What does increased regulation of domain names in China mean for the average investor?

One of the most prominent trends in the domain investing world over the last year has been the incredible growth in China. Ten years from now we might look back at 2015 and say, “that was the year where Domaining really took off in China” or we might say “2015 was an anomaly and the domain industry never ended-up taking off in China.”

china-flag

After a strong Q4, 2016 started off without a bang as Chinese domain buyers stopped buying premium 4L .COMs and 6N .COMs at record prices. In short, demand fell off a cliff. There has been a debate about if this is a short term down cycle or the beginning of a downward trend.

Now, this week the news broke – China was looking at instituting a policy for restricting access to foreign domain names:

“The proposals, released for public comment last week by the Ministry of Industry and Information Technology, seek to update existing regulations to censor any domain names not registered within China. Only domain names approved by authorities would be permitted, while other names registered outside of China would be blocked automatically.” (Source – thestack.com)

So it seems likely that the interest that we saw from China in the back half of 2015 will likely continue to wane in the face of this news. If your portfolio was centered around CHIPS and 6N .COMs you might take a hit.

Here’s my question? How will this impact the average domain name investor. My thinking is that most domain investors might have loaded up a bit on names that Chinese investors have been showing a lot of interest in, but overall I think it’s going to be a-okay for most investors.

The domain industry goes through cycles and many investors have learned how to balance their portfolio to profit when trends move in their direction, and pull back when they don’t. Do I think the news from China will impact investment activity coming from China? Probably so. However I also think that the average domain investor is going to be fine, and like most things in this industry, just wait a year or two and things might be very different.

Now I’d like to hear from you. If China does take a deeper dive and investment activity drops, will this make a major impact on you? Comment and let your voice be heard!

{ 5 comments… add one }

  • Jijo Pappachan March 30, 2016, 1:46 am

    I think the regulations are most likely geared to the developed sites, companies that do business in China. Investing in Chips are mostly for value appreciation over time. Most of them are not going to be developed. They are like collectibles and I don’t think govt. or Chinese investors care.

    Investing in extensions that are accredited in China would have a plus though.

    Reply
  • Martin March 30, 2016, 7:09 am

    The exact details of the new regulations are unclear, but I think they will have zero effect on domainers in China. Today, almost all domainers in China register their domains at Chinese registrars, who will make sure they conform to the new regulations. I beleive this is a non-issue.

    Reply
  • John March 30, 2016, 11:50 am

    Not so sure about the “no effect” part. Just last week I received a purchase inquiry about a .Gold domain from a Chinese party via a QQ.com email address. When I tried to list the domain on 4.CN afterward, an error message popped up stating that domains not approved by the “Ministry” cannot be listed.

    Reply
  • Joe March 30, 2016, 3:22 pm

    I have registered domain names to be written in English keywords Chinese.
    This week contact http://www.Dopa.com domain parking, and respond to accept my domain names.
    Also I have the feeling that the Chinese market will end one day or another as all markets and industries, but the question I ask to you how many domain name investors be living in China?

    Reply
  • mikey April 2, 2016, 10:19 am

    This really impacts all SME’s since any online Chinese demand or interest will essentially stop. It will be interesting to know if say a Maple Syrup producer who’s sales are derived partially from online buyers to the Chinese will still have access to that market. Could you imagine if the USA said they would restrict access to non-US registered domains, what impact that might have on say ALIBABA?? I would imagine multi-national firms will be excluded from the Chinese restrictions (given their scale) but this also has social impact since the SME market will be blocked out of one of the largest and fastest growing consumer markets in the world…the rich will get richer as they say. Hopefully when Trump becomes president he will bring some prudent governance to international policies…hehe *sarcasm*

    Reply

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