It would gladly buy up the whole country, given the chance. A “mere” computer games company might therefore seem an odd place to draw a line in the sand by activating the new national security and investment bill. That Downing Street should overrule its own business department to order a review of the Chinese takeover of Britain’s largest computer chip manufacturer, Newport Wafer Fab, was understandable enough, even if by most accounts the Prime Minister had to be pushed into doing it and the company itself looks to be in some difficulty. But a video games company? Can this really be regarded as a strategic asset whose acquisition would be a threat to national security?
Video gaming is a fast consolidating sector. The big console publishers and internet platforms are jostling to buy up the best available content and talent. Given that the sector is alive with startups to take the places of the ones being acquired, it doesn’t obviously seem to be something to be concerned about. Besides, Sheffield-based Sumo’s founders seem more than happy with their mooted Chinese acquirers, who they believe will boost the company’s prospects by providing the global footprint and financial clout they have perhaps lacked in the past.
Other video games companies acquired by Tencent have spoken highly of its stewardship. And if Tencent can help with access to China’s vast gaming markets, what’s not to like?
The new national security and investment bill is not yet law, so it is possible that Tencent could sneak in under the radar. Besides, entertainment industries are not obviously covered by its provisions, so even if in operation it’s not clear Sumo would be caught by it.
But here’s why this takeover might be used to British advantage – paradoxically by allowing it rather than responding to knee jerk demands to block it.
For the UK, entertainment is a big and fast growing industry that plays uniquely to the country’s creative talents. When identifying the industries of the future, entertainment, including gaming, is way up there with the most exciting of them.
But key to any trading relationship must always be reciprocity. One of the reasons the UK attracts so many foreign takeover bids is that it is much easier to buy here than almost anywhere else. We are a very open economy, and we believe it to be in our best interests to be so. Unfortunately, the favour is rarely returned, and that applies especially to China, which free rides off relatively open Western markets, but still keeps its own tightly closed.