Black Myth Wukong is but one single game. Besides, they sourced Western talent. Only time will tell whether they can replicate the success, and whether they can breach into other markets. Chinese developers and publishers have tried to take on popular titles with their own iterations, and haven't always succeeded. Tencent knows this well.
If you look at the mobile anime game space Chinese made games are hitting peak popularity even in Japan.
Wukong, Genshin, Honkai are actually doing very well internationally. They're also using foreign talent for music, voice acting (when for export) etc but the coding is their own with a lot of their own artists involved.
Not sure why you are confused. Japan has been making video games since the 80s and they've stagnated. If you speak to any Japanese people they'll tell you innovation is dying and the mindsets are fixed. They've rested on their laurels and are now being outdone.
The Chinese deserve the win here, but Black Myth Wukong is not Japan's gaming death knell. Japan has creative talent by the loads.
You also seem to not know the difference between present tense and future tense.
In the recent past who were Japanese competitors? Who was producing games - Western studios and Japanese ones only. Now many of the big earners and many of the games which take Japanese users' money by the 100s of millions of USD are Chinese. Korean too, but Koreas' potential is less.
Look at the jump Chinese media/game companies have made in the recent past.
Remember that Wukong was made by a small time mobile game company. Not the same pedigree as Square but rivaling them and maybe even outdoing them, if looking at sales counts.
Some of their upcoming East Asian "samurai" like hack/slash or souls like games:
Those will take away from FromSoft and others. And there will be more to come.
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