Electronic Arts, the world's biggest computer games firm, is setting up a development studio in China.
EA is behind the popular and lucrative Sims franchise
The firm said it hopes to have 500 staff at the Chinese arm, which should help it capitalise on the massive demand in Asia for online gaming.
EA, best known for sports and strategy titles, is settling the plan's details with the Chinese authorities.
Encouraging more online gaming would give firms like EA a way around the software piracy prevalent in China.
It also provides ongoing revenues in the form of per-month user fees, as opposed to the one-off payment for a non-networked console or PC game.
Accessing games via mobile phones is also a growing business area for games companies.
Thus far, the centre of gravity of online gaming has been South Korea, thanks to the country's massive penetration of fast internet connections.
But China is following suit, with internet cafes teeming with gamers.
Experts believe it is likely to overtake South Korea within a few years.