No new Internet cafes in China

Bruce Einhorn

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.

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