No new Internet cafes in China

Posted by: Bruce Einhorn on March 7, 2007

Internet cafes in China play a far more important role than in the U.S. and other Western countries: Since relatively few Chinese own PCs, millions of people depend on Internet cafes to get online. So what’s behind China’s campaign against Internet cafes? Beijing yesterday announced that the government won’t allow any new cafes to open in China this year. The country has about 113,000 licensed Internet cafes, and there are many more that operate illegally. The illegal ones have gotten the headlines for being unsafe; I blogged in Asiatech last year about an explosion at one Internet café, for instance, and the crackdown that followed.

But Internet cafes are also big business. Some of the legal ones are huge, with 300, 400 PCs per café. Last year I visited one café in Shanghai that had a no-frills section, a nicer area that cost a bit more, and a first-class section decked out with decorations from a popular online game. Companies like Intel and AMD see Internet cafe owners as important customers and have been designing systems with them in mind. (More on this here.)

According to Xinhua, the problem is that Internet cafes are dens of iniquity. “China has seen an alarming rise in the number of teenagers addicted to Internet cafes and gaming,” the official news agency reports. And sure enough, last week the Chinese papers reported on an obese 20-something who died after a marathon online gaming session during the Chinese New Year holiday. The reporting on the latest move doesn’t mention, however, that the government has been trying to force consolidation on the industry for a while now. The idea is to drive the illegal cafes out of business and force the owners of legal ones to sell to one of the handful of companies that are authorized to operate nationwide chains. Maybe the government is figuring that a ban on new cafes will make it easier for the nationwide chains to gobble up some of the smaller ones.

Reader Comments

Comment

March 7, 2007 3:24 PM

Many people in China go to Internet cafe not becuase of they don't have a computer, but they go there with friends to play internet games together

will

March 8, 2007 12:56 AM

People have a computer and internet dont want to go to internet cafe.

it's smoky, dirty, greasy keyboard...

Lim

March 8, 2007 10:37 AM

It's almost impossible to ban all small Internet cafes (even illegal ones), because they are the only and cheapest way for the village people and workers who cannot afford computers to surffe the Internet. And obviously the number of these people is large. How the market supplies depends on the demand, not the government's will.

cq

March 8, 2007 1:29 PM

Dangerous signs of things to come. Is the government already up for sale to big business.

another reason why

March 8, 2007 7:23 PM

don't know if you've ever been to China, but a bigger reason than "relative few Chinese own PCs" is that China has the market for internet cafe. Why? b/c of the huge urban population AND much much higher population density (probably 500 million urban residents in China now? and how many square footage they occupy? how many people in usa? in Europe? in how large(r) area? btw, the "relative few Chinese" at times could be very misleading as a relatively hihger rurual population which greatly dilutes almost any "per capita" numbers; but when you just consider the sheer number of urban residents and don't be so proud of your own wealth or anything...) Here is a very simple example to support it: in China, travelling by trains plays very important role in mass transportation b/c of the exactly same reason for successfual internet cafe (population, population, population) and in the USA the railway system for tranporting people long-distancely has long been down to the earth, literally.

Nikolay

March 18, 2007 12:49 AM

At the end of the day the Internet Cafes are a low cost way for many Chinese to get on the Web with Broadband connections. PCs are pricey and so is the fancy PC - if you want to be up to date with the latest and greatest gaming machine...In a way the Internet Cafe is not much different from the Gaming Arcades. How many people want to buy an arcade game system...? Thought so -- not many. So the young Chinese consumers who cannot afford a mid-to-high end PC will continue to rely on the internet cafe

Will

April 6, 2007 2:12 AM

The reason why indivuduals use internet cafes is:

1. low PC penetration
2. Link up with friends
3. Privacy away from home and freedom to access what games they want to play (vs parental control)
4. Better equipment to play and run popular games

Check out the CINNIC report 2006/07

sdusd

September 9, 2007 2:50 AM

Chinese use net cafes because (from experience):

1. The computers are usually pre-loaded with pornographic films.

2. There is very little personal space at home for teenagers.

3. Most teenagers going to netbars can afford computers, they go there for the experience

4. To hang out with friends and blow each other apart in Counter Strike

maychic.com/aiagold

September 11, 2007 8:12 PM

China’s campaign against Internet cafes is ill conceived and misguided. The Chinese govt has to be very careful about all the restrictions they impose on freedom in China because it can choke the life out of their technological and industrial progress.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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