Here is a Kotaku article titled Bootleggers Explain Why There's So Much Video Game Piracy in China. It is from 2013 and I think there has been a size amount of legislation changes but it sounds like the grey market for video games was thriving thanks to console mods.

I could still see it existing today considering you do occasionally see someone selling drives full of pirated games. It might be a more local sneakernet style of system.

Good question though. I love hearing and learning about how piracy works in other countries.