This actually wouldn't be a mainland Chinese company's first foray into the console market. \\
By the way guys, the reason why consoles are not big there is not because they are outlawed, it's because console producers all want to stay the hell away from PRC. Rampant copyright infringement pretty much means that anything sold there will probably be cracked, copied and then rebranded onto the market by one of the local Chinese companies in a matter of days. It is no surprise to me that most of the R4 card (the card you use to okay bootleg games on the DS) was originally manufactured in China.
You combine this with the amount of control China wants to have over the content, and you have an environment that nobody wants to go near.
This, however, is a novel move on Lonovo's part. You see, the hands-free controller market is pretty much undeveloped. I mean, sure, they're basically just ripping off the kinect, but as we all know, hardware alone doesn't make the grade. It's the games that that will make or break the competition. So we'll have to see who comes up with the better games.
My bet is still on the US devs, since we still have the more mature financial institutions to fund allow new dev teams to jump into the market, and we also have the more sophisticated game dev industry here in the US. But you never know. China might have their own Nintendo brewing in their pocket.
Here's another thing though, Lenovo has a leg up in that this is their home court. It is pretty much guaranteed that the PRC government will probably give them a ridiculous leg up by footing a huge chunk of the bill, and slapping ridiculous tariffs and taxes on anyone who wants to enter.
Chinese laws pretty much prohibit any foreign company from just entering without getting a Chinese partner anyway, and trust me, that's not a road many western companies are willing to walk down. The business culture there can be extremely frustrating.
This means that Lenovo will pretty much have the market to itself with competition having to work 3 times as hard to get through.
All that Lenovo needs to do is to not screw it up too badly, get some decent titles developed on it, and they might still be able to turn a profit from this product. Though, at the same time, we must realize that this product will still, compared to the kinect, for example, be an absolute piece of garbage.