A new Reuters report citing "industry sources" has revealed that Microsoft is looking to launch its Xbox 360 console in China in the next few months. According to the report, Microsoft has been discussing its Xbox 360 plans with Chinese Internet service providers and PC manufacturers and intends to appoint several sales agents for the console in the mainland.

Microsoft has actually had an Xbox 360 launch in mind for China since 2005, but part of the problem is that the company needs to gain the approval of the government first—the culture and information ministries review the video game product sold in the country. The government's stance on imported video game products has typically been one of caution.

That said, retailers in major Chinese cities such as Shanghai, have told interested consumers that the Xbox 360 could go on sale as early as February, around the lunar new year.

"We take a long-term approach to each market and continue to evaluate the China market for opportunities," Andres Vejarano, Regional Marketing Director at Microsoft's Entertainment & Devices Division for Asia & Greater China, told Reuters.

Piracy has long been a concern in China and in Asia in general, but video game companies may be looking to the region as a more viable market of late. The PS2, for example, has been on the market there for three years and would likely be Microsoft's main competition when the 360 makes its debut.

Concerns over piracy aside, one analyst believes that Microsoft sees the market as a risk worth taking because of the software development community there.

"Microsoft has to choose whether to go for better software protection or if they're going to charge more for the Xbox because there are already some gray imports," said Florian Pihs, assistant vice president of market research firm Analysys.

"The reason, however, that they are doing it anyway is because Microsoft wants to develop the Chinese software development community ... they already have teams that have software development for Xbox in China. Either way it's going to be a tough market for them."