Posting from phone, so please ignore spelling and bad auto correct.
The activation is required by beTV, MS chinese partner. At initial boot, before you can entre you gametag, it goes to a beTV page, where you have to enter a valid chinese Mobile number (it checks The number, must be chinese). This number Will receive a sms with a code, that must be entered in the console to continue. The code is valid only for a few hours. Without it you cannot continue and the console will not boot. Since there is no registration other than the Mobile number (no extra information is required) I guess it is to verify you are really a chinese citizen. There is no IP or geo lock, you can activate the system anywhere as long as you have a chinese Mobile number.
And Yes, I have friends over there that sent me the console and helped me with the activation, using skype.
So...What is the point of buying a Chinese XB?
Couldn't they go to the grey market and just buy an imported XB?
No region locks, western games with no restriction.
Can they even block Chinese games to be play on an imported XB?