Kowloon in the game is based on the Kowloon Walled City (Japanese: 九龍城 Kyūryū-jō or 九龍城砦 Kyūryū-jōsai) located on mainland China, before it's demolition in 1993. Despite being on the mainland of China, Kowloon is an enclave of Hong Kong, so still part of the Hong Kong territory. The city is filled with many high rise buildings, the largest being the Yellow Head Building. Additionally, the name Kowloon (九龍) literally means nine dragons, which Shenmue players should be familiar with as part of the password Ryo needs to talk to Master Chen back in Yokosuka.
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