China’s virtual goods business booming

“A new profession for the Internet age” is a newspaper article from the Harbin Daily [for those who don’t know, Harbin is a major city in China’s extreme northeast], via Chinese IT community Donews. The article chronicles the ins and outs of owning, working at, and regulating businesses that sell virtual assets. Rough translation, sometimes paraphrased, follows.  The article is too long for me to translate every sentence.

After two years of hard work, business at Chen Xiao’s “proxy player” business — selling virtual currency, equipment, and game characters — is on the rise.  Chen is one of Harbin’s first group of virtual goods merchants.  As the article explains, proxy player shops “网游代练”公司 arose to serve those who love online games but don’t have the skills or the time to develop a mature character.  Instead, they simply buy what they need.  The people who are hired to develop virtual assets in-game are called “online game proxy players”.

Workers earn meals, a bunk in a dorm, and 600-1000 RMB per month (roughly 80-120 USD) working 12 hour days.  They work in 2 shifts so as to maximize the production of virtual assets and characters, and while they “play,” Chen handles the business side of things.  Most of those who run the shops are Internet bar owners.  In several Internet bars near Harbin’s technical and provincial universities, the reporter saw dozens of computers set aside for for proxy playing.

But it’s not easy to earn a good living selling virtual assets.  First there is the issue of equipment–this is a business where scale produces profit.  More boxes equals more proxy players equals more profit.  Second, there’s the issue of finding a market for your goods.  Foreign players are the biggest source of profit for China’s virtual goods shops. Success requires skills in the game and in foreign languages.  Even then, the Chinese companies have to keep their prices very low. Chen explained that Chinese proxy player businesses are basically wholesalers for foreign companies that turn around and sell the virtual goods for a healthy profit. There’s also the constant threat of being cheated; always a possibility in doing business, and even more so when the goods are virtual.

As for labor, these games are designed to be playable by pretty much anyone, which means that some proxy player shops are moving to the suburbs or even to China’s towns to take advantage of rural laborers who can be paid less. 

Worker Chen is 22 and after proxy playing for almost one year is now making 1000 RMB per month. The work is “painful but fun,” he says.  Sitting at the screen playing for 12 hours at a time is physically and mentally exhausting.  And living conditions are pretty bad: the 34 male and female workers use 17 computers in two shifts, and live, sleep, and eat together in small room with bad air. But Chen has no academic degree.  And he manages to fulfill the quota set by the boss every day, which earns him an additional bonus. However, worker Chen says that the twenty-year olds who do this kind of work have no sense of achievement, indeed even feel a sense of emptiness about what the future might hold. Worker Chen hopes to open his own proxy player shop someday.

Owners sometimes even hire minors, who will work for a couple of days simply for the fun of playing their favorite games.  Many don’t need salaries, which brings down operating costs.  But these practices have given proxy player shops a bad name in China.

The shops operate in a legal gray zone.  Harbin’s commercial officlals say they haven’t registered a single such company, and there are no regulations under which to register them in any case.  Rules, licenses and regulations would go a long way toward increasing the stability of this new industry. 

link