Chinese Gaming Firms Dump IPO Plans Amid Tough Policy Environment

Dou Shicong

(Yicai Global) April 10 — Three Chinese online gaming firms have ditched plans for an initial public offering in the local market so far this year as the policy environment becomes unfavorable for the sector.

Guangzhou Duoyi Network Co. announced its withdrawal late last month, but is still keeping an eye on global stock markets, Chief Executive Tang Yilu told online news portal Sina Finance. The decision to abandon its IPO plans has nothing to do with its earnings, which need to meet a minimum threshold for Chinese exchanges, as they have continued to grow, he added.

Suzhou Snail Technology Co. and Shanghai Greenshore Network Technology Co., both based in eastern China, have also dumped listing plans, the report said. Not a single online gaming firm has gone public on a Chinese exchange over the past 12 months.

Such firms often have problems with information disclosure, such as unclear data on the age of users and the distribution of IP addresses, an executive from the China Securities Regulatory Commission said. Some gaming companies are over reliant on a single product which affects the sustainability of their income, he added, saying authorities have stepped up supervision of IPO applicants’ operations and intellectual property rights.

Online gaming firms in China are facing intense social and public pressure and the government is continually tightening regulations governing the capital markets, a sector insider said. He is pessimistic about IPO prospects for gaming companies still looking to go public in China.