Although the cultivation genre is China-originated, if you're putting a whole separate world into the story instead of basing it on China, I don't see why you shouldn't use characters from other ethnicities. There are even some Chinese xianxia novels that use such characters(although mostly as stereotypical villains and to show off how great Chinese culture is in comparison). And if you're just taking the theme of cultivation, you don't have to stick to the culture. You can do whatever you like. After all, no matter where they originate from, genres are just a base. An idea. It can never solely belong to someone or some culture.
At least, that's my opinion. And I've been an on-and-off xianxia addict for a long time(When I'm not reading it, I like to pick apart how ridiculous the repetitive plots, dialogues, and nationalism are). So it really is nice to see people starting to attempt cultivation games here. Though I've always been more on the side of 3d (or even 2d if they're well drawn) instead of real porn, I'll still give it a try.