24 October 2016
Given the huge role smartphones play in people's lives, the mobile game industry has great potential worldwide. Photo: HKEJ
Given the huge role smartphones play in people's lives, the mobile game industry has great potential worldwide. Photo: HKEJ

HK should vie to become world offshore center for mobile games

Don’t Tap the White Tile 2 has become the world’s most popular mobile game, beating Candy Crush and Clash Royale, the first-quarter ranking of mobile apps by Sensor Tower shows.

The app has been downloaded by more than 160 million people.

The original Don’t Tap the White Tile was developed by a small company based in Guangzhou in 2014.

The simple game offers a lot of fun and gives fingers a fast-paced thrill with the elegance of playing the piano.

Like the wildly popular coloring book Secret Garden last year, the game is very relaxing for adults who do not necessarily have a talent for music, or painting in the case of the book.

But Don’t Tap the White Tile aficionados enjoy the calm and peace that comes from playing the game, which doesn’t require too daunting skills.

After the company was acquired by Cheetah Mobile Inc., a unit of Chinese software company Kingsoft Corp. Ltd. (03888.HK), it launched the sequel, Don’t Tap the White Tile 2.

The game is available in more than a dozen different languages.

It was ranked the top mobile game in 13 countries and regions last year.

The game is free for players to download, but users need to pay if they intend to resume the game sooner or unlock more songs.

Cheetah Mobile’s sales revenue was 3.65 billion yuan (US$560 million) last year, of which Don’t Tap the White Tile 2 generated a big chunk.

So, what is the game’s relevance to Hong Kong?

Well, the game is registered in the city, and Cheetah Mobile has set up an office in Hong Kong and a team of professionals with promotional, financial, legal and game upgrading skills.

This practice has become increasingly common with mainland game companies intending to enter overseas markets and foreign players planning to tap the mainland market.

They choose Hong Kong as their gateway, mainly because of the city’s traditional advantages.

First, Hong Kong has a very simple tax regime, and registering a game in the city can save a lot of tax compared with registering it in the mainland, Europe or the United States.

Second, worldwide game companies mainly receive money from Apple or Google, since users first pay the US giants’ online stores, which subtract a commission and in turn pay the mobile game developers.

Hong Kong has free capital flows, which enables game companies to allocate their capital without foreign exchange controls.

Third, Shenzhen is the largest research and development centre and talent pool for China’s gaming industry, and Hong Kong has the perfect geographic location as the city’s immediate neighbor.

Hong Kong also offers a world-class legal regime, free information flows and a melting pot of East and West — which is an advantage to game developers with worldwide ambitions.

Interestingly, these advantages are quite similar to those the city boasted in the old days when it played the role of the principal transit centre when China was the world’s biggest supplier of textiles or other manufactured goods.

So, while on the one hand, Hong Kong should breed its own “unicorn start-ups”, on the other hand, it should try to become the offshore center for the world’s leading mobile game makers and internet giants.

This article appeared in the Hong Kong Economic Journal on April 25.

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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