China's Internet Cafe's: More to Come?

Filed in archive Internet on January 16, 2008

For a day or two it looked as though China was about to lift the ban it has in place on the opening of new Internet cafe's in the country. At least that's what the Inquirer was saying.

Egan orion at the Inquirer reported the rumor on January 9th.

BEIJING MEDIA report that Chinese government agencies will soon welcome new Internet café applications again following a year-long ban.

Now it turns out that the rumor was just that - a rumor.

The rumor had been made more believable in part by...





The rumor had been made more believable in part by a Xinhau report that same day entitled China's Internet consumption expected to rise 45.8% in 2008.

The Inquirer, after washing a little mud off its face, printed something of a correction, acknowledging that the original report had been wrong.

In keeping with its tradition of authoritarian central planning, the Ministry of Culture announces the nationwide total and regional quotas for Internet café s annually. It has not decided yet whether to accept new licence applications for netcafes in 2008.

Such heavy handed government interference in the market for online diversions has had the predictable effect of driving up the prices of existing netcafe licences from less than 500 yuan a few years ago to more than 1 million yuan recently, in cities such as Shanghai, Guangdong, Anhui and Shanxi.

The Internet industry has been impacted badly in recent months by new rules on foreign investment and a clamp down on online videos. The result has been that venture capital funds and private equity managers are looking outside the tech industry for new opportunities.