Taobao listing for Nintendo Switch consoles imported from Japan and Hong Kong. (Image credit: TechNode/Eliza Gkritsi)

For games, “there is still a very strict regulatory environment,” which means the approval process is “long” and “cumbersome,” Ahmad said. Officially, it takes three months, but in reality, it can take a year to get a game approved by China’s National Press and Publication Administration. Rather than wait, online and offline shops respond to strong demand with smuggled products. 

Ahmad points out that despite a recent increase in the speed of the licensing process, a “soft cap” on how many games can get approved means that there is no “material difference” in the number of games Chinese console owners can get their hands on. 

Globally, more than 3,000 titles are available on the Nintendo Switch console. As popular as the Switch has been, gamers in China can only choose from fewer than 20 titles, Ahmad said.

This might sound like a small number, but it’s a massive improvement. During the first three months of the Switch’s launch in China in December 2019, only one game was approved: Super Mario Bros U Deluxe. 

New titles have been slowly added to the list of approved games, notably Ring Fit Adventure in September 2020.

“This is why there is a big smuggled games market in the first place,” Ahmad said.

Correction: A previous version of this article incorrectly described Niko Partners as “London-based.” 

Eliza Gkritsi

Eliza is TechNode's blockchain and fintech reporter. When she isn't obsessing over the rise of distributed ledger technology in China, she helps with editing.