Chapter 5. The Story of CEG

A chapter from ONE MORE WAY: The History Behind Chinese Esports, by BBKinG (Liu Yang). Translated from the Chinese original: 五 CEG的故事

First published in the author's Zhihu column on November 20, 2013: https://zhuanlan.zhihu.com/p/19618208

This translation was reviewed against the Chinese original on August 1, 2026. If you spot a mistranslation, a wrong name, or a factual error, please open an issue or send a pull request.

When the entrepreneur Luo Yonghao smashed refrigerators in public to press a consumer complaint, someone challenged him: "Why didn't you first go through the proper channels, the quality inspection authorities or the consumers' association?" Luo just smiled, and released a long recording of the phone calls he had made while going through the proper channels.

I am always criticising people who pin the hopes of esports on state support or on becoming an Olympic event. Many of them do not understand why. So all I can do is smile wryly, and then tell them a story called CEG.

The China E-sports Games, CEG for short.

When we make fun of some baffling little incident, we like to say, "This is all part of a very big game of chess." With CEG, though, I mean it seriously. The game was so big that if you do not know the background story, and look only at CEG itself, you will find its rise and fall almost impossible to read.

Rewind to November 18, 2003, at the Great Hall of the People in Beijing. What follows is an extract from a news report of the day. It is well written, so I have not changed a word.

At the launch ceremony for the China Digital Sports Platform, held at the Great Hall of the People on November 18, reporters learned that esports has been listed by the General Administration of Sport as China's 99th official sport. Following that decision, the China E-sports Games will open in the first quarter of next year. Hosted by the All-China Sports Federation and jointly organised by Huaao Xingkong Technology Development Co. and Huaao Xingkong Information Technology Co., these games are the first national top-level esports competition ever held.

That is the famous, thrilling moment in the history of Chinese esports. By then I already counted as someone working in the industry, and I still remember the excitement and the sense of encouragement. Everyone around me felt that spring had arrived for Chinese esports.

Seen from today, it was only the first piece placed on a board of competing interests.

The official press release played down what was really going on. Look at the extracts from these two pieces of news commentary instead.

1. Huaao Xingkong was set up in November 2003 with the support of the General Administration of Sport, jointly founded by the Chinese Olympic Committee, the All-China Sports Federation and Hong Kong's CITIC Pacific Limited. CITIC Pacific injected 300 million yuan into Huaao Xingkong, held 50 per cent of the shares, and appointed the company's CEO.

2. CITIC Pacific Limited concentrates its business in Hong Kong and the vast mainland market, with an emphasis on infrastructure: investment properties, infrastructure such as bridges, roads and tunnels, energy projects, environmental projects, aviation and telecommunications.

History behaves like a magician sometimes. One hand produces a flourish to catch your eye while the other hides what it is really doing and why.

Put simply, Huaao Xingkong was a company where politics and business met, and esports becoming the 99th official sport had a great deal to do with that company being founded.

So why did the investor, Hong Kong's CITIC Pacific, hand Huaao Xingkong so much money?

If that question has just formed in your mind, then congratulations. You can think for yourself, and you are getting close to the truth.

CITIC Pacific had made its name in traditional industries, and after the Asian financial crisis it began looking for ways to diversify. One important direction was telecommunications and media. In 2005, at the last moment before CEG collapsed, CITIC Pacific moved Chen Guangcai, general manager of its subsidiary CITIC Telecom 1616, into the role of Huaao Xingkong CEO. That tells you that from the very beginning, the four words written on CITIC Pacific's hidden card were "telecommunications and media".

So what was written on the hidden card of Huaao Xingkong, the company backed by the General Administration of Sport?

Huaao Xingkong, with the sports authorities officially behind it, was promoting the concept of "digital sport". CITIC Pacific's direction was telecommunications and media. The date was the end of 2003, five years before the Beijing Olympics in 2008. One side had the content, the other had the distribution.

Read those four sentences together. If it does not make sense, read them again, and read them aloud.

Now you see it.

What you see, though, is only the surface layer of the cooperation. For the deeper layer, you can go and look up CITIC Pacific's background yourself.

Forgive me for stopping the explanation there. Should I mention that in 2004 I received a lawyer's letter accusing me of spreading rumours, because I had revealed that CITIC Pacific was withdrawing its investment from Huaao Xingkong? Heh.

The interesting part is that a game we took ten years to understand was understood instantly by the State Administration of Radio, Film and Television, which went straight for the vital spot. Here is another extract from a news commentary, and I expect you know this one very well.

On April 21, 2004, the State Administration of Radio, Film and Television issued its "Notice on Prohibiting the Broadcast of Computer and Online Game Programmes", and esports did not escape it. As television stations around the country and CCTV's esports programme went off the air one after another, Chinese esports lost what was very nearly its most important source of revenue: selling broadcast rights.

CEG had opened its competition on April 10, 2004.

You think that was a coincidence? Then all I can do is say heh a second time.

So stop cursing them for not understanding esports, or for not understanding digital sport. Stop trying to explain to them what esports is good for. Stop shouting that spring has come every time a policy is announced. Stop waiting for support or for handouts. All of it comes down to interests, and when esports cannot serve those interests, and when you do not understand the rules of the game, you will never see where the real problem lies.

Right, that is roughly the background to CEG. Now let us go back and look at the many episodes in which CEG appeared to tie itself in knots for no reason, and it should all be much clearer.

Around 2003, the most successful competition model in Chinese esports was the WCG model: open qualifiers in internet cafés across regional divisions, then the players who came through gathered in Beijing for a national final. Every business model built around competition at the time worked on that basis, and in an era when esports was still a grassroots affair, it was a fairly common approach.

CEG's earliest operational team thought along exactly those lines. Yan Yinjiang, then a vice president of Huaao Xingkong, was one of the very few owners who held a licence for a national internet café chain in China, and his Zhonglu Shikong chain was in the middle of expanding nationwide. He had also been a university classmate of Li Lijun, the owner of the Haofang platform. Both men had strong backing and real resources, one strong offline and the other online, and CGA, which Haofang owned at the time, was the most visited esports website in the country. Had CEG been built along those lines, it might have turned out to be a very different thing.

But history does not deal in what-ifs. CEG had been due to start in March 2004 and suddenly announced a delay of one month, because the senior management of Huaao Xingkong had fallen into a serious disagreement about the CEG model. CEO Lin Diankui, vice president Yan Yinjiang and a number of other people from within the esports industry all left the company. The man who replaced them was Wang Manjiang, marketing director of Beijing Guo'an, and he brought a group of people with football backgrounds in as Huaao Xingkong's new operational team.

That was the first open political fight in Huaao Xingkong's not especially long history, and it ended in total defeat for the new-school esports people. It is worth mentioning that when Wang Manjiang was a vice president at Dalian Shide, he created a supporters' group called Lanse Jilang, or Blue Surge. The secretary general of Blue Surge was Li Xiaodong, assistant to the general manager of Dalian Shide, and Li Xiaodong is now the owner of Maidong, a well-known esports company in Beijing whose holdings include the Ehome club. In other words, a lot of people's lives were changed by all this.

The whole WCG approach to esports was rejected, and the methods of traditional sport took its place. To put it more bluntly, the methods of Chinese football.

Specifically, the new CEG plan looked like this. Eight regional divisions would be set up around the country, each run by the "social sports centre" of a local sports authority, which is the department responsible for every non-Olympic discipline. Huaao Xingkong would grant each division one million yuan as start-up capital for the league. Professional esports teams would be founded and matches would be staged in sports arenas. The league would run on a home-and-away points system, and the goal was to have every club it created fully commercialised before that million yuan ran out.

Put simply, this was the familiar formula of the government setting up the stage and business performing on it. In each place the government would take the lead in building a club for a national league, and then local businesses would take it over, completing the transition to a commercial operation.

In theory the plan was sound, and keeping the matches out of internet cafés also sidestepped the jurisdiction of the Ministry of Culture. The crucial link in the chain, though, was this: why would any business take a club over?

With SARFT having sealed off the route to television advertising, and with CEG neither caring about nor understanding how to use the influence of the esports scene itself, where was the commercial value supposed to come from?

CEG matches everywhere in the country were staged in sports arenas, and nobody told the esports websites when or where the games would be played. The websites, chilled by CEG's lofty manner, rarely covered it on their own initiative. On top of that, domestic stars did not have much drawing power then, so most of the spectators who did turn up were the players' friends and relatives. At most venues the audience amounted to a handful of people. Only the CEG events in Wuhan consistently drew a decent crowd.

Right up to the end of 2004, CEG still attracted little attention while the sports authorities kept up the same lofty manner. The events themselves were run as ceremony, with the national flag raised and the national anthem sung, and often a whole arena, players of every discipline from both teams included, held only about thirty people.

In its later phase, CEG had begun to hold Chinese esports back.

1. Because the league calendar was full, and because local clubs were prevented from entering other competitions, CEG accelerated the decline of several rival events of the same period, among them CIG, run by the Ministry of Information Industry, and CKCG, run by the Central Committee of the Communist Youth League. It may look as though the competition had been cleared away, but it also sharply reduced the level of activity in esports as a whole.

To this day I keep saying that a genuinely healthy market is never dominated by one player. If you do better work than everyone else, fair enough. But if you use coercion to squeeze everyone else out, then once you hit the ceiling of what the industry can support, the decline of the whole thing follows.

1. The prize structure was badly designed, and that became a serious problem. The person then in charge of the wNv club said: "CEG takes more than half a year and the prize for a single discipline is under 30,000 yuan, while the global WCG cycle takes less than three months, the regional champion in Counter-Strike gets 30,000 yuan and the national champion gets 80,000. The prizes in the other two disciplines are mostly around 30,000 as well, the prize money for going abroad to the world final is higher still, and playing in that kind of event also raises your profile." Given all that, top domestic clubs such as wNv and AS weighed up the money and went to compete overseas.

2. When officials are involved you have no recourse, whatever they choose to say. The strongest team at the time, Shaanxi, won the CEG national league every year, and most of its players were from the YollinY team led by KinG. To stop them moving to other teams, Shaanxi often withheld their prize money from the national final, leaving KinG stuck in an impossible position.

Those episodes looked at the time like farcical, self-inflicted deadlocks. Now they are perfectly clear, because the real interest of the people in charge lay elsewhere. Set against the grand chess game of the Olympics, these small matters simply did not count, and turning a blind eye to them was sometimes a strategic necessity.

CEG drifted further and further away and faded steadily, and there were deeper political reasons behind that too. The central figure at Huaao Xingkong was He Huixian, then assistant to the director of the General Administration of Sport. The director of the administration at the time was Yuan Weimin, and in December 2004 Liu Peng replaced Yuan Weimin in that post. From then on He Huixian gradually moved out of the leading positions in the sports administration.

Once you look at the whole CEG affair from that height, it becomes clearer still. This was a bet placed by a Hong Kong company, and winning it would have meant owning the future. Unfortunately, the factors shaping that future were far too complicated.

In mid-July 2005, He Huixian, vice-chair of the All-China Sports Federation, informed the staff of Huaao Xingkong of the changes about to come: "Huaao Xingkong will cooperate with the Xinchuan Group, which will take full part in the company's operations. The transition of the various relationships begins in July and is expected to be completed in August. In future Huaao Xingkong may be renamed Huaao Xinchuan."

After that, although CEG reinvented itself a few more times, it had essentially left the stage of history.

Looking at CEG as a whole, as a super league backed by the highest authority in Chinese sport and by a financial group with red establishment connections, I do not know whether we will ever see a combination operating at a higher level than that. There is a great deal to learn from its failure, and the reasons for that failure run very deep, because CEG was a miniature of a whole era of Chinese society. What it reflects is not only the history of a group of kids who played games, but also the problems that era faced.

The monopolistic thinking that comes from combining officialdom and business is still present in our esports environment today. In public we always sneer at monopoly, and in private we envy it and chase after it.

Fair competition, diversity and shared prosperity have still not taken root in people's hearts. That is the biggest problem facing esports today, and the biggest problem facing China as well.