Rise of the Dragon: MiHoYo's Genesis and the Chinese Gaming Context

On a September afternoon in 2020, a Chinese game studio released a free-to-play action role-playing game with no preceding hype campaign, no tie-in to an established media franchise, and no backing from a major Western publisher. Within two weeks, Genshin Impact had been downloaded over fifty million times across PlayStation, PC, iOS, and Android platforms. Within a month, it had generated over $400 million in mobile revenue alone, ranking it among the highest-grossing mobile game launches in history. App stores in dozens of countries reported that it had become the most downloaded free-to-play title within days of release. For a company that had operated for nearly a decade without mainstream recognition outside of anime gaming circles, this was not merely a commercial achievement—it was an event that rewrote assumptions about what a Chinese game developer could accomplish in the global market. The speed of the ascent, the scale of the audience, and the sophistication of the product demanded explanation. How had a company founded by three graduate students in a Shanghai apartment building produced, essentially from scratch, one of the most technically ambitious and culturally resonant games of the decade?

This chapter begins the work of answering that question by situating MiHoYo—the company now known as HoYoverse—within the specific historical, institutional, and market conditions that made it possible. To understand the industrial complex that produced Genshin Impact, one must first understand the conditions of its creation: the intellectual ecosystem of Shanghai Jiao Tong University where its founders met, the peculiarities of China's gaming market that shaped their early strategic decisions, the decade-long learning process embodied in the Honkai series, and the calculated choice to compete globally rather than consolidate domestically. These are not merely background details. They are the foundational elements from which the entire system emerged. The story of MiHoYo is inseparable from the story of Chinese gaming itself, a story that Western analysts had long dismissed or underestimated until the numbers became impossible to ignore.

The Shanghai Jiao Tong Foundation

To trace MiHoYo's origins is to trace the origins of a particular kind of intellectual ambition. The company was founded in February 2012 by three individuals who had met as undergraduates and graduate students at Shanghai Jiao Tong University (SJTU), one of China's most prestigious institutions: Cai Haoyu, Liu Wei, and Luo Yu. Each brought distinct technical capabilities to the partnership. Cai Haoyu, who would assume the role of president, studied computer science and had a deep fascination with otaku culture—Japanese slang referring to people with intense, often obsessive interests in anime, manga, and gaming. Liu Wei, the chief technology officer, specialized in programming and systems architecture. Luo Yu, who became the company's first animator, provided the artistic sensibility that would eventually manifest in the studio's distinctive character design philosophy. Together, they formed a founding triad that balanced commercial instinct, technical mastery, and aesthetic vision—the three pillars that would define the company's approach for years to come.

Shanghai Jiao Tong University occupies a particular position within China's academic landscape that is essential for understanding the environment in which MiHoYo's founders developed their worldview. Established in 1896 as the Nanyang Public School, SJTU has long been regarded as one of China's "C9 League" institutions—its Ivy League equivalent—a designation shared with Peking University, Tsinghua University, Fudan University, and a handful of other elite schools whose graduates have disproportionately shaped Chinese technology, finance, and governance. SJTU's engineering programs are particularly renowned, and the university has produced an unusually large cohort of entrepreneurs in the technology sector. The culture of the institution emphasizes rigorous technical training, collaborative project work, and a pragmatic orientation toward applying theoretical knowledge to real-world problems. For students with entrepreneurial ambitions, the environment offered not only technical skills but also access to a network of like-minded peers, a culture that valued ambitious projects, and proximity to Shanghai's growing technology and finance ecosystem.

The year the three founders were active at SJTU—roughly spanning from the late 2000s to early 2010s—coincided with a period of remarkable ferment in the global gaming and internet industries. World of Warcraft had demonstrated the commercial viability of persistent online worlds. League of Legends was transforming competitive gaming and esports. Mobile smartphones were beginning their meteoric penetration of the Chinese consumer market, with iOS and Android devices rapidly replacing feature phones. Simultaneously, Japanese anime culture was experiencing a significant revival in China, driven partly by the legal and illegal streaming platforms that made anime more accessible than ever before. The convergence of these trends created a generation of Chinese students who were simultaneously fluent in Western game design principles, deeply immersed in Japanese visual culture, and aware of the transformative potential of mobile platforms. This was the cultural and intellectual environment that produced MiHoYo's founders.

The decision to start a company rather than pursue conventional career paths was not taken lightly. In the early 2010s, Chinese tech culture was not yet the dominant force it would later become, and game development startups were regarded by many in Chinese society as risky and somewhat marginal ventures. The gaming industry in China carried a complicated social stigma, partly due to government concerns about gaming addiction—concerns that would crystallize in 2019 when the Chinese government implemented strict time limits on gaming for minors—and partly due to the association of gaming with youth escapism. Against this backdrop, the choice of three SJTU graduates to found a game studio was a significant bet. Their initial venture capital came from Shunwei Capital, a venture firm founded by Lei Jun, the co-founder of Xiaomi, andQV Capital, which had connections to Sequoia Capital China. The early funding, while modest by later standards, provided enough runway to develop their first product while maintaining the creative independence that would become a defining feature of the company's culture.

The Architecture of China's Gaming Industry

No account of MiHoYo's rise can be separated from the specific structural characteristics of the Chinese gaming market. Understanding this market requires abandoning assumptions derived from Western industry models and engaging with a set of conditions that are, in many respects, unique to China. The market's sheer scale is the most immediately striking feature. In 2020, the Chinese gaming market generated approximately $40.9 billion in revenue, making it the largest gaming market in the world by total size, according to data from the China Audio-Video and Digital Publishing Association and Game Publishers Association. By the early 2020s, China was home to over 660 million gamers, a figure that exceeds the entire population of the United States and Europe combined. This domestic audience provided MiHoYo—and every other Chinese game studio—with an enormous potential market for testing, iterating, and scaling products. Critically, this audience was not merely large; it was distinctive in its composition and behavior.

The most consequential structural characteristic of the Chinese gaming market is the dominance of mobile gaming. While Western gaming markets have historically been organized around console and PC platforms, with mobile gaming representing a significant but secondary segment, the Chinese market developed in the o