Biz Opportunity: Rolling Up and Franchising China’s Internet Cafes

In my previous post, I talked about the dark side of China’s Internet cafes. I was surprised at how quickly I got responses to the posting; there were more than six comments in less than two hours.

Now, I would like to talk about a business opportunity in China’s Internet cafes. One of the biggest problems with Internet cafes is the uneven quality of the management; most are terribly managed, some are managed pretty well. Overall, the well-managed cafes suffer from the poor image problem associated with the whole industry. In a comment following my post, Fons Tuinstra says that the numbers of people going to Internet cafes are falling sharply, citing CNNIC figures. I suspect that this is because of a combination of factors:

  • Educated Chinese families don’t like them because of their bad reputation
  • With laptop computer prices coming down to 7,000-8,000 yuan for a fully equipped notebook, prices are coming with the range of most urban Chinese
  • With monthly DSL prices between 100-200 yuan; broadband access is now affordable

In spite of all this, the Internet cafe still has attraction as a social and recreation area for young people who are looking for places to meet which don’t cost too much.

So why hasn’t someone come in with a roll-up strategy, buying up the good Internet cafes, offering professional management and a franchise package, and turning the whole thing into a franchise like Starbucks, McDonald’s or KFC? After all, that is how Ray Kroc started with McDonald’s in the 50s in the US.

These Internet cafes should offer clean well-lit areas which are frequently cleaned, fresh food and drink, clean bathrooms and a good overall experience. Just think of what could be done if a Chinese Internet cafe experience could be as good as an Apple store! Yes, prices would be higher but it would attract a much better demographic group. And a better demographic would make for a better advertising market.

Events could be planned for the stores educating people about online buying and selling, and to demo new products and services. Game contests could be held in a much better environment than are available now.

If I were an advertiser, I would really love to reach this demographic group. They would be upwardly mobile, not like the permanent urban underclass we now see in so many Internet cafes.

In short, make the Internet cafe a place where Chinese parents would not be ashamed of letting their child go to, and a place where the child could tell his parents he is at, without having to lie or admit to shamefully.

This would help to clean up the image of an industry which badly needs to improve its image. It would even make sense for an advertising company to get into it, as the advertising opportunities in a wholesome Internet cafe franchise are huge. I can think of several companies which should seriously consider doing an Internet cafe franchise in China:

And now, here’s the company I’d really like to see do a Internet cafe franchise in China because it really knows about making cool stuff and it understands lifestyle marketing. If they did it, and did it right, they would own the Chinese Internet cafe experience.

Now wouldn’t that be something! You saw it here first.

I can always wish…

15 Responses to “Biz Opportunity: Rolling Up and Franchising China’s Internet Cafes”

  1. […] You can read the rest of this blog post by going to the original source, here […]

  2. […] wrote an interesting post today on Biz Opportunity: Rolling Up and Franchising Chinaâs Internet CafesHere’s a quick […]

  3. Tangos Chan says:

    I guess even though there is such kind of cyber cafe franchise, young guys are still reluctant to tell their parents, because they mainly go to cyber cafe for playing games, which their parents don’t like. In the concept of many parents, they just think cyber cafe is a place for playing and wasting time.

  4. Alex says:

    You might be the first one to suggest Apple, but here are two news stories on the subject:

    Basically, large IT suppliers are bargaining with local governments over the development of netcafes. Local governments may like large established companies coming into the market because they have some creditability/something to lose if they don’t run the cafes well, and the IT suppliers can create a nice little oligopoly.

  5. RE: Alex
    I belieive both of the links above lead to nothing more than articles about hardware/network suppliers (now future franchise owners) – i.e. the point is that AMD/HP… would have special supplier relationship with internet cafes…

    Now to the post:

    I think the problem here is that the majority of netcafes are actually illegal. Typically the ones (in major cities) that are “nice” tend to be O.K. with the government anyways. However, most of the traffic comes from rural, dirty and mostly illegal once. Why always illegal? Because in rural areas there is more demand for netcafes/#people but the rate of legally allowed places is not, hence the supply/demand problem… So, sure the big company can come and own a big stake in metropolitan cafes, but it still won’t change the nature of business.

    On a second note, with future deployment of WiMAX technologies, it’s possible that netcafes will become more mobile (easy to setup) and thus in an effect making WiMAX providers the franchise owners (not just ISPs).

  6. […] terribly unpleasant places to spend your time: smoke-filled, poorly lit and generally dingy. In a follow-up post, he asked, why hasn’t some smart entrepreneur started franchising internet cafes on the scale […]

  7. Promising China Blogs: The China Game And The China Vortex…

    Two good new China blogs out there by two already pretty well known China hands. Paul Midler (who I believe coined the phrase China fade, referring to the diminishing quality of China products) has started a blog called The China Game. Paul has been in…

  8. […] from foreign investment. It seems Youtube will not have chance to enter Chinese market, and Paul Denlinger’s proposal of foreign Internet cafe franchise has been […]

  9. […] from foreign investment. It seems Youtube will not have chance to enter Chinese market, and Paul Denlinger’s proposal of foreign Internet cafe franchise has been dead.Douban 1 million users: Douban, a famous web 2.0 […]

  10. business business internet opportunity…

    Good comment. It brought light to an old idea I had….

  11. Mailman China is launching a platform of commercialization to the net cafes across China – Also bringing some social value by offering free English lessons, encouraging sport and social interaction. Getting ether one cafe at a time….

  12. franchising opportunity…

    Didn’t realise there was this type of information out there…


    Multi- ……

  14. wow :)
    its very unconventional point of view.
    Good post.
    realy good post

    thank you ;)

    RulseDubuploabes last blog post..No Faxing 100 Percent Online Payday Loan