China tech-watcher Paul Denlinger’s post about the country’s decrepit internet cafes (which he calls “shitholes and firetraps“) has been making the rounds among the China blogging elite lately. Beijing-based Wikipedia expert Andrew Lih agreed with Denlinger’s view in rather milder language, calling them “digital opium dens.” Kaiser Kuo, a CER alumnus who’s gone on to bigger and better things – like being Ogilvy’s China new media boss, also riffed on Denlinger’s views.
In short, Denlinger said that the majority of China’s internet cafes were 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 of a McDonald’s or Starbucks (he even mentions Apple, but that seems a little implausible to us)? The opportunities are there for the taking.
It seems someone has been thinking just that for awhile now. We read a news item in the Asian Venture Capital Journal in September reporting on Intel Capital’s second-round investment in BigCafe (China) Holding Corp. The amount invested was undisclosed. But what is known is that BigCafe (please, guys, lose the heavy Flash intro) was started in 2006 and has 1,000 net cafes around the country operating under its own brand. It plans to double that number by year’s end (perhaps underscoring the futility of the government’s supposed freeze on new internet cafes through the rest of the year), and it owns another 10,000 outlets that operate under different brand names, which it bought recently.
BigCafe doesn’t just run its own chain. It’s also apparently targeting some of those firetraps Denlinger fingered. It provides management services like staff training, marketing consulting and advising on property insurance (important for any fire hazard) and financial services.
The cafe chain looks like it’s in good hands. Prominent Chinese blogger Isaac Mao’s United Capital Investment was a first-found investor in BigCafe. Intel certainly thinks so. An Intel Capital spokesman told the AVCJ that “BigCafe is poised to play a major role in the internet cafe industry and Chinese users will benefit.”