China Loosens Grip With Game Consoles Ruling

BEIJING (TheStreet) -- Chinese entertainment companies may come off the biggest winners now that Beijing authorities have inched toward opening the country's vast consumer market to the Sony (SNE) PlayStation, Microsoft (MSFT) Xbox and other foreign-brand video game consoles.

Shares in companies such as Internet game portal Shanghai 37Wan Network and Alpha Animation rose on China's stock exchanges after the government Monday said it had conditionally suspended a ban on consoles imposed in the year 2000 on grounds that video games corrupt youths.

Investors drove domestic entertainment company shares higher on expectations that Beijing policymakers will continue to loosen the government's grip on the entertainment and media industries.

The console decision clears the way for sales by foreign companies "engaged in the production and marketing of gaming entertainment equipment" located in the new Shanghai Free Trade Zone (FTZ), which was formed last year to attract overseas investors and encourage trade.

On the Shenzhen Stock Exchange, 37Wan rose 10% to 29.24 yuan a share and Alpha jumped nearly 10%, to 38.42 yuan. On the Shanghai exchange, shares in Internet protocol television provider BesTV New Media were heavily traded Wednesday, closing up 6% at 42.79 yuan.

BesTV is a controlling-stake partner with Microsoft in a gaming terminal and content company, launched with a joint US$79 million investment last September, and based in the Shanghai FTZ.

Exactly what the government meant by approving console "production" has yet to be spelled out. Electronics contractor factories across China already crank out plenty of components for the consoles sold globally by Sony, Nintendo and others.

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