E-Home Entertainment comprises of Microsoft and BesTV, and takes advantage of the slightly more relaxed rules of the Shanghai Free Trade Zone.
The current rules allow for the sale of consoles only in the zone, and we've contacted Microsoft to find out if the Xbox One will be restricted to the same guidelines.
Also announced was a new developer program to develop and sell games "fused with Chinese culture" for local as well as international distribution.
Microsoft reckons China will be a big market -- the company says there are half a billion gamers in China and the gaming industry has generated $13 billion in revenue as of 2013. However, this is from PC, mobile and online gaming.
Besides China, Microsoft's Xbox One will also debut in 28 other countries in September, such as India, Japan, Korea and Singapore for a total number of 42. Previously, only 26 markets had been confirmed.
May 1, 8.45 p.m.: Updated to correct the number of launch countries.