Angry Chinese Blogger has a good post on why a Chinese crackdown on ‘objectional’ material in video and online games is likely to fail.:

Every day, countless counterfeit games are brought and downloaded in China, all of which bypass Point of Entry censorship, and are almost impossible to stop without a wider crackdown on pirates and counterfeiters; which Beijing is so far unwilling to commit to because of the benefits that these industries have for China’s domestic economy.
A similar problem has already been observed with Chinese language movies imported from Hong Kong and Chinese Taiwan, many of which have been censored to remove political commentary, and some of which have been altered to change the nationalities of mainland Chinese villains to be other Asian nationalities.
As is likely to happen with games, censored or government approved movies that are retailed legally are often disregarded by the public in favor of counterfeits made from uncensored source because the counterfeits are cheaper and because they often arrive on the market significantly before censored additions are release or original additional are approved for distribution, giving them a notable edge.

While much of China’s intellectual piracy is driven by high prices for legitimate goods, it’s my experience high censorship causes high rates of piracy regardless of per-capita income. In my two previous homes - wealthy Singapore and oil-rich Kuwait - there was always a brisk trade in pirated movies.

The reason, for many buyers, was that legitimate versions had been horribly censored.

Singapore relaxed its censorship somewhat last year, allowing legal sale and rental of uncut R-18 movies. I haven’t seen data yet, but I expect the trade of illegal DVDs from Johor has likely slipped considerably.