Shenmue City has been officially announced as an upcoming Japanese social networking/mobile/online/net game according to Yu Suzuki (creator of the series), who also briefly discussed Shenmue 3 at a presentation on the new social game held in Akihabara Japan.
So what is Shenmue City? Here are the details, so far the game has only been announced for release in Japan via Yahoo Games online portal and Japanese mobile phones. This is essentially Shenmue Online.
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As far as Shenmue 3 is concerned, this is what Suzuki stated when asked about it.
“I feel like I want to make Shenmue 3 on par with the previous games, and there are many requests from the fans for it. Tens of thousands have petitioned for it, and I want to take charge of this series as best I can. However I wanted to try and make a social game, [something that didn’t exist as we know it now when the Shenmue games debuted].”
Here is a video from the announcement.