Oriental Pearl, Sony establish gaming JVs in Shanghai FTZ

The lifting of a 13-year ban on the sales of gaming consoles in China has been confirmed with the establishment of a joint venture between Shanghai Oriental Pearl (Group) Co Ltd and Japanese electronics giant Sony Corp.

A-share listed Oriental Pearl Group said on Sunday that it signed contracts with Sony to set up two joint ventures in the China (Shanghai) Pilot Free Trade Zone.

The ventures will be responsible for the production, sales, research and development of the hardware and software for PlayStation gaming consoles, which are a best-seller for Sony.

Shanghai Oriental Pearl Solatube Culture Development Co Ltd, one of the joint ventures, has a registered capital of 10 million yuan ($1.6 million), with Oriental Pearl Group holding 51 percent of the shares and Sony the rest. This new company will be mainly responsible for the distribution and sale of software.

The other joint venture, Sony Computer Entertainment (Shanghai) Co Ltd, has a registered capital of 43.8 million yuan, with Sony holding 70 percent of the shares and Oriental Pearl Group the rest. This joint venture will focus on the production and sale of hardware.

"The two joint ventures have not completed their registration at the local industry and commerce administration," said Xu Xiaojun, board secretary of Oriental Pearl Group.

"It is not yet decided when the gaming consoles will start production and sales in the Chinese market. And it's also not confirmed what kind of games will be sold here. All of these questions are the major tasks we have to settle with Sony," Xu said.

Kazuo Hirai, president and chief executive officer of Sony Corp, told the company's recent strategy meeting that 2014 will be a year of structural reform in Sony's electronics business, "in order to transition Sony into a high profitability structure and deliver sustained growth".

Gaming and network services will be one of the three core electronic businesses that will lead the company's growth, he added.

Sony is one of the largest gaming console sellers globally. Sales of its PS4 device, which was released in November, had exceeded 7 million sets as of April 6, and sales of software reached 20.5 million units.

Oriental Pearl Group's shares dropped by 0.54 percent to close at 11.11 yuan on Monday, while the Shanghai Composite Index closed at 2,041.48 points, up 0.34 percent.

Still, Qilu Securities Co Ltd suggested that investors increase holdings of Oriental Pearl Group, saying that the cooperation between the two giants will be very likely to generate annual sales of more than 20 billion yuan.

The analysts said the joint ventures will be able to grab more than 50 percent of China's overall games market, which is estimated to be worth 40 billion yuan.

Approval for the production and sales of game devices has been one of the highest-profile developments in the FTZ, which was officially launched in September last year.

shijing@chinadaily.com.cn