CHI Yufeng, the top executive of a leading China-based online games company, said one of his top priorities nowadays is to encourage employees to speak English at work to get them thinking more globally in a highly competitive market.

Chi is the founder and chief executive of Nasdaq-listed Perfect World, which is aiming to increase distribution of its games, such as Battle of the Immortals, in the US and other overseas markets.

Perfect World is not alone in banking on worldwide marketing for future revenue growth.

Chinese game makers are hustling in search of new opportunities as the once booming online games market in China begins to show signs of slowing. Companies are not only looking abroad for new customers; they are also trying to redesign computer games for new formats, such as mobile phones.

"The industry is at a crossroads, and we must choose the best way forward," said Alan Tan, president of Shanda Entertainment, China's No. 2 online game maker. "I certainly feel the pressure."

China's online game market, in the second quarter, posted its first quarter-on-quarter loss in more than a year. Domestic sales in the April-June period were 7.34 billion yuan (US$1.1 billion), down 1.8 percent from the first quarter, Shanghai-based iResearch said.

Cooling consumer interest partly reflects a lack of innovation in the industry, said Sun Shoushan, vice director of the General Administration of Press and Publications. All games look pretty much the same now, casting an unexciting pall over products and making it difficult for any one company to stand out in the crowd of competitors.

Sun, who was attending the China Digital Entertainment Summit held on Wednesday in Shanghai, said he expects revenue from China's online game industry to grow 30 percent this year despite all the drawbacks and negative comments.

Industry insiders were quick to note, however, that growth of 30 percent would "still be 20 percentage points lower than the peak years from 2006 to 2008, when the market was growing more than 50 percent annually."

Is the industry simply running out of creative puff?

"It's difficult to create another Zhengtu or Tian Long Ba Bu," Liu Wei, president of Giant, said, referring to popular online games. "We have to think differently."

Zhengtu, developed by Giant, and Sohu's Tian Long Ba Bu, one of the top five games in China, have been big draws for online game makers.

While domestic sales remain under a cloud, game exports are growing, thanks to the efforts of companies like Perfect World, Shanda and Sohu.com.

In 2009, 29 China-based companies exported 64 different games overseas, earning revenue of US$109 million. This year, the figure is expected to double, according to Sun.

"Strong design and global promotion will help us become a world leader in games, even though it may take 10 years or even longer," said Perfect World's Chi.

To expand into the global market, young Chinese firms have to compete with giants like US-based Electronic Arts and Japan-based Konami and Sega.

For China's game firms, they have to modify products to reflect culture difference besides just translating them. Another way is to cooperate with overseas design firms to co-develop games for global market.

Perfect World reported 186 million yuan in export revenue in 2008 and 215 million yuan in 2009. This year, the company forecasts sales will double to 700 million yuan.

To achieve that target, Perfect World has been making acquisitions overseas, in markets like Japan, Brazil and Malaysia. It has also invested in a Seattle-based studio with former Diablo development team. Earlier this year, Perfect World set up a subsidiary in Europe.

Sohu.com Inc has been expanding overseas, too.

In the second quarter, Sohu's overseas licensing sales jumped 29 percent year on year to US$2.1 million, accounting for 3 percent of its total gaming revenue.

The increase was primarily due to the better performance of its Tian Long Ba Bu game in Vietnam and Malaysia, according to Morgan Stanley.

Shanda, another competitor, set up overseas business headquarters in Singapore last year. In January, the Chinese company acquired a US-based game network Mochi Media for US$80 million to help penetrate the US market.

Tencent, now China's No. 1 game firm, will sign partnership deals with top overseas game studios to co-develop products, said Ren Yuxin, president of Tencent's game division.

"We will combine East-West cultures to bring something new to the market," Ren said.

During the Shanghai forum at Chinajoy, the country's biggest game fair, China Mobile made its maiden appearance, after establishing a mobile game development center in Jiangsu Province one year ago.

China's largest wireless carrier saw second-quarter revenue from its mobile games business jump 40 percent from a year earlier, more than four times the industry's growth rate, according to Wang Gang, China Mobile's game division director.

"Compared with online games, mobile games have great potential, coupled with 3G development and the low cost of mobile traffic," Wang said.

In January 2009, 3G licenses were issued. Using the high-speed network, people can enjoy video calls, game downloads and multiplayer roles on their handsets.

In China, more than 84 percent of game revenue has come from computer-based programs, leaving a lot of room for expansion into other devices, according to Microsoft Corp, another newcomer in the game industry.

In China, more than 800 million people use mobile phones, compared with an estimated 300 million game players at the end of June.

Wang's optimism was echoed by Zhang Xiangdong, 3G.cn's co-founder and president.

"The annual traffic from mobile phones will soon surpass the combined traffic on computers," said Zhang. "Games, music and books are the three most profitable businesses on mobile phones."