HONG KONG (Reuters) - Lenovo, the world’s No. 4 PC maker, has set up a unit to develop a video game console for the China market, a newspaper reported on Friday, pitting it against rivals such as Microsoft and Sony.

Some 40 Lenovo software engineers have been spun off from the company to work for Beijing eedoo Technology, which will be tasked with developing and marketing the “eBox” game console, the China Daily reported.

Lenovo, its unlisted parent Legend Holdings, and its private equity arm Legend Capital co-invested in the new company, but did not disclose investment figures, the newspaper said.

Lenovo and eedoo officials were not immediately available for comment.

The Chinese PC maker has been trying to diversify away from selling only the heavily commoditized personal computer, having launched in the past year a smartphone in its home market and announcing plans to roll out a tablet PC.

China has been a notoriously difficult market for video console makers, which make most of their money from game sales, due to rampant piracy in the country.