China has to be their own league since they are on their own client controlled by Tencent in line with NPPA (China's National Press and Publication Administration) standards. This means they would either have to convince China to let Chinese players use the normal client (never happening) or force all SEA players to use the Chinese Client (also never happening). They also can't force HK/TW to use the client as they are TECHNICALLY still not under governmental rule of China and therefore the NPPA's decision to make their own client for Chinese players does not apply to them, hence why they have their own league since they had access to Valorant earlier and they never used the Chinese client. This is also the reason why the matches played in Shanghai and also any CN league matches do not have VLR ratings as it is a different client.
Why China not SEA + why HK/TW not in China League
HK/TW players can choose to play in CN or Pacific, but people are asking HK/TW to be part of the Chinese league which would mean enforcing a use of the Chinese client on to all HK/TW pro players (or potentially all players overall) which won't go well with some of them. It's not about individuals choosing CN or Pacific, but enforcing an all or nothing which is what they have to do.
From the perspective of game servers, it is more appropriate for HK/TW Region to stay in the Pacific Division. But if Riot decides to merge HK/TW with Southeast Asia, more and more players will choose to develop in the VCT CN, because it is obvious that the CN has more opportunities and more money for them. HK/TW will become an empty shell.
I don't know if there are enough slots in VCT CN for that to happen, but it's a possibility. I think no matter what some regions will become an empty shell due to this merger, which sucks. I'm not a fan of it, but I get why it happened. Just explaining why certain things went the way they did with HK/TW
Yeah, China has a ton of big orgs and they want to 100% make sure that they have their own league and funding and platform so they can keep them there and generate revenue. They're capitalizing more on this by creating a Twitch and Youtube livestream as well to increase funding (through ads) in other countries rather than just letting the streams be on BiliBili, Douyu, Huya and QQ which most Westerners (EMEA+Americas) don't want to use or don't know exist
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