Big Brother is watching you. And not just the Big Brother that you might expect.
It’s a warning worth noting in China’s internet cafes (there are at least 113,000 cyber cafes around the country, according to Xinhua).
In Europe and the US, the days of the internet café are pretty much on the wane, except for a few inner-city areas where lower incomes still make a home connection too expensive.
But in China at least 135 million people head for cafes for their online fix, according to the most recent data last month from CNNIC (the government’s internet information centre). That corresponds to a little over a third of total internet users.
The large majority of cafe-goers are young, not especially well educated and often from poorer backgrounds. They are logging in to watch videos online (see WiC45) or to take a turn at a multi-player game (WiC10). Others are checking email, sending instant messages or browsing the web for news as well. That means that they have to deal with the filters and firewalls just like internet users at home or in the office. But cybercafé owners are also supposed to check customer ID cards and register their details at each sitting. Anyone below 16 should really be shown the door too, although the regulations are not always enforced. Profits are thin in the industry.
For those that do spend hours online, few may realise that their behaviour is being recorded for market research purposes. One firm, ComRatings, is capturing the lion’s share of the business. It generates reports from thousands of cafes, transmitting them every 10 minutes to company data centres in Shanghai and Xi’an.
The company’s chief executive Yu Hui told the 21CN Business Herald last month that there is no dominant online research firm for the domestic internet. His own strategy for getting ComRatings into premier position is to start with the cafes.
ComRatings embeds its monitoring capabilities into the billing software used by cafe owners to track and charge for usage. So when an online games freak spends three hours playing World of Warcraft before switching over to Youku.com to watch an HBO mini-series, ComRatings knows about it.
In fact, it knows about tens of millions of people doing the same. Yu says he has an eye on information captured from more than 90% of the country’s registered cybercafés.
ComRatings says it has modelled itself on the US firm comScore, which collects data from monitoring software that has been installed on computers. But there are important differences. For one thing, comScore will have sought permission to collect user information. Not all the surfers who contribute to the ComRatings data do so knowingly.
What about privacy? Yu maintains that terminals in cybercafes aren’t private facilities. He says the data collected doesn’t include personal information either.
ComRatings then sells the information to the companies that provide online games, video sharing and messaging.
“They don’t gather the data, we do. After analysing the data, we feed it back to them, which they will use to improve their business,” Yu says.
Yu will know from the most recent CNNIC report that the proportion of internet users who go to cyber cafes is falling (still around 35% in 2009 but a lower share than a few years ago). By contrast, more people are now accessing the internet at home or over their mobile phones.
But less than a third of the Chinese population is currently online. So ComRatings may be betting that, for many, cyber cafes will continue to offer the first online experience, especially for applications not well served by 3G phones (like video and online gaming). It may well be a customer base on a lower income. But, with so many still to log on, it could still be a profitable audience.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.