The source of my befuddlement is the screen in front of me, where a gaggle of warlocks, wizards and warriors are busy knocking seven bells out of a savage, toothy-looking ogre. The ogre is in trouble - as would Goliath be if beset by a horde of lethal, heavily armed Davids. It lunges at one of the hero-types and gets an arrow in the neck for its trouble before retreating, stumbling, and being blasted to smithereens by a lightning bolt. Poor chap was only doing his job.

This is Legend of Mir II, a Korean videogame sweeping mainland China. More than a million Chinese from Beijing to Kashgar log on every day at home, work and in Internet cafes to play, in many cases for several hours at a time. It has also made Chen Tianqiao, a mild-mannered Shanghainese with a pleasant, lilting tone and a tendency to talk in lists, a rich man. An extremely rich man.

Chen, 31, is founder and chief executive of Shanda Interactive, China's biggest online gaming company, which licenses Mir from Korean firm Actoz Soft. Chen topped the recent Euromoney China list of wealthiest mainland information technology entrepreneurs - his US$1.05 billion (HK$8.19 billion) nest egg making him the country's second richest man and an icon for millions of young mainlanders.

Shanda has also proved a favourite among investors. They love the fact that it is profitable, and has used much of the capital raised from its Nasdaq initial public offering in May to buy up competitors and strengthen its market-leading position.

They also love its business model. Product piracy in China is a huge problem; Shanda's ludicrously simple solution was to get game players to buy a pre-paid card, costing up to 35 yuan (HK$32.94), before logging on. The card itself is hard to duplicate, encouraging its closest mainland gaming competitors, The9.com and Netease, to copy its business model.

Online gaming is becoming big business in the mainland and it is forecast to become the world's biggest Internet-based gaming market within three years, according to Dallas-based analysts Diffusion Group.

Consultants IDG see online gaming revenues in the mainland hitting 6.7 billion yuan in 2007, from 2.17 billion this year. The China Centre of Information Industry expects online gaming numbers to grow to 48 million players in 2005 up from 19 million last year.

So it comes as a surprise to find first that Shanda's boss is so nice, and second, that his humble demeanour, a slightly stooping gait and a rugby shirt conceal a burning desire to build not just a big online gaming firm but a global media empire.

``We want to be the leading interactive entertainment company in the world,'' says Chen. ``Right now, compared to Disney or Universal we have no competitive advantages based on traditional technologies. In movies, for example, we cannot compete with Universal. But in 10, 20 years, there will be several global interactive entertainment companies, and I want the biggest to be Shanda.''

His ambitions don't stop there. Chen says he wants to stream content - whatever that may be several years hence - via personal computers, mobile phones and TV sets. He also wants to establish, once the thorny issue of piracy is solved in China, his own film studio and music label - all online and interactive, of course.

Fortunately he is also smart and humble enough to know that a market-leading position can be reversed by a wrong decision or a clever, dynamic market rival, particularly in China's cut-throat business world.

``Maybe in a year or two someone will solve the problem of music or movie piracy - maybe Microsoft or a small start-up. If they can do this, maybe we lose our advantage.

``I don't worry about the nearest competition. People always ask me who our closest rivals are but I don't care about this. I care about who will come out of nowhere to compete with us - after all, we came out of nowhere to out-compete our bigger rivals.

``We are a young firm, we don't know what the future holds and we don't have the experience of running a huge company,'' Chen says, adding that any firm's worst enemy is usually itself. ``The first obstacle will always be us. The question is, can we grasp the right opportunities?''

Stiff competition may arrive quicker than anticipated. The barriers to entry in China's online gaming sector are low - hence the need for size. Since Shanda's Nasdaq listing it has bought up online game developers Haofang and Bianfeng, mobile game maker Digital-Red and literature portal Qidian, and the buying spree won't stop there.

``We will continue to make acquisitions as and when necessary,'' he says.

Overseas gaming firms, meanwhile, are also eagerly eyeing China, having in some cases outgrown their domestic markets. Most Japanese and Korean firms, including Actoz Soft and Webzen, have so far preferred to allow mainland firms to license their games, fearful of overextending themselves in a country infamous for disappointing outside investors.

But foreign firms will come, Chen acknowledges, and they will want to offer their own games direct to customers - hence Shanda's need to create its own games.

The company is ramping up its staffing numbers to around 2,000 from 1,100 at present, many of whom will be employed to create China's next generation of homegrown videogames.

United States and European firms are looking to break into China's vast gaming industry. Major player California-based Electronic Arts, despite having been burned once before in China, is set to build a videogame studio in the mainland, using it as a cornerstone for expansion into Asia.

Electronic Arts (EA) president John Niermann said recently that the company aimed to hit a billion dollars in revenue in Asia by 2010, with China a ``big part'' of that growth.

EA previously released its own role-play game, Ultima Online, in China but closed its doors within a year when the game drew in fewer than a thousand participants. By contrast, Mir has around 1.2 million users during peak hours between 8pm and midnight.

Chen has a word of advice for overseas rivals - keep it simple. ``A lot of foreign games are based on role-playing like Dungeons & Dragons and also on clever wordplay. Chinese don't like the style of Dungeons & Dragons, and they don't like having to explore complicated words. The Chinese live highly pressurised lives, and so they prefer simple games.''

Financial and regulatory support may also come from Chinese authorities increasingly keen to support the budding industry. Beijing recently said it would spend up to two billion yuan to support homegrown games in a bid to grab market share from Japanese and Korean firms. Central authorities are also beginning to see the value in supporting entertainment firms that can act as overseas ambassadors for the country.

``[The authorities] see how popular European and US music and movies are and they realise that it is important to support the industry, rather than kill it. After all, if the authorities wanted to kill this industry it would be very easy for them to do so,'' he says.

Chen is rightly proud of both his company's success and its ability to develop a new business model capable of solving, for now, the problem of online game piracy.

``We have created this company ourselves, rather than copying the model from a US firm. The movie industry has huge piracy issues and was worth, officially, just 900 million yuan last year, while Shanda made revenues of 650 million yuan,'' he says.

He also seems thoroughly at home at Shanda's new headquarters in a nondescript Shanghai business estate surrounded by oil refineries, posh housing and a scattering of high-tech firms.

Chen chats freely with fellow employees and grills them over a lunch of fish, vegetables and rice about any number of issues - new products, customer services, even the state of the flower borders outside the office complex.

Mainland CEOs have a reputation for being distant, coldly patriarchal figures capable of providing direction but little warmth. Chen stresses the need for workers to have fun - indeed, most employees seem genuinely happy to be in the office. Most of the workers, from call-centre operators to video programmers saunter around smiling. Even the security guards are smiling. Weird.

The personal touch extends to the office layout. Whereas most state-run firms tend to bedeck entrance halls with layers of heavy marble, Shanda's approach is more minimal - carpet runs throughout, with simple doors and a sense that the offices are ``lived in''.

``We want everyone to enjoy working here [and] to enjoy playing our games,'' says Chen. ``In China, studying has always been more important then enjoying yourself, but everyone wants to enjoy themselves - it's just the nature of human beings.''

With success has come increasing pressure on Chen and his company, not just as the leader of a booming market sector but as a voice for a new generation of young entrepreneurs whose customers are the young men and women Beijing needs to keep both happy and docile.

``With every new industry, there is always somebody watching you,'' he says. ``I feel responsibility and pressures. In China, first the business is created, then the environment. But we are the pioneers, and we have had to deal with many problems.''

I wonder if Chen fully realises the power and influence he could one day wield. After all, Shanda does not make electrical switches or TV sets; it makes, licenses and sells ideas, images, sounds, effects, impressions, illusions and personalities.

Shanda's games allow millions of Chinese to live vicariously for a few hours each day: changing from worker and consumer into a cunning wizard or a fearsome hero with unlimited powers over friend and foe. It also allows players to join forces with others to become a team - a feeling often absent in the isolating modern world of education or business.

The company may also, Chen hopes, one day become a media empire with roots in China and divisions that touch every corner of the world. This puts him in a fairly rare position of being able to influence the image of Chinese culture at home and abroad.

With China seemingly capable of anything these days, Chen could one day make films or champion the mainland's first global rock star, or become China's first media mogul, following in the footsteps of William Randolph Hearst or Rupert Murdoch - albeit for now without disseminating news.

He seems aware of the pitfalls to ambition also and the need to remain humble - after all, he is one of just three billionaires in a country populated by over a billion people, most still with barely US$3 to rub together.

He wants the world to know that he is playing his part, noting that the company is ranked No 6 in China's taxpaying tables and he is the youngest person in China's list of the top 100 donors to charities.

Chen steers the conversation back to Disney, a film studio built on innovative content and an ability to change and adapt to the times. Walt Disney saw how times were changing in the first half of the last century and acted correctly, moving quickly from its first simple black-and-white cartoons in 1923 to full-length movies and television.

Shanda, a company with five employees four years ago has, like Disney, grown from humble roots.

What Chen needs now is his own Mickey Mouse in the form of original content, and a hefty slice of luck to boot.

elliot.wilson@globalchina.com