The downfall of 6,487 Internet shops in China, only in the first half of 2020

On the second floor of the Xingshuaiwan complex in Haikou city (Hainan province, China), outside an Internet cafe, more than a dozen bright yellow leather sofas are being loaded onto a truck one after another. the big one is parked downstairs. Looking through the glass window with the words “Closed of Liquidation”, it was vaguely visible that nearly a hundred identical sofas were placed in a slightly chaotic and lonely room.

In 2019, the owner of this Internet cafe, Tran Thuy Dich (pseudonym) bought these sofas for 570 yuan (about 2 million VND). But now he can only put them on the secondhand exchange for 50 yuan (about 170,000 VND), in the hope of “selling out as soon as possible”.

Tran Thuy Dich’s situation is not unique.

Statistics show that in the first half of 2020, a total of 6,487 Internet café companies and shops across China were either bankrupt or closed. As many Internet industries are opening up new opportunities during a pandemic, the gaming business, which was born from the Internet, has entered a long night.

The sadness closed: High-end configuration suddenly turned into a pile of “scrap scrap”

At the end of February 2020, when Tran Thuy Dich closed his Internet store to go home for Tet holidays, he thought it was just a short goodbye. His game shop has just been cleaned and looks clean and tidy. It was his hand that stuck a pair of Tet sentences on the sides of the glass door carefully and flawlessly, and a warm reminder with the black text on the white background above the door lock, saying: “See you all again. after a new year. Whoever doesn’t come is a jerk. “

However, when the Covid-19 epidemic suddenly worsens, this farewell will eventually turn into a separation.

Five months later, Tran Thuy Dich, now overwhelmed by rent, loan and employee salaries, realizes that “Internet cafes cannot escape bankruptcy”.

In 2019, Thuy Dich has just graduated from college and is very fond of esports, decided to start a business by returning home to open a high-end internet cafe.

“The loan of 2 million yuan, of which the cost of decoration accounted for 850,000 yuan, the rest was to focus on building the best configuration of equipment, environment and service,” Thuy Dich recalled that day, when he had high hopes for this Internet cafe. He is involved in all stages of preparation, from selecting locations to decorating, even purchasing furniture and computer equipment afterwards.

“In addition to the leather sofa, hundreds of high-end computer monitors and mechanical keyboards are needed for gaming,” he says.

At the first time of opening, high-quality Internet shops attracted many customers. After nearly a year of operation, the number of old customers of the restaurant has also been cultivated, Thuy Dich has also successfully built a group on WeChat for old customers and regularly does some small activities.

According to his plan: “In 2020, we plan to open a new branch”.

Inside the Internet cafe of Tran Thuy Dich.

The truth is the exact opposite. The pandemic broke all of Thuy Di’s plans and pushed him and his Internet cafe to the brink of bankruptcy.

“Due to the epidemic, Internet cafes had to close for nearly half a year, but labor and rent were abundant. After the business reopened, at most 30 or 40 people every day, many machines. to not accumulate dust, “ he said. And now, Thuy Dich can only sell all the equipment at low prices and rent out the Internet cafe to recover some of his capital. “Although there will definitely be a loss, at least the rent owed can be covered.”

But the result of the liquidation was that a sofa costing nearly 600 yuan is now worth 50 yuan, and an Intel i5-4460 quad-core computer is worth 800 yuan. “The high profile that had been carefully selected before is no different now , “ he said in a helpless voice.

In the southwest corner of the city, Tran Thien (pseudonym), who runs four Internet cafes with his friends, is also worried. He said that two of the internet cafes he runs near the university are still at a loss. The rental cost has exceeded 300,000 yuan a year. ”

“During our business hiatus, we lost a total of about 500,000 yuan, especially the closure of the university, which greatly affected our business. To ease the pressure, we had to sell computers and sofas in some stores, at least make up for the money, “ he said. ” It takes money to maintain the remaining Internet cafes, or to turn around capital to trade in other items.”

After consulting with friends, Truong Thien decided to sell 148 computers. These are computers that are almost brand-new, just 6 months old. With a three-month and one-year warranty, it’s not too bad that one can still sell for between 1,000 and 2,000 yuan. After all, it’s better than putting them to sleep in the store.

On the online buying and selling of electronic components in China today, when searching for keywords like “shut down Internet cafes”, “sell used computers” or “resell game shops “You will notice that they are popping up a lot in recent times. Most of the sellers who owned internet cafes were closed, and most of the merchandise was resold showing they had no choice but to liquidate the store.

The liquidation of the game shop is taking place in China.

More visual data also reveals some of the industry’s confusion. In the first half of 2020, a total of 1,557 Internet cafe business units across China had newly registered, and 6,487 had their business licenses revoked or canceled in the same period. Among them, February is the month with the least number of new registrations with 43 units nationwide. In other words, in the first half of this year, there were 4,930 Internet cafes related units as “net declines” and the whole industry showed a significant negative growth trend.

Difficult to exist: Low prices lose money, high prices do not have customers

“Nearly a dozen Internet cafes in the district have closed and only one is reopening,” said Ly Chuong Ky (pseudonym), who likes to go to Internet cafes to play games. He recently discovered that even though the membership card money has not been used up, some of the Internet cafes he frequents have closed one after another and only one survived.

“Not many people go there every day, and almost two-thirds of the seats are empty,” said the player.

In fact, even in urban areas, Internet cafes that have survived the cold winter of Covid-19 are still sluggish.

“The epidemic is currently not fully controlled. Many cities have strict control of Internet cafes. Some cities require a maximum percentage of visitors to the Internet shop is only 50% and only seats. Only. need to exceed one person must also prepare mentality to be closed, “the owner of an Internet cafe in Shanghai said.

After being allowed to resume operations in late July, the cost of disinfection and disease prevention in Internet cafes has also risen dramatically. In addition to the cost of sanitizing water, gloves and face masks, the chores have also increased. The game shops must have staff to measure the temperature and register the health code. If someone misses the entrance, the shop is in danger of being blocked immediately.

And while the managers’ workload has increased, the salaries have come down.

“There’s also no way. I need to disinfect and ventilate the Internet every day. From desks to headphones and keyboards, the workload has increased a lot,” said manager Tran Thien, who works. at the Internet kiosks from 2018 above, said. “Many old customers during the translation period often ask me on WeChat about when the Internet shop will open. So even though it was difficult, I didn’t want to resign.”

And in order to keep the Internet cafe running at high costs, his salary was temporarily reduced by 1,000 yuan. “This is understandable. Anyway, even if you quit the job, it is not easy to find another job, and the salary is definitely low,” said this manager.

The Internet cafe where manager Tran works has chosen to cut spending, while others are trying to “raise prices” to cover losses and maintain operations.

Gamer Li Zhangqi also shared, “Because there is only one Internet cafe in the district open, the price for using the Internet has increased from 6 yuan an hour earlier to 8 yuan. It may not sound like big, but in fact, I often go to Internet cafes to play online games. It’s just an afternoon of playing, the money is pretty much spent. “

An Internet cafe still active after a pandemic, which Bao Thach frequents.

In the southwestern part of the city, Bao Thach (pseudonym), a frequent visitor to Internet cafes, also noticed that some of the Internet cafes he visited frequently increased in price somewhat, with increases around 1-3 yuan. As for higher-end Internet cafes with private rooms, the internet usage fee can be as high as 25 yuan per hour. After talking to a familiar manager, he learned that the internet cafes were losing money and could not survive without raising prices.

“If the business goes back and still uses the same price as before, it will actually lose more and more, because after all, investing too much in the first phase, the capital recovery will not be easy, let alone the disease has caused the shop closed for so long, “said manager Tran. “But the effect of the price increase is not good, because of the fact, Internet cafes are not essential. So as soon as the price increases, customers will lose. As a result, income will not be. increase.”

“If the price is low, you will definitely lose money, if you increase the price a little, there will be no customers”, after talking with his colleagues and business, the owner of Thuy Dich game shop also noticed everyone’s life. are not all easy. “Especially, the Internet shops are open near the university, the prices are very sensitive. Not to mention there are many Internet shops around the university, if you want to increase prices, you have to discuss with each other, if you increase the price yourself, not only loss of visitors, but also cursed colleagues, even denouncing the business of dumping. “

Chaotic times have come

In fact, even in the absence of the epidemic, the Internet cafes business industry is in decline, and the epidemic is doing nothing more than speed this process up.

Data show that from 2015 up to now, the number of Internet stores in China has decreased for 4 consecutive years. New registration in 2019 is the lowest level in 10 years, and the number of cancellations is 3.3 times higher than new registrations.

On the other hand, the convenience of mobile games has quickly dominated the PC gaming market, not to mention the gap in game content supplies is also increasing. This has also been recognized by both gamers like Bao Thach and manager Tran: “Most of the most popular games in Internet cafes are still old games, and there are very few new games” .

Specifically, in China, according to a 2018 report, the top three online games are League of Legends, CrossFire and Dungeon and Warriors, all of which are games that have been released for more than 10 years. Meanwhile, since November 2015, a game called Heroes of War, developed by Tencent Game and Tianmei Studio Group on Android and iOS platforms, was later renamed Glory of the King. of Internet shops.

In addition, the Internet cafe business differs from other industries, and is hindered from accessing the capital market. Most of them are developed by individuals and small companies, with no investment by large corporations or investment funds.

One of the reasons for this is because the active object is too scattered, not forming large chains yet. As of 2018, the number of internet chains in China is only about 20%. Under these circumstances, game shops had to look for a way of transformation.

Some have started integrating food services, but the results have not been very positive. Some are looking to transform into an Internet cafe for mobile games, into an esports complex or an Internet cafe for female gamers. In some places it also transitioned to open-form offline mobile gaming venues.

A game shop in the style of an electronic sports complex.

However, the conversion efficiency is usually not as good.

“After all, these models still require Internet recharge, and the demand for new-style users is usually not high, mostly short-term demand, even less than demand for PC gaming. as before, “ an industry insider pointed out. “Besides, the costs of these new business models are all higher. It’s not easy for customers to pay for them.”

Hoang Phong, the founder of Netfish Internet Cafe, also personally admitted that the experience of discovery has not reached its ideal state and that he believes the concept of an Internet cafe for mobile games, including VR kiosks and esports halls, wouldn’t be able to develop into a real commercial. The fact also proves that since the pilot, 5 or 6 models of the mobile gaming chain have been wiped out.

Apparently, more than 20 years after the rapid growth of the Internet in China, an epidemic has pushed the Internet cafe business into a dark, new page of history.

Refer to Sina