Looking for pc games in China? Not a problem, they're sold everywhere. Console games and consoles? Not a problem, they're also sold everywhere, despite the fact that video game consoles are banned in China.
The sale of gaming consoles in China falls into the category of the gray market. Despite the connotations of a black marketesque deal where stores are hidden and passwords are needed, that is not the case. Video game shops are in business, selling consoles and console games in super shiny shopping malls and regular old store fronts, and, in Beijing, in dust covered historic buildings. To the Chinese, this is just a regular thing. When you ask a Beijing person where is the gray market, they won't know what you're talking about. But ask them where to buy video games, and they will send definitely know where to send you. The gray market is a only a term used to describe the ambiguous sales of import products and banned products.
You can find legal items that have not been banned on the gray market as well as banned goods. Gundam model kits, cell phones and pc gear released outside of China before a Chinese version is ever out are some of the things that are found in gray markets.
Video game consoles are illegal in China; however, the ban does not include Hong Kong, Macau, or Taiwan. But since the year 2000 video game consoles have been banned in the Chinese mainland.
The reasons behind the ban are obscure at best; one of the major reasons for the console ban was to prevent Chinese youth from wasting their brains, and another was because of the stringent cultural import laws in China, such as only allowing 20 foreign films to be shown on movie screens a year (yes only 20 foreign films a year, including Hollywood productions). Hong Kong and Macau operate as special administrative regions and are pretty much autonomous and thus consoles are sold. In fact, there are even Hong Kong versions of many consoles. Taiwan is pretty much like Hong Kong and Macau but because of the Taiwan "issue" there are more political factors in play, and video game consoles are not banned. Instead, they are a part of the gaming culture in Taiwan.
However, the ban on consoles hasn't stopped Chinese gamers from buying consoles or playing console based games. In fact, the main limiters on console sales in China to the general public are supply and price. It's hard to imagine but the vast majority of China's 1.3billion people are unable to afford a console. According to People's Daily, the mouth piece of the government, the average yearly income across China is about US$5,900 a year. Take into account the number of super rich pulling up the average of the super poor and there might be a clearer number but unfortunately official sources usually account for the SUPER WEALTHY.
The following gallery is a look into the gray market. For the purpose of this report, I visited Beijing's High Technology district in Zhongguancun and the tourist trap that is Guloudajie.
For more information on about the ban, Brian Ashcraft wrote a very informative piece on the ban back in 2010 Why Consoles are Banned In China.