I think it is precicely because China was involved that this incident caused such an upset. I think we see what we want to see and chose where to put emphasis.

But sure, lets break it down why not?

- The makers of devotion called a world leader an idiot. Error in judgment #1 (which people conveniently overlook, I think they shouldn't). Should there have been some repercusion? Yeah, I think so. To the extent that it did? Probably not.
- An egotistical dictator takes a personal insult a step too far (notice that I'm not blaming China as a whole here, some people are). Yeah, a wiser person would have made a more measured response. I guess you'd call that an error in judgment, though we probably shouldn't expect anything better here. This is the baseline behavior.
- GOG announces a game that is a political loaded gun without thinking it through. Error in judgment #3 (they never should have announced it).
- GOG choses its Chinese customers over an obscure game. Sound business decision. Lets recall that they are a business, not a democracy advocacy group (some people are upset by that?)
- I honestly don't know what kind of message they should have sent at this point that would have made it half alright. I tend to speak my mind and tell it like I see it, but it also tends to get me into trouble so perhaps I'm not the best advocate here.
- Bunch of people get upset that a corporation wasn't secretly "democracy watch" in disguise

Is world democracy in peril? I think not (well, it always kind of is, but not because of this, the biggest threat to democracy always come from within)

The incident was very targeted (insult on Chinese presidents), the principal affected actor is close to China and heavily affected by them (and frankly should have known better, though for sure they did not deserve that much of a blowback). The other actor is a corporation and definitely not a substitute for democracy ("voting with your wallet" is an unfortunate saying... its an extremely poor substitute to actual voting).

The guy at the head of China will be around for another 1-2 decades I guess. This is a pro of democracy where we usually have a chance to rotate those guys every ~4 years, though its not perfect, occasionally, a demagogue will get in power and subvert the democracy (there was an unfortunate incidence of that in your country quite some time ago, then we had Venezuela with Chavez, Trump tried really hard, but thankfully failed though he had an unsettling number of supporters... bunch of other such incidents and many more close calls, it seems nobody is safe from that cr*p, lets call it an unfortunate side effect of the human condition?).

Its all very unfortunate. A lot of poor judgement here to go around. I'll be honest, I don't feel particularly threatened or affected by this particular incident (its a single obscure game and if Canadian democracy is shot to bits, we'll do it to ourselves... it will happen at some point in the future, to be sure, its all very depressingly cyclical... a good thing just doesn't seem to last, anywhere really).

Anyways, if you were just in it to support GOG with your wallet because you were operating under the belief that it was the second coming of Christ (as opposed to, you know, doing it for the games). Yeah, for sure, stop right now (though you should never have started). If you're under the impression that gog turned into some villain, I have sad news for you: The gaming industry is mostly run by corporations. They'll follow the money every single time (you can actually depend on them doing it). If you want to enforce values beyond that, try to lobby your local political representative I guess? The laws often start there.