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If overseas game agency is considered export, what is the basis?
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Our company wants to distribute an overseas game in China and would like to inquire whether this overseas game distribution business is considered export trade. What are the criteria used by customs to determine this? Are there any special procedures that need to be completed?
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
Your question touches on a current regulatory gray area. From the perspective of customs law，the traditional definition of "export" refers to the physical movement of goods across borders，while game agency essentially involves "service import" – as a domestic enterprise，you pay royalties or revenue shares to overseas parties to obtain intellectual property usage rights. According to Article 2 of the Customs Law，customs supervision applies to "goods，articles，and transportation vehicles entering or leaving the country," and purely digital content downloads do not fall under customs statistics. However，the key issue lies in foreign exchange payments: when making overseas payments，banks will require you to provide the "Tax Registration Form for Foreign Payments of Service Trade and Other Items," at which point you must declare under the category of "royalty payments" or "technical service fees," subject to a possible 10% withholding tax on income and a 6% value-added tax. Risk alert: If the game involves sending physical merchandise，even as gifts，customs may require formal customs declaration as goods，furthermore，the approval of a game license by the Ministry of Culture is a prerequisite. Operating without a license may be deemed illegal，which is a more serious issue than customs-related concerns.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
Your business essentially doesn’t fall under traditional logistics, but there are several practical points you must pay attention to. For pure digital distribution, there are no concepts like containers or customs declarations. However, don’t randomly use trade terms like FOB or CIF for goods trade. Instead, define responsibilities using terms like "DDP (Delivered at Destination)" or "EXW (Ex Works)" for digital versions. If dealing with limited edition physical games or merchandise figurines, they must be classified as goods, with an HS code recommendation of 8523.49 (Other Recorded Media). The customs duty rate is typically 0%, but avoid underreporting, as customs inspectors may impose fines of 30%–100% of the declared value. Prepare the following customs clearance documents: proforma invoices, packing lists, and copyright authorization letters (to prove they’re not pirated). For digital distribution, there’s almost no logistics cost, but for physical products shipped by air, ensure shipping and insurance fees are allocated to the unit price during declaration. Regarding timelines, digital distribution arrives instantly, while physical products typically take 3–5 days from Hong Kong warehouses to mainland China, but allow time for customs inspections.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
When negotiating with overseas developers, you must first clarify the nature of the "agency rights," which directly determines the payment method and tax costs. In terms of phrasing, avoid using expressions like "I want to buy your game" and instead say "We have obtained the exclusive operating license for mainland China," which will make it easier for the other party to accept the royalty sharing model. The contract terms must be clear: First, the payment method should be "net revenue sharing" or "fixed payment + revenue sharing." If it's a fixed payment, strive for installment payments to reduce cash flow pressure. Second, the tax provisions should state that "Chinese domestic taxes are borne by the licensee, while overseas taxes are borne by the licensor," to avoid double taxation. Third, strive for quarterly settlements for foreign exchange payments to reduce exchange rate volatility risks. As for negotiation leverage, you can emphasize the scarcity of game licenses in the Chinese market and imply that "obtaining a license itself represents value," thereby lowering the fixed payment. For payments, using a Hong Kong subsidiary as an intermediary is a common practice that can optimize tax costs by about 5%, but ensure compliance with regulatory filings.