How about market share? Isn't it important right now to penetrate the market rather than to earn a big profit from the market. If Nintendo can penetrate the China and Korea market with Wii and DS, they have won. Profit can come from rest of the World.
No doubt things are cheaper in China, but still you have to look at the number of handphones and cars sold there. Chinese has been playing Magic the Gathering trading cards for many years too. If they had been video games - starved for 2 decades, I believe they will grab Wii. Nintendo will no doubt sell Wii cheaper just like Nokia and other gadgets company.
I believe China's market has big potential this generation alone, at least for Nintendo.
WW Market share prediction on 31st March 08 (I make this prediction on 13 Dec 07):
Wii - 50%
X360 - 30%
PS3 - 20%
