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Through the Prism of theInternet CafeManaging Access in an Ecology of Games

J AC K L I N C H UA N Q I U A N D Z H O U L I U N I N G

Abstract Using the ecology of games perspective, this article analyzes China’sregulation of internet cafes. Based on the analyses of regulatory documents,interviews, and news coverage, we identify three games fundamental to ourunderstanding of the subject: (1) the establishment of national regulatory regime,(2) local policy implementation, and (3) market competition. We situate thediscussion of game players, their goals, strategies, and performances in the contextof rapidly increasing internet cafe penetration under intensifying governmentregulation, a manifestation of the inevitable clash between state and market at thelocal levels of internet development. This culminated in the April 2003 proposal bythe Ministry of Culture for a national chain-store model, which led to a “nestedgame” involving key players from all three essential games including nationalregulators, local state agencies, cafe operators, user groups (e.g. students andmigrant workers), and members of the urban elite (e.g. parents and teachers). Weconclude by maintaining that there is a pressing need for more research oninternet cafes as localized points of access control; that the processes of internetcafe regulation constitute a prism for the examination of the internet’s socio-political ramifications; and that the ecology of games provides an insightfultheoretical framework for this analytical task.

Keywords internet cafe regulation, chain-store operation, ecology of games

Authors’ affiliation Jack Linchuan Qiu is an assistant professor at the School ofJournalism and Communication, Chinese University of Hong Kong. Zhou Liuningis a PhD candidate at the Annenberg School for Communication, University ofSouthern California, USA.

Access to media technologies is often a social construction that reflects thepolitical and economic dynamics of a given society.1 Examining accesscontrol mechanisms therefore helps us understand not only the processes ofregulation but also the larger social, political, and economic structureswithin which a regulatory regime takes shape. In this article we focus oninternet cafe regulation in the People’s Republic because these distinct accessvenues are the sites for the cyberspace to become rooted in the public space

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of China. They provide key moments when the abstract principles of regula-tion collide with, and become enacted by, the concrete logics of entertain-ment, businesses, politics, and collective consumption in China’s urban andurbanizing places. We are particularly interested in internet cafes becausetheir customers tend to be vulnerable social groups such as children andmigrant workers, who have little say in policy-making processes typicallydominated by government authorities and the urban elite.

Despite frequent coverage in English-language news media, the regulationof China’s internet cafes—or “net-bars” (wangba)—has so far received littleattention in academia. Except a comprehensive review by Brendan Murrayin 2003 regarding regulatory measures since the tragic cafe fire in summer2002, there is virtually no systematic discussion on the formation, evolution,and implementation of internet cafe regulation due to the lack of empiricaldata. This article is designed to fill in this gap of understanding by providingthe historical context of the regulatory regime and explicating its operationalmechanisms from the initiation of internet cafe regulation in 1998 to thepromotion of a national chain-store management model in 2003. Besides the analyses of regulations and news reports, our discussion also draws fromfield observations and more than 30 interviews with internet cafe operators(owners and managers of both independent shops and chain stores), govern-ment officials, telecom providers, and Chinese experts.2

An ecology of games perspective

Since a plethora of government entities and social groups are involved, thenotion of ecology of games3 is employed to conceptualize China’s efforts toregulate internet cafes as “a larger system of action composed of two or moreseparate but interdependent games.”4 The idea of an ecology of games differsfrom, but is closely connected to, formal game theory.5 A game is “an arenaof competition and cooperation structured by a set of rules and assumptionsabout how to act in order to achieve a particular set of objectives.”6 Thisconceptual framework allows for better organization and structured analysesof empirical data and secondary materials. It also alerts us to the fact that theconsequence of regulation is not determined by technical configuration or asingle set of regulatory objectives. Rather, it results from the interplaybetween a wide variety of actors, their goals, and the materialization of thesegoals in administrative, commercial, and technological configurations, afeature that characterizes China’s internet regulation as a whole.

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The ecology of games perspective is designed to overcome the tendency ofconventional approaches that often oversimplify public policy as little morethan the means by which a monolithic block of stakeholders, or an elite class,seeks control of the larger population. Instead, public policy can be under-stood “as the outcome of an unfolding history of events driven by the oftenunplanned and unanticipated interactions among individuals playing rela-tively separate but interdependent games.”7 From this perspective, we wouldargue that very seldom do China’s national regulators, telecom providers,cafe operators, and local government agencies directly focus on the overallgoal of controlling internet cafes per se. Rather, these players are better con-ceptualized as functioning on a daily basis to achieve particular objectives inspecial realms of action—or “games”—such as network security, contentfiltering, protection of minors, commercial competition, and the growth in aspecific geographic area of an information economy of some sort.

In this sense, China’s internet cafe regulation, although theoreticallyconceivable as a single policy “game,” is in actuality constituted by a seriesof specialized games played by state and nonstate actors, who are pursuingtheir specific goals in a more defined, and often localized, realm of action.This is to say that internet cafes in China are not under the overwhelmingcontrol of a single, omnipotent “Chinese government.” More precisely, reg-ulation of the cafes, or the “business sites of internet access services,”8 is asocially constructed outcome of “relatively separate but interdependentgames.” At a given historic moment, there is a priority order for the varietyof policy goals, which reflects the power relationship among game playersas well as the influence of unanticipated incidents, which is often magnifiedby the mass media into major concerns in public opinion, be it a deadly cafefire or the promotion of a national chain-store management model since2003.9

While in the Chinese context the ecology of games perspective indeeddraws attention to the multiplicity of players and their games, the regulatorystructures at the national and local levels do not have to be pluralistic.Rather, depending on the evolution of the national policy regime and local-ized implementation, the process of internet cafe regulation is often full ofstructural inequalities. At a given moment, the entire system may be gearedtowards a single policy goal, for example, eliminating illegal cafes during anationwide campaign. A ministry or a local government may also succeed inestablishing a highly centralized formal policy structure for a short period of time. In fact it has been a norm rather than an exception for state players

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to try to set up an overwhelming omnipotent regulatory framework, whose

failure, however, is evident in the repeated spasms of such efforts usually in

the wake of tragic cafe accidents or following considerable complaints about

the “negative” influence of illegal shops, when the decision makers painfully

realize that the supposedly centralized structure has been malfunctioning

and long eroded by pluralistic localized interests. The process of policy mak-

ing hence does not have to be based on rational choice, either, because it is

common for such interplays of games to produce unintended consequences

that bring benefits to none.

The theoretical generality of the perspective is a plus for this study because

this means that we can be more encompassing in considering different policy

structures and processes—be they pluralistic or centralized, rational or

random—all as constitutive of this ecology of games. However, by making

minimal presuppositions about the specific policy framework, it also poses

the challenge that the ecology of games would evolve over time, producing

different player interactions, policy priorities, and social, economic, and polit-

ical consequences, all of which need to be specified through intensive case

studies. While it is beyond the capacity of this article to exhaust the cases of

internet cafe regulation in China, we would like to start the discussion by

posing the following questions based on this more inclusive conception of the

public policy ecology:

(1) Who made China’s nationwide internet cafe regulations and with

what intentions? How has the line-up of national regulators—and

their regulatory objectives—evolved over time?

(2) What kinds of local government agencies and commercial entities are

influential in the games of local implementation? What are their goals

and priorities in the localities?

(3) What are the interactions between the regulatory regime and the

internet cafe market, between national licensees and local governments?

(4) How does this ecology of games influence internet cafe access, including

both physical access to computers in the cafes and informational access

to online content?

Before attempting to answer these questions, we first examine the short his-

tory of internet cafes in China, focusing on who operates them, who patron-

izes them, and what the main characteristics of the most representative

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internet cafes in different periods are. It is within this social and economiccontext that the ecology of policy games continues to evolve.

Development trajectories: the internet cafe paradox

It has been widely noted that the growth of internet cafes in China isattributable to a relatively low level of home computer ownership,10 aphenomenon observed in much of the developing world. Yet, beyond theconstraints of PC penetration, which is due to low income and educationlevels, a closer examination of the phenomenon reveals a host of structuralfactors underpinning the rapid growth of such a commercial mode ofpublic internet access: the relentless efforts of internet service providers(internet service providers such as China Telecom) to create a market ofmass consumption; the legend of a New Economy largely promoted by themass media that associates IT entrepreneurship with easy money-making;the quick spread of basic computer and internet skills among China’syounger generations due to recent curricular reforms in elementary andmiddle schools; and strong parental control in the usually highly limitedhousehold space of urban families, which is intensified by the one-childpolicy. Before these various social forces are disentangled in our analysis, itis essential to recognize that the boom in internet cafes has to be under-stood in the context of this plethora of transformations in the macro as wellas micro structures of economics, social control, and power contestation. Itis also precisely because so many social forces have intervened to shape thisparticular mode of access—arguably much more so than access at home orat work—that the trajectory of internet cafe development in China hasbeen full of twists and turns.

As early as 1995, when internet access was first available to the Chinesepublic, experimental internet cafes started to emerge in major urban centers,such as the one at Info Highway (yinghaiwei) in Beijing’s and Guangzhou’s“information time-space” (xinxi shikong),11 a China Telecom operation.While these early points of access were free of charge and put in place forpromotional purposes, the first for-profit internet cafe, Sparkice (shihuakai),was opened in November 1996.12 In many respects, Sparkice was a prototypefor the first generation of internet cafes in China: it was located in Haidian,Beijing’s university district. In 1999, the hourly charge was RMB 20(US$2.40), not including coffee, which was also expensive by local standard.It had about 30 computers with broadband access. More often than not,

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people had to wait in line before being seated. About half of the customerswere foreigners since the shop was not far from the Friendship Hotel.

The Sparkice model, however, was quickly superseded as competitionincreased and market specialization took place. Feiyu (<http://www.feiyu.com.cn>) was the internet cafe that defined a new era at the turn of thecentury. Founded in December 1998 along the southern border of PekingUniversity campus, Feiyu was equipped with 1,800 online computers in2000.13 It used flexible pricing: RMB 10 in the afternoons and evenings,RMB 5 from 9 a.m. to 12 a.m., and between 7 a.m. and 9 a.m., totally free ofcharge. Feiyu claimed a daily business volume of about 20,000 customers,most of whom were students, the largest occupational group among Chineseinternet users according to China Internet Network Information Center(CNNIC).

Indeed, the years between 1999 and 2001 was the period of most rapidgrowth for cafes nationwide in terms of the percentage of users who gainedinternet access in places such as Feiyu. As demonstrated in Figure 1, whichsummarizes longitudinal findings from the China Internet NetworkInformation Center surveys, the proportion of cafe users as part of China’stotal internet population soared from 3 percent in January 1999 to 21 per-cent in January 2001.14 Since then, although the total number of cafe usershas continued to rise to reach 16 million in January 2004, the percentageremained relatively stable between 15 and 20 percent.

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Figure 1 The growth of internet cafes in China




Feiyu was also symbolic because its owner, Wang Yuesheng was the leaderof a township and village enterprise in Shanxi Province. Like many otherinvestors in late 1990s, Wang first made his fortune in traditional industries(in his case, construction materials and oil refinery) and then subscribed tothe mass-mediated digital dream of the internet. But Feiyu was not a com-mercial miracle because the impressive business volume did not translateinto sizeable profit after subtracting sunk investment, rent, tax, and main-tenance expenses.15

The glorious days of Feiyu have never returned since 2001, when the glob-al IT market slowed down, when China strengthened its regulatory measureson internet cafes, leading to even higher operational cost. To maintain legalstanding, cafe operators throughout the nation now have to deal with a largenumber of authorities that typically include industrial and commercialadministration, public security agency, bureau of culture, city sanitationoffice, and fire prevention taskforce. Since 2001, especially in the aftermathof the Beijing cafe fire that cost 25 young lives on June 16, 2002, all theseagencies made frequent inspection tours and thousands of internet cafeswere shut down.16 The rectification campaigns made headlines in print andbroadcasting media, feeding into a vicious circle that fixates internet cafe onits “negative influence” on juveniles. “Speaking of internet cafes now is liketalking about nightclubs in the early 1980s,” said a cafe manager inGuangzhou in 2002.17 The derogatory stereotype has been haunting him aswell as most internet cafe managers in the country.

Yet, as Figure 1 shows, despite tightened regulation, constant crackdowns,and unfavorable media depictions, the proportion of users visiting internetcafes remained stable and the number of cafe visitors kept increasing steadilyfrom four million in July 2001 to more than 16 million in January 2004. ByFebruary 2003, there were approximately 110,000 internet cafes in thecountry.18 The persistent rise took place because the fastest-growing market-place has migrated from central cities to suburbs, small towns, and China’svast urbanizing areas where enforcement is more lenient and the demand forinformation and entertainment remains strong. While many of these aremom-and-pop “family internet cafes” with or without license, they havebecome one of the most primary drivers for the diffusion of internet in smallChinese cities such as Guangshui, Hubei Province, where “almost all theinterviewees said they first learned to use the internet at an internet cafe.”19

Internet cafes in urban centers, on the other hand, have been transformedto serve more specific market segments. The Special Economic Zones of

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Shenzhen and Zhuhai are now full of internet cafes catering to the needs ofthe migrant population. On Shanghai’s Huaihai Road, a store targeting high-end game players provides super-fast broadband connection and unlimitedfree drinks. In the computer business district of Chengdu, another internetcafe offers special online group experiences in small rooms equipped withone or two networked computers and sofas that are reminiscent of karaokerooms.

The body of internet cafe owners is also becoming more diverse. Whilethose who work for IT and telecom firms remain a major type of investor forinternet cafes, other groups are also joining, such as laid-off workers whoobtained loans from families and relatives, real-estate capitalists who attemptto create additional value for their properties, and entrepreneurs who used torun video game rooms and billiard clubs but now open internet cafes to servetheir old customer base. Until 2003, the latest market entrants were thosewith official endorsement to promote a chain-store model for internet cafemanagement, leading to a new cycle of state-led market reconfiguration. Forthe most part, this policy was in its initiation a reaction to the increasingconcern of parents and teachers about the lack of control over students ininternet cafes, but it has led to a series of political and economic ramificationsin the ecology of games for internet cafe regulation. We will analyze theformation and implementation of the chain-store policy later in this article.

Shaping access, understanding the games

As public space for 16 million Chinese to access the web, the internet cafe hasbecome the target of government regulation since 1998. Fundamental to theregulatory framework and implementation processes are three “relativelyseparate but interdependent” games: (1) the establishment of a national reg-ulatory regime, (2) local policy implementation, and (3) commercial marketcompetition. Space constraints make it unrealistic for this article to exhausteach and every policy game involved in internet cafe regulation in China asthe national ecology is constantly evolving and the local games have endlessvariations. But we do hope to explicate aspects of these games—the key play-ers, policy priorities, and basic strategies—because, in so doing, we gain anunusually rich understanding of the social construction of a national regu-latory framework for distributive and localized commercial managementmechanisms that shape internet access throughout China’s urban andurbanizing territories.

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Establishing a national regulatory regime

The creation of a national regulatory regime is the first step in China’sattempts to control internet cafes. Yet, why does China need a specializedsystem to govern internet cafes? This fundamental question raised byMurray20 is seldom discussed among policy makers in China. It is widelyknown that the Chinese government has spent a huge amount of resourcesto regulate internet usage, online content, and network infrastructure.21 “Ifthe government can control access nationwide, why concentrate on regu-lating cafes?”22

Contemplation of this question points to two likely attributes of China’sinternet regulation endeavor in general, which reveals critical rationalesabout internet cafe regulation in specific. First, the general internet regula-tion is not sufficiently effective so that, despite the overall executive measures,firewalls, content filters, and the build-up of cyber-police taskforces, it is stillrelatively easy for cafe users not to abide by the guidelines set by the author-ities. Second, China’s internet regulators are not centrally coordinated toincrease regulatory efficiency and overlapping jurisdictions are common. Inother words, general internet regulations are only designed to provideguiding principles and they are adopted in varying degrees by differentgovernment bodies for their own policy objectives. The regulation of internetcafes is therefore in itself a component of the overall ecology of games forinternet regulation in China. It is separate from, but also interconnectedwith, other internet regulation games such as control over online newsdistribution, network security management (e.g. preventing hacking), andfostering of China’s own internet industry.

As summarized in Table 1, several directives have been promulgated toestablish a national regulatory regime for internet cafes in China. The mea-sures, as could be seen from their titles, are increasingly formal and detailedfrom “announcement (tongzhi)” to “measures (banfa)” to “regulations(tiaoli).” While the responsible government agencies remained to be those ofpublic security, cultural affairs, telecom regulation, and industry and com-merce management, the order of the line-up changed significantly, indicatingdifferent policy priorities at different times.

The establishment of China’s internet cafe regulatory regime involves fourkey players: the Ministry of Public Security, Ministry of Culture, Ministry of Information Industry, and State Administration for Industry andCommerce. In 1998, the Ministry of Public Security, which initiated internet

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cafe regulation as part of its general task of “internet network security man-agement” was the nation’s main internet regulator at the time.26 Its maingoal was to ensure “network security,” that is, the prevention of harmfulinformation and illegal online operations via internet cafes. TheAnnouncement stipulates that all internet cafes in China have to registerwith local public security agencies that supervise network security in theseaccess venues.

The primary concern for network security was reiterated in the Measuresof 2001 and the Ordinance of 2002, the latter of which requires internetcafes to have “a sound, comprehensive administration system and technicalmeasures for information network security” (Article 8). Article 15 reads,“Operators or customers cannot engage in activities that jeopardize networksecurity by (1) deliberately creating or spreading computer virus and otherdestructive programs, (2) illegally accessing computer information systemsor destroying the functions, data and applications of computer informationsystems, and (3) engaging in other activities prohibited by law and adminis-trative directives.” In the aftermath of the fatal Beijing internet cafe fire, the

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Table 1 China’s official directives regarding internet cafe regulation

Date of Regulatory Directive Regulatory AgenciesPromulgation

Announcement for theStandardization of CommercialActivities in “Internet Cafes” andStrengthening of SecurityManagement (Guanyu guifan“wangba” jingyingxingwei jiaqianganquanguanli de tongzhi, hereafterAnnouncement)23

Measures of the Administrationof Business Sites of InternetAccess Services (Hulianwang shang-wangfuwu yingyechangsuo guanlibanfa, hereafter Measures)24

Regulations on the Administrationof Business Sites of InternetAccess Services (Hulianwangshangwangfuwu yingyechangsuoguanli tiaoli, hereafter Regulations)25

Ministry of Public Security(MPS), Ministry of InformationIndustry (MII), Ministry ofCulture (MoC), StateAdministration for Industry andCommerce (SAIC) and theirbranch offices at the provinciallevel

MII, MPS, MoC, SAIC, and theirbranch offices at the provincial,municipal, and county levels,coordinated by MII and itsprovincial-level subunits

MoC, MPS, SAIC, MII, andbranch offices at the provincial,municipal, and county levels,coordinated by MoC and itsprovincial-level subunits

25 December 1998

3 April 2001

29 September 2002




Regulations expanded the authority of MPS and its subsidiaries to “the super-vision of information network security, public order, and fire prevention”(Article 4). Ten specific types of prohibited acts are also listed, which to agreat extent reiterates what has already been outlawed in China’s generalinternet network security measures.27

While the Announcement of 1998 was short with only six generic articles,the Measures were expanded to 25 articles and 28 subarticles, and theRegulations 37 articles and 40 subarticles, indicating a period of muchheightened control over internet cafes since 2001. Both recent directives

appointed a new coordinator among the four major players, signifying new

policy priorities, which probably resulted from dissatisfaction at the highest

decision-making level regarding the previous administrative framework of

the regulatory regime. Although the Announcement of 1998 explicitly

stated that the problem of “profit-making from computer games that contain

gambling and pornographic content that seriously impairs social stability

and corrupts the physical and psychological health of youngsters,” would be

addressed, complaints from parents and teachers, amplified by official mass

media and commercial tabloids, rose in quick tempo until 2001 and 2002,

adding greatly to the pressure to improve internet cafe regulation.

In April 2001, Article 3 of the Measures stipulated that internet cafes are

within the jurisdiction of

regulatory agencies of information industry in the State Council and telecom reg-ulatory agencies in provinces, autonomous regions, and municipalities directlyunder the central government, who are also responsible for coordinating andsupervising public agencies at the same administrative level in order to imple-ment the current Measures for commercial internet access service provisionvenues.

With the power to “examine and approve” internet cafes, which was recog-nized by the Announcement and reiterated by the Measures, the Ministry of

Information Industry and its subsidiaries became the indisputable center ofthe policy game ecology starting from April 2001. The leadership status of

information industry regulators, however, only lasted for 18 months, in partdue to the Lanjisu cafe fire disaster, and in part because national and local

telecom regulators are technocrats, who share more interests in seeing thegrowth of business volume for major telecom operators above and beyond

anything else.28

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In the Regulations of 2002, telecom regulation agencies become second-ary players following the leadership of the Ministry of Culture and Ministryof Public Security. They were listed even after the State Administration forIndustry and Commerce, the player that has so far always played an assistingrole. The State Administration for Industry and Commerce and its localrepresentatives are in charge of internet cafes, their “commercial unit regis-tration, the management of operation licenses, and the investigation andprosecution of unlicensed commercial activities” (Article 4 of the Regu-lations). It remains unclear though why the State Administration forIndustry and Commerce was not selected to take more responsibility after theLanjisu fire. One possible explanation is that it was already in charge of manyother more lucrative markets as compared to the Ministry of Culture, whichis historically more restricted in resources and would therefore be more likelyto see internet cafe regulation as a way to increase its influence. This is plaus-ible because some local venues of cultural affairs (wenhuaguan or wenhuahuodong zhongxin) were converted into internet cafes as we found out inShanghai.

The new priority set by the Regulations emphasizes “the building of thesocialist spiritual civilization” in addition to the goals of “strengthening theadministration of commercial internet access service provision venues,standardizing the operational conduct of the operators, and protecting thelegal rights and interests of the public and the operators” (Article 1). Thischange reflects the new concentration of power in the Ministry of Cultureand cultural affairs departments above the county level. They now have theauthority to coordinate regulatory efforts among government entities andapprove new internet cafes, assuming the central role previously played bythe Ministry of Information Industry and its subsidiaries. According toArticle 11 of the Regulations, cultural affairs offices have the authority toissue an “Internet Culture Operating Permit” (wangluo wenhua jingyingxukezheng), which is indispensable for running internet cafes. In April 2004,the Ministry of Culture also put forward a new proposal to merge indepen-dent cafes to form nationwide chain stores,29 an ongoing initiative at the timeof writing this article.

In addition to the Ministry of Culture, the Ministry of Public Security, theState Administration for Industry and Commerce, and the Ministry ofInformation Industry, other government agencies took part in the policygame of establishing this national regulatory regime, most notably the StateBirth Planning Commission (SBPC), one of the major promulgators of the

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Measures in 2001.30 This is not surprising because it is the main governmentbody responding to issues of childcare and parental concerns of all kinds. Aspreviously mentioned, complaints from parents whose children patronizedinternet cafes have been a most important factor underpinning regulatoryefforts in this domain. The Announcement, Measures, and Regulations allhave clear instructions addressing the protection of minors including theprohibition of smoking, filtering of gambling and pornographic content, andthe display of no-entry signs for those under 18. To protect children, Article9 of the Regulations stipulates that no internet cafe is allowed in the vicinityof 200 meters of elementary and middle schools. Article 21 states that inter-net cafes are out of bounds for minors. And business hours of internet cafesare limited between 8 am and midnight (Article 22).

Whereas different players have different goals and priorities in the game ofestablishing a national regulatory regime for internet cafe regulation, theyshare a commonality because these are all national government entitieswhose members are adult elitist urbanites. It is easy for them to share theconcerns of parents and teachers as many of the government officials havechildren. Most of them live in an information-rich environment, whichmeans on the one hand they are frequently exposed to mass media coverageof the harmful effects of internet cafes, and on the other hand, these stake-holders tend to have internet access at the workplace and/or at home. As aresult, they either have never been to an internet cafe themselves or simplycould not empathize with the youngsters and migrant workers who have todepend on the cafes for information, entertainment, and social interactions.The establishment of this national regulatory framework is therefore inher-ently biased against small internet cafes, their operators and users, none ofwhom has institutional or mass media channels to influence the ecology of games at the national level. The players may pursue their own objectivessuch as network security (Ministry of Public Security), socialist spiritual civil-ization (Ministry of Culture), IT industry growth (Ministry of InformationIndustry), commercial entity management (State Administration forIndustry and Commerce), and the protection of minors (State Birth PlanningCommission), which are all to some extent helpful for the maintenance of a“healthy” social order in internet cafes. But none of these is from the per-spectives of the majority of people who run or use the internet cafes on a dailybasis such as operators of small cafes, students, or migrant workers. Socialgroups at the grass roots are seen as passive participants in the ecology ofgames. But in actuality they are not.

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Local policy implementation

Parallel to the formation of the national regulatory framework is a muchmore complicated series of games regarding how to implement nationalpolicies at the local levels. The evolution of the national regime is linear withincreasingly strict ordinances and a consecutive leadership succession fromthe Ministry of Public Security to the Ministry of Information Industry to theMinistry of Culture. While the move toward more stringent control and thechanges in leading authorities have indeed affected internet cafes through-out the country, the continuity breaks down when it comes to local imple-mentation, a sphere of more informal processes that is separate yetinterconnected with the establishment of nationwide regulation. Localexecution of national policy of all kinds has long been a challenge for the cen-tral government given the country’s size, internal differences, and the rela-tively low level of standardization for administrative operations. It is criticalto this particular ecology of games because, unlike the business of onlinecontent provision, the greater majority of internet cafes are localized opera-tions by the locals and for the locals.

In the case of internet cafes, the issue is complicated because, contrary towhat one might expect, the attitude of local governments toward internetcafes often fails to reflect tendencies at the national level or the structure ofthe local economy. In the Pearl River Delta, for example, although localeconomies are all highly export-oriented and reliant on migrant labor, thecity governments adopted drastically different policies toward internetcafes.31 Shenzhen, Zhuhai, and Foshan took a lenient approach even in theimmediate aftermath of the Beijing cafe fire of June 2002, allowing a goodmixture of migrant workers, students, and unemployed youth population toaccess internet cafes. The city of Guangzhou, however, attempted to keep aminimal number of cafes by resorting to very strict licensing measures andlaunching regular rectification campaigns. And the city of Dongguan hadnot issued a single license for business site of internet access services untilsummer 2002, although a visit to an ordinary residential neighborhood inDongguan revealed three internet cafes within walking distance of eachother.

Yet, the responses of local government are not entirely random. More thananything else, they reflect the priorities of city informatization offices (xin-xiban), which is the central player in the game of policy implementation.There are several reasons for this phenomenon of the kuai decisively outper-

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forming the tiao.32 First, the national regulatory regime is immature, a prob-lem exacerbated by the national leadership being shifted twice in the shortperiod of five years. Until 2001, local subsidiaries of the Ministry of PublicSecurity from the provincial to city levels were relatively active in promotinginternet cafe regulation in part because they collect a decent fee for installingnetwork security software in the cafes,33 and in part because they arearguably the most resourceful internet regulator in terms of financing, per-sonnel, and administrative support.34

However, since 2001, we have not observed a similar level of activity forthe local successors of public security bureaus especially at the city level.Compared with the police, telecom regulators and cultural affairs authoritiesare less powerful official entities especially in their handling of local resist-ance. Both are active at the provincial level but not at lower levels in the citiesand the counties35 in that the national regulatory regime has only set therules and objectives but no fixed budget is allocated to ensure funding at thelocal levels. Or, as one city official in Jiangsu Province put it in classicalChinese political lingo, the national and provincial regulators “only givepolicy but no money” (zhigei zhengce bugeiqian).36 Consequently, although theMeasures granted the power of coordination to subsidiaries of the Ministry ofInformation Industry and the Regulations empowered local representativesof the Ministry of Culture, it is still the city informatization offices that play acentral role in local internet cafe regulation because of their higher capacityto control financial and personnel resources in a sustained manner. This is incontrast to the lack of direct involvement on the part of the State CouncilInformatization Office at the national level because this office is only man-dated to “coordinate” activities among IT-related ministries. Therefore,although the State Council Informatization Office is a player in decidingwhich ministry will oversee the regulation of internet cafes, its role at thecentral level is limited once that decision is made. The State CouncilInformatization Office is thus not supposed to give orders to the ministries,nor to local informatization offices regarding specific regulatory matters,including those of internet cafe regulation, which again confirms that thenational regulatory framework is far from mature.37

Local variation centered on city informatization offices can also be attrib-uted to the vagueness of national regulations. The Regulations, for instance,stipulate multiple penalties for offenses on the part of cafe operators,38

which, however, are only broad guidelines for actual implementation. Whilethreatening to use heavy punishment such as license abolition, equipment

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confiscation, and even criminal charge beyond the more usual penalty ofmonetary fines, the Regulations frequently state that the application of thesemore serious punishments depends on “the severity of the offense” (qingjieyanzhong de) (Articles 29–30), without further specification. There is thusmuch room for interpretation and informal ruling in local implementationregarding what a severe offense is. While many see ambiguity as an indica-tion of the underdevelopment of internet regulations in China, Hartfordinterprets unclear legislation as a key strategy to prompt self-censorship.39 Italso further empowers local governments, especially in small cities where the coalition is weaker among urban elite on issues such as the protection ofchildren. Another evident lack of specification is the definition of minors, or“nonadults” (weichengnianren).40

Most importantly, what if the local authorities fail to act as internet caferegulators? Article 24 of the Measures and Article 25 of the Regulations bothstipulate that officials neglecting duty, abusing power, or engaging in fraud-ulent practices are subject to administrative penalties and/or criminalcharges. But this stipulation has almost never been enforced. The mostserious incident in the history of internet cafe regulation is no doubt the fatalfire in Beijing’s Lanjisu internet cafe. While the cafe owners were prosecuted,no local officials were held accountable, at least according to our exhaustivereview of related news articles.

It is profound to our understanding of policy implementation that localregulators may choose not to implement the Regulations without fear ofbeing penalized. Since supervision of the regulators only comes loosely fromparents, teachers, and to some extent the mass media, implementation at thelocal levels is almost always post-hoc, short-term campaigns in response tounpredictable tragic events. Without sufficient administrative supervisionand support, it is difficult to ensure that the regulations become routine,while local protectionism of internet cafes may hover on the edge of legality.After all, so far the national regulatory regime is little more than a rootlessstructure, whereas most internet cafes grow out of well-developed grass-roots guanxi networks in cities and towns.

Commercial competition

The third domain of action concomitant with policy games at the nationaland local levels is the arena of commercial market competition, whoseplayers include internet cafe operators, regulatory agencies, groups of cafe

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users, and increasingly certain groups within the IT industry such as tele-com providers, computer manufacturers, and producers of online games.Arguably such games are even more complex than local implementationbecause each type of player includes a wide variety of constituents, some ofwhich, like groups of operators or internet cafe consumers, are massassemblies rather than formal organizational entities as in the case of localgovernance bodies.

Yet from another angle, this arena of actions is also more unified under therationale of economic profit maximization. Unlike administrative turf warsthat tend to be zero-sum games, it is also likely that, following the logic ofclassical economics, market competition would reduce internet access cost,enhance internet cafe services, and ultimately produce a win-win game forall participants: the operators, the consumers, and the regulators. This hashappened in some locations such as Yima, a city with a population of120,000 in Henan Province, where 38 formally registered internet cafeswith broadband connection were in operation in January–February 2003.41

The cafes were found to play a distinct role of introducing the local people tothe internet, while generating sizeable revenue for local government andtelecom operators. Such a win-win situation, however, does not always exist,especially in large cities where higher economic and political stakes wouldwarrant more government intervention by means of both regulatory andcommercial measures. The application of this model of classical economics isthus limited to certain small cities where there is more power balancebetween state, society, and the telecom industry.

Despite the latest push for internet cafe chain stores, the majority of cafesare small independent operations run by telecom or computer sales per-sonnel, laid-off workers, underemployed urban youth, and increasingly, real-estate owners who combine internet cafes with food and entertainmentbusinesses such as restaurants, a pattern observed in cities such as Chengduand Guangzhou. Making profit is the shared objective among all operators,including the recently emerging chain-store operators, which will be dis-cussed in more detail. Some of them, especially in places where internet cafeshad just started to appear (e.g. Beijing in 1998, Xichang in 2002), had grandvisions and wild commercial ambitions as one might expect of any real orself-alleged pioneer of the IT industry. However, as market competition inten-sified in tandem with the heightening of regulation, quite a few of our cafeoperator interviewees (e.g. Guangzhou in 2002, Shanghai in 2003) claimedthat they had been so disillusioned by reality that their only goal was

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to recover as much investment as possible so that they could pay the loansborrowed from friends and relatives.42

Official regulators play an indispensable role in commercial competition bymanipulating the costs of market entry and daily operation. Indeed, bothformal legislations and local implementation deeply affect the rules of themarket. The Regulations, for instance, stipulate strict requirements in regardof licensing, equipment, business hours, and safety, all of which increase thecost-profit ratio for the internet cafe business. For instance, Article 10 of theMeasures and Article 23 of the Regulations require that internet cafe opera-tors verify and record the personal identification numbers of all customers.The record has to be kept for no less than 60 days to facilitate the supervisoryand monitoring needs of relevant government entities. Another importantcontrol mechanism with tremendous commercial implication is the rules forthe physical configuration of the shops such as the minimum number ofcomputers and the requirement in terms of space,43 which basically outlawsthe very small, mom-and-pop type of “family internet cafes” that populatemany small towns44 and the countryside.

On the other hand, although the Regulations specify that cafe regulatorswill be penalized if they engage in, or “covertly” (bianxiang) engage in, busi-ness operations of public internet access services (Article 5), this article hasalmost never been enforced. The definition for officials’ involvement in com-mercial internet cafe business is far from clear. As a result, licensing internetcafes could be a profitable business in itself. While applying for an internetcafe license usually requires a few thousand to tens of thousand renminbi,depending on the location, in some cases, such as in downtown Shanghai, anet-cafe license could be sold in the black market for up to RMB 240,000(US$29,000).45 Regulators may make a profit by requiring local licensees topay considerable fees for the installation of network security programs,which is what happened with public security bureaus, cultural affairsdepartments, as well as local informatization offices.

The informatization office of Shanghai, for example, developed the Pubwinnetwork security management system46 for internet cafes which is widelyused in the Pearl River Delta when public security bureaus were the mainregulator. The charge was RMB 500–600 for installation and RMB 100–200for annual update. Since the Ministry of Culture became the prime regulatorin 2002, they also released their network security platform, called “Clean NetPioneer” (jingwang xianfeng), whose installation fee was RMB 45 per com-puter in 2003.47 Most licensed internet cafes in Zhejiang Province paid this

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fee during June and July of 2003. However, until January 2004, none of ourinterviewees in six internet cafes in Hangzhou, Jiaxing, and Ningbo hadreceived the installation service. In fact, most of them preferred not to installit due to the beliefs that the Ministry of Culture system had many bugs; thatas long as they paid the fee the purpose of such software was already met; and that having both Pubwin and Clean Net Pioneer—for they dared not touninstall the old system yet—would significantly reduce network speed.

With the number of Chinese cafe users reaching 16 million, the IT indus-try is also increasingly paying attention to the commercial development ofinternet cafes for hardware and software sales as well as emerging newmarkets such as online gaming. According to the China Internet NetworkInformation Center, there are more than three million computers in China’sinternet cafes. If the period of equipment updating is two to three years, thatmeans a demand of more than two million new computers each year.48 Dueto the high percentage of game players in internet cafes, the gaming industryalso sees internet cafes as a new channel for service delivery and revenuegeneration, which has led to new alliances between cafe operators and gameproducers. For example, Shengda Corp. in Shanghai, which maintains Legend(chuanqi), the most popular online game in the country, has relied on inter-net cafes as a distribution network to sell its gaming cards.49 The growingcoalition between cafes and the gaming industry, although still in an earlystage, is worth noting because of an increasing consensus on the necessity ofChina’s own gaming industry. If successful, internet cafes could also prove tobe an effective way to create a new mass market for other content-based ITcommercial operations in China.

Finally, groups of internet cafe users constitute another indispensable cat-egory of players in the game of commercial competition. Our interviews andfieldwork reveal a wide variety of reasons why users frequent internet cafes.In most general terms, young male users including a mixture of students andunderemployed youth are still the largest group. Female users normallyaccount for 30–40 percent of the total cafe user population. Migrant workersare a major customer base in certain coastal cities and inland urban districts,whereas older residents are also increasing as some of them would like to goonline to obtain stock market information and medical information and yetdo not want to maintain home computers. Information seeking and educa-tional purposes are important motivations among all kinds of users. Yet thegoal of entertainment—or more specifically, collective entertainment withone’s peers—remains the first and foremost objective for the core users,

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which is evident from the prevalence of online gaming and downloading ofmovies and music in all internet cafes we visited.

While many observers tend to underestimate the capacity of cafe users toface and challenge official regulation due to the multiplicity of structuralconstraints and the lack of organization among these users, we found thatthe power of consumers is critical in the game of commercial competition,and user groups can indeed indirectly exert fundamental influences on theecology of games. Because the core users go to cafes to access not only the internet but also their close friends and peers, they are better conceivedof as networks of consumers rather than atomized individuals. And there canbe a huge effect of collective behavior among these networks upon the gamesof both market competition and official regulation. A case in point is the pattern of behavior of urban youngsters in Nanhai, Guangdong Province,who often go to the neighboring town of Foshan for internet cafe access dueto more lenient local control there. Coordinating through mobile phones,they would convene in a particular Foshan Net cafe in small groups viamotorcycles, the favorite local means of transportation that is now trans-formed into a political vehicle to express their opinion against stringentregulation.

The chain-store model: a nested game

The previous section outlines three major games for internet cafe regulationin China: the collective efforts to establish a national regulatory regimeaimed at top-down social control; the game of implementation which con-sists of actual power negotiation in distinct local environments; and com-mercial competition which is the arena where cafe operators and IT firmsattempt to maximize profit by catering to the needs of cafe users’ networkswithin the parameters of regulation. The games are analyzed separately but,in reality, they are often entangled and form what Tsebelis calls a “nestedgame,”50 that is, a particular game situated within a larger game that simul-taneously involves multiple objectives of multiple players. The single mostimportant nested game in internet cafe regulation is probably the develop-ment of the chain-store model since April 2003 given its national scope andbroader political and economic ramifications for all players.

At the national level, the series of actions was signaled by the release on 22 April 2003 of the Ministry of Culture’s Announcement on theStrengthening of Chain-Store Management for Business Sites of Commercial

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Internet Access Services (hereafter the MoC Announcement).51 The MoCAnnouncement emphasizes that “to promote the chain-store operation forinternet access service” is “an important measure to strengthen the admin-istration of the premises for internet access services, and to standardize theoperational activities in such services.” The new measure differs significantlyfrom previous ones in that it for the first time emphasizes the responsibility ofregulators to promote a special type of internet cafe business and it outlineshow this should be done. The release of this document occurred seven monthsafter the MoC became the primary coordinator of the national regime, signi-fying an overall change in China’s regulatory approach from “strict control”(congyan kongzhi) to a combination of “strict control” and “positive guidance”(zhengmian yindao). According to the MoC Announcement, besides existingcontrol mechanisms, the regulators are now committed to the enhancementof the business via a new model of internet cafes, that is, “large-scale chainstores with themes and brands” (guimohua, liansuohua, zhutihua, pinpaihua).

The ideal mode of operation, though unrealized yet, goes as follows. First,commercial entities have to demonstrate that they are capable nationwideoperators with sufficient financing, technical support, managerial skills, andstrong intention to strictly implement the regulatory measures. Second,those who succeed in obtaining permits are entitled to integrate a large num-ber of internet cafes throughout the country. From a regulatory perspective,the concentration of ownership is believed to be able to foster more stan-dardized operations, and hence increase the effectiveness and efficiency ofpolicy implementation. By simplifying the ownership structure, the newframework also allows national licensees to collect considerable membershipfees from member stores while profiting from arranging sales of computerequipment, software, and network service to member stores.52 In the mean-time, by joining the chain stores, individual internet cafes can also benefitfrom brand name recognition, cost reduction in hardware and softwarepurchases, and the standardized, high-quality business environments53 thatwill attract more customers.

The success of this regulatory regime would in principle maximize advan-tage for all players from regulators to operators (chain stores or smallshops), from equipment and service providers to cafe users themselves.Despite its many operational problems that will be discussed below, the newmodel should be recognized as a major improvement for the regulatoryregime towards more mature strategizing. For the first time, it signals officialrecognition of the basic legality of the internet cafe, its positive social value

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(however diminutive), and the possibility of expanding such value via a com-bination of commercial and administrative means. In this sense, the statecould be construed as becoming more sympathetic to the needs of otherplayers by encompassing commercial logic in its regulatory efforts, whichcould also be interpreted as an indirect manifestation of the informal powerof internet cafe consumers whose needs to go online constitute the most fun-damental basis that underlies all commercial operations of whatever scale.

The new model, however, can also be seen as just another power projectaiming at the same regulatory goal of control, although the means of influ-ence is more hegemonic, targeting not at the users per se but at the economicstructure of the entire internet cafe market. The new rules lay the ground forunfair competition that favors giant operators at the expense of small, privateplayers. This is evident by looking at the recipients of the 10 national chain-store operation permits issued by the Ministry of Culture’s Cultural MarketDepartment on 5 June 2003, all of whom are multimillion-RMB enter-prises.54 Because the Regulations do not specify what “covert engagement” ofstate regulators is in the internet cafe business, most of the 10 nationwidelicensees are direct subsidiaries of, or have close connections with, officialbodies such as the Ministry of Culture, Ministry of Information Industry, andCommunist Youth League, thus contributing to a particular business organi-zational model that directly serves the state’s objective of social control.55

It is important to note that the decision about national chain stores ensuesfrom a series of separate but interdependent negotiations within the Ministryof Culture and its subsidiaries, among ministerial level regulators, betweennational as well as local players following the main objective of commercialprofit maximization. Our document analyses and interviews could recon-struct part of this complicated process of multiple interactions. First, as Table2 shows, the issuing of national licenses began in November 2002, twomonths after the Regulations were issued by the Ministry of Culture, fivemonths before the formal promulgation of the chain-store model. It wasunsurprising that this power shift following the tragic Beijing cafe fire insummer 2002 would entail a more distinct approach towards regulation,unlike the previous transfer of leadership from the Ministry of Public Securityto the Ministry of Information Industry, which was only accompanied by themore detailed Measures consisting of articles that are hardly new.

The Ministry of Culture is also more likely than the Ministry of InformationIndustry to concentrate on fostering this nationwide model because cafechains would be relatively marginal for the Ministry of Information Industry,

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the main telecom regulator, which oversees major IT markets such as com-puter sales and mobile telephony. In contrast, a larger portion of the Ministryof Culture authority falls in the realm of managing public sector units (shiyedanwei) such as the national orchestra and local cultural centers

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Table 2 The 10 national licensees for internet cafe chain-store operation

License holders Affiliated state agencies Approval date

Network Audio-VisualCenter of the CommunistYouth League CentralCommittee

China Audio & VideoPublishing House, directlyunder MoC

China National Library,directly under MoC

Shaanxi ProvincialGovernment and ShaanxiEconomic and TradeCommission

State Administration ofCultural Heritage

Partnership withChina Telecom,China Netcom,China Unicom

Great Wall (Computers)Group and CITIC Group

Ties with the Ministry ofInformation Industry (MII)

Ties with MII

Ties with MII

November 6, 2002

November 6, 2002

January 27, 2003

March 14, 2003

March 21, 2003

April 25, 2003

May 15, 2003

May 15, 2003

May 19, 2003

June 5, 2003

CY Network Home Co. Ltd. (zhongqingwangluo jiayuan)<http://www.cynhome.com>

Beijing DCHome Cultural DevelopmentCo. Ltd. (zhonglu shikong)<http://www.chinaavph.com/whcb.htm>

China Digital Library Co. Ltd.(shuzi tushuguan)<http://www.d-library.com.cn>

Shaanxi Asia TelecommunicationNetwork Co., Ltd (yalian dianxin)<http://www.catun.com>

China Cultural Heritage InformationCenter (wenwu xinxi zixun zhongxin)

Capital Networks Co. Ltd (shouchuangwangluo) <http://www.capitalnet.com.cn>

Great Wall Broadband Network Co. Ltd(changcheng kuandai)<http://www.gwbn.net.cn/homepage.htm>

China Unicom (lianhe tongxin)<http://www.cnuninet.com>

Zhongdian Huatong Telecom Co. Ltd

Read China Investment Stock-holding Co.(ruide touzi) <http://www.readchina.com>

Source: Announcement of Ministry of Culture Cultural Market Department on the Examination and

Approval of National Chain-Store Internet Access Services, 5 June 2003.




(wenhuagong). It would be therefore in the interests of the Ministry of Cultureto foster large-scale private operations under the control of either its directaffiliates such as Beijing DCHome (zhonglu shikong) and Digital Library Co. orthose who are willing to form strategic alliances with the Ministry of Culture.The tendency to favor close affiliates is evident in Table 2, which shows thatwork-units from cultural affairs backgrounds obtained licenses earlier thanthose from the IT sector. China Unicom, for instance, was among the last tobe authorized, and was the only major telecom operator among the 10national licensees.56

While the new model is essentially a top-down framework for access con-trol, there are several bottom-up processes in this power project that areequally important. The five-month lag between the beginning of licensingand the issuing of the Ministry of Culture Announcement indicates a stage ofinternal experimentation, probably propelled by key applicants such as CYNetwork Home Co. and Beijing DCHome Cultural Development Co.Satisfactory results from these experiments led the formal policy announce-ment, which also granted de facto temporal leadership of the Ministry ofCulture’s closest affiliates in the game of commercial competition. Notably,Shaanxi Asia Telecommunication Network Co., a Xi’an-based access tech-nology provider, took part in these early internal experiments. Althoughmore information about this firm is needed, it could be preliminary evidencefor coalition between national and local players.

Most critical to the understanding of local operations and their role in thegenesis of the national chain-store model is Shanghai EastdayBar ChainAdministration Co. Ltd (dongfangwangdian).57 This is the earliest andarguably the most successful chain store in China,58 whose outstandingstatus renders its historical trajectory particularly important to our under-standing of the local–national relations in this nested game, including bothcooperation and competition. EastdayBar was initiated in April 2001 whenthe public security bureau of Shanghai Municipality launched a rectificationcampaign of “public computer rooms” (gongzhong diannaowu).59 The mainobjective of this police operation was to prevent access to “unhealthy” con-tent via the city’s internet cafes. At that time, there were approximately1300 cafes in Shanghai, all separate business entities, which posed a chal-lenge to the goal of content regulation.

According to our interview with a high-ranking manager of EastdayBar,Mr Li Zhiping, CEO of Shanghai Eastday Co. (dongfangwang, <http://www.eastday.com>), was the first person who conceived of the chain-store model

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for internet cafes. Eastday, the parent company of EastdayBar, is a member ofShanghai Media Group (wenguang jituan, <http://www.smg.sh.cn>) thatoperates much of the city’s media markets, including a newspaper and mag-azine retail network called Eastern Press Pavilions (dongfang baokan ting). Thisretail network was necessary because there were also content-relatedproblems with newspaper and magazine stands, some of which would selloffensive materials to minors, causing concern among parents and teachers.The idea of Eastern Press Pavilions was therefore invented to allow state-sanctioned newsstands to display standardized signs so that, on the onehand, the concerns of parents, teachers, and other residents would be allevi-ated while, on the other hand, Eastern Press Pavilion operators would be ableto save on subscription and delivery costs after paying the membership fee.This was the model that Mr Li Zhiping proposed to the rectification campaignsteering group: if newsstands could be regulated in such a manner, why notinternet cafes?

With approval from local regulators, in April 2001 Eastday established aspecial taskforce named EastdayBar, which became an independent com-mercial entity in December 2001. According to recommendation from Mr Li,the goal of the taskforce, and later of the company, was to enhance “effectivecontrol and standardized businesses” (youxiao kongzhi, guifan jingying)among internet cafes. The means to achieve this goal are “government lead-ership, societal participation, business operations, membership chain stores”(zhengfu zhudao, shehui canyu, qiye yunzuo, liansuo jingying). All necessarycomponents of the later national model were present in EastdayBar includingformal ways to guarantee regulatory control, membership fee collection, anddiscounts in computer purchase and system maintenance.60

The first franchised internet cafes of EastdayBar started to emerge inMay 2001. The total number was less than 20 in 2001, more than 30 in2002, and 299 in 2003 (i.e. 21 percent of all internet cafes in Shanghai).Notably, although the public security bureau was the main regulator in2001, the earliest chain stores were local cultural centers (wenhuagong)such as the first two EastdayBar shops in the districts of Changfeng andMeilong. Both of them were properties of local subsidiaries of the Ministryof Culture that were used as sites of collective entertainment (e.g. dance-hall and billiards) prior to being converted into internet cafes, reflecting atthe local level the overlapping tendency of existing cultural affairs venuesand internet cafes in terms of general functions, targeted social groups,and even physical locations.

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As for the interconnections between local and national operations, it isalso critical to note that, between June 2002 and April 2003, the Ministry ofCulture sent three groups of officials to visit EastdayBar and inspect its chain-store operations. Yet, despite such early cooperation and EastdayBar’s statusas possibly China’s leading profit-making cafe chain store, it is intriguing thatthis Shanghai-based chain store is absent from the list of 10 nationallicensees approved by the Ministry of Culture Cultural Market Department.Analysts already point out that the promotion of the national chain-storemodel is accompanied by the intensification of competitive relationshipsbetween national licensees and local governments.61 According to Ding,officials of certain national licensees complained about barriers to enter localmarkets because, in order to protect the interests of provincial licensees,certain provincial-level Ministry of Culture branch offices deliberatelydelayed the approval process for national licensees.62 In some cases, such asGuangdong, officials announced that not all 10 national licensees would beallowed to operate in the province because they need to protect local busi-ness.63 In other cases, city informatization offices also intentionally ignoredorders from provincial cultural affairs authorities to promote chain stores.The director of a city informatization office in the Pearl River Delta explainedto us that he would like to see chain stores spontaneously growing out oflocal independent businesses; and that the orders to impose restrictions onchain stores recognized at the provincial level were “nonsensical” (meidaoli)and “against the law of the marketplace” (weifan shichang guilu).

At the time of writing, the chain-store model has already been formallyannounced for about a year. Yet a larger number of internet cafes remainindependent enterprises, resistant and alert to the intrusion of the chainstores. And much remains unclear for the prospects of the new regulatoryapproach. For one thing, who will become the most dominant commercialplayers: national, provincial, or city-based chain stores? Or, will all of themultimately fail to establish the necessary market base for themselves? On amore serious note, to what extent will the chain-store model be successful inrestricting access to “harmful” online content and providing a safe and cleanphysical environment? Too often did our respondents reveal their suspiciontoward the regulatory effects of the chain-store model because they wereperceived, first and foremost, as instruments of unfair competition. Many ofthem said that, after paying expensive membership dues, independentoperators in their cities usually could not receive the promised services, anddiscounted equipment provided by chain-store headquarters were seen as

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mostly inferior. A cafe manager told us the most important “service” of the largest chain store in his city was to provide alerts of supposedly“unexpected” official inspections. Another cafe owner disclosed that he wasconsidering joining another chain store because they offer a reasonablypriced “back-up” line that can be used for overnight businesses without leav-ing a trace in the centralized chain-store operation database. One may arguethat these were inevitable problems due to the early stage of development.But the instances were not isolated; nor were they disconnected from struc-tural insufficiencies of the model itself. While it is laudable for the regulatoryregime to incorporate commercial logic in its considerations, there areobvious gaps in the current chain-store model resulting in the reduction ofactor accountability and possibility for all kinds of abuses in local implemen-tation, which may well lead to new forms of unintended consequences.Without keeping the game of commercial competition in check, it is morethan likely that excessive commodification of access control mechanism willeventually defeat the purpose of the entire regulatory regime.

Conclusion

The central lesson we have learned from the above analyses is that internetcafe regulation in China is much more than a single process of top-downimposition by which a monolithic power elite gains control over people’sinternet access at the grass roots. It is a rather complex ecology within whichlocal issues of control over internet cafe access become first generalized fromthe micro social units of families, schools, and the cafes themselves to themacro levels of mass media coverage and national regulation. This is aprocess full of power disparities that often assume quite dominant forms ofcontrol endeavors that lead to repetitive crackdowns. However, during actualdecision making, multiple ministry-level players are involved in the estab-lishment of the national regulatory regime, which is then most importantlynegotiated in domains of local implementation and commercial competitionbefore they are imposed upon lower-level authorities, cafe operators, andChina’s 16 million internet cafe users, via mechanisms such as the chain-store policy, with varying degree of success.

By scaling up and scaling down, the question of access configuration at the internet cafe becomes a prism reflecting a broad range of multilevelprocesses by which state control and commercial logics are intertwined—albeit not without tension—to produce the structural conditions for internet

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cafe regulation. All of these, however, are merely partial transformations due

to the instability of the rules, the ambiguity of formal measures, and the per-

sistence of local, informal procedures. Consequently, none of the players, be

they national regulators, local authorities, cafe operators, or user net-

works, can achieve their goals without compromise. Hence the poverty of the

monolithic state assumption or purely rational approaches and the suitabili-

ty of the ecology of game framework as a first conceptual tool to identify these

separate yet entangled realms of cooperation and competition.

Much remains to be explored since the purpose of this article is to provide

an overview rather than scrutiny. It would therefore be rewarding if future

research can be launched to reconstruct different types of power projects at

different analytical levels that result in different configurations of internet

cafe access. Because internet cafes are spatially specific, we would also like to

see structured comparative studies between cafe regulation and content reg-

ulation. This would contribute to a deeper understanding of China’s overall

internet regulatory regime, not merely as a media representation but as a

complex system of political and economic processes taking place in the con-

crete world of a transformational society.

Notes

We are grateful to the Annenberg Research Network on International Communicationwhich provided kind support for data collection and analyses during 2003 and 2004. Wealso thank two anonymous reviewers for their helpful comments.

1 Manuel Castells, The Rise of the Network Society (Oxford: Blackwell, 1996); WilliamDutton, Society on the Line: Information Politics in the Digital Age (Oxford: Oxford UniversityPress, 1999); Shanthi Kalathil and Taylor Boas, Open Networks, Closed Regimes: TheImpact of the Internet on Authoritarian Rule (Washington, DC: Carnegie Endowment forInternational Peace, 2003).

2 The interviews were conducted since 1997 in selected locations in Beijing, Shanghai,and the Yangzi River Delta, Guangdong’s Pearl River Delta, Wuhan, and Chengdu andXichang in Sichuan Province. The most intensive interviews were carried out duringJune and August 2002 and December 2003 and January 2004. While earlier interviewswere exploratory, the ones carried out since 2002 were semistructured to cover a varietyof topics including the development history of the internet cafe, user demographics andusage patterns, market competition, regulatory issues, and suggestions for improvementin policy making and implementation.

3 Norton E. Long, “The Local Community as an Ecology of Games,” The AmericanJournal of Sociology 64 (1958): 251–61; William Dutton, “An Ecology of Games: ThePolitical Construction of Santa Monica’s Public Electronic Network,” Informatization andthe Public Sector 1 (1991): 279–301; William Dutton, “The Ecology of Games Shaping

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CIN54683 Qiu & Liuning 5/7/05 9:37 am 8



Telecommunications Policy,” Communication Theory 4 (1992): 303–28; Dutton, Society onthe Line.

4 Dutton, “The Ecology of Games,” 307.5 Dutton, “An Ecology of Games,” 282.6 Dutton, Society on the Line, 15.7 Ibid.8 “Business sites of internet access services” (hulianwang shangwang fuwu yingye

changsuo) is the legal term referring to “places of business operation like ‘internet cafes’and ‘computer lounges’ that offer internet access services to the public throughcomputers and other devices” (Article 2 of the Regulation Ordinance for theManagement of Commercial Internet Access Provision Venues, 14 October 2002,<http://www.ccnt.com.cn/newccnt/document/2002.10/001_2002.10.14.1034577459.php>, accessed 16 October 2003).

9 Brendan Murray, “Internet Cafe Regulation in China: A Policy Review,” MFC Insight,4 June 2003, <http://www.mfcinsight.com/files/030604Oped3.pdf>, accessed 8 March2004; Feiyang Ding, “Liansuo wangba zaoyu diyu bilei, duanqi nanyi daguimo yingli”(Chain-store operation of internet cafes encounters regional barrier: difficult to realizeprofitability in the short run,” Jisuanji shijie (China computer world), 28 September2003; Rui Tong, “Wangbaye chongxin xipai shangji yongxian” (Business opportunitiesemerge in the reshuffle of the internet cafe industry), Meizhou diannaobao (Chinainformation weekly), 21 July 2003; Hai Wang, “Baiyiyuan wangba shichang zhenyounameda?” (Is the ten billion-worth internet cafe market really a big one?), Meizhoudiannaobao (China information weekly), 14 July 2003; Xin Xu, “PC changjia lipinwangba liansuojingying de shichang zhanyoulu” (PC manufacturers try their best totake market share in the chain-store operation of internet cafes), Meizhou diannaobao(China information weekly), 22 September 2003.

10 See, for example, “China Enlists the Public in Its Ongoing Campaign to Censor theInternet,” AsiaWeek, 2 February 2001.

11 Interviews, 1997; 2000; 2002.12 Interviews, 1997; 2000.13 See “A Brief Introduction to Feiyu Internet Cafe Street,”

<http://www.feiyu.com.cn/jianjie/feiyu.htm>, accessed 10 March 2004.14 Compilation based on CNNIC Semi-Annual Survey Reports on the Development of

Internet in China, 21 July 2003, <http://www.cnnic.net.cn/>, accessed 18 October 2003.Notably, the only significant drop in the percentage of internet cafe users was in July2001. This was most likely due to a change in the questionnaire when the order ofoptions was altered and access through internet cafe was listed further behind otheroptions.

15 Interviews, 2000.16 “All Beijing Internet Cafes Closed for ‘Rectification’ to Guarantee Safety,” Xinhua

News Agency, 16 June 2002.17 Interview, 2002.18 “Internet Cafes Still Subject to Strict Controls,” Xinhua News Agency, 21 February

2003.19 Liang Guo, “Internet Development in Chinese Small Cities,”

<http://www.markle.org/news/case_studies.pdf>, accessed 15 March 2004.20 Murray, “Internet Cafe Regulation in China.”

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21 Jack Linchuan Qiu, “Virtual Censorship in China: Keeping the Gates between theCyberspaces,” The International Journal of Communications Law and Policy 4 (1999):1–25;Eric Harwit and Duncan Clark, “Shaping the Internet in China: Evolution of PoliticalControl over Network Infrastructure and Content,” Asian Survey 41, no. 3 (2001):377–408; Kalathil and Boas, Open Networks, Closed Regimes.

22 Murray, “Internet Cafe Regulation in China,” 2.23 25 December 1998, < http://www.jincao.com/fa/law08.s06.htm>, accessed

10 December 2003.24 13 April 2001, <http://www.mii.gov.cn/mii/zcfg/04-13-01.htm>, accessed

12 December 2003.25 <http://www.ccnt.com.cn/html/netlaw/>, accessed 12 December 2003.26 Qiu, “Virtual Censorship in China.”27 Article 14 of the Regulations prohibits internet cafe users to access any content

that: (1) opposes the fundamental principles of the Constitution; (2) endangers the unity,sovereignty, and territorial integrity of the country; (3) divulges State secrets, jeopardizesState security, and harms State interests; (4) incites national enmity or discrimination,undermines national solidarity, or encroaches on national customs; (5) sabotages Statereligion policies, and advocates cult and superstition; (6) disseminates rumors, disruptssocial order, and sabotages social stability; (7) publicizes pornography, gambling, andviolence, or instigates people to criminal activities; (8) humiliates or defames otherpeople, infringes upon the legal rights and interests of other people; (9) harms socialethics or national cultural traditions; and (10) other content that is prohibited by lawsand administrative regulations.

28 Interviews in Beijing, Guangdong, and Jiangsu, 2000; 2002; 2003.29 See following section for more detailed discussion.30 See note 24.31 Interviews conducted in Shenzhen, Guangzhou, Zhuhai, Dongguan, Foshan,

Nanhai, Shunde, and Zhongshan in Summer 2002.32 Kuai is the place-based administrative system such as a city or a prefecture or a

province governed by a local-level administration, whereas tiao is the ministry-basedsystem led by a division of the central government in Beijing but also extends tocorresponding local bureaus and branches. Most government work is done with dualinfluence from the kuai and the tiao, although the relationship between the two variesgreatly in different localities and different sectors.

33 Among our research sites, the fee ranges from a few hundred renminbi in Sichuanto RMB 80,000 in coastal areas.

34 Greg Walton, “China’s Golden Shield: Corporations and the Development ofSurveillance Technology in the People’s Republic of China,” <http://www.ichrdd.ca/english/commdoc/publications/globalization/goldenShieldEng.html>, accessed14 March 2004.

35 Interviews in Guangdong, Shanghai, Jiangsu, and Zhejiang, 2002–2004.36 On the other hand, the Regulations state that all income from monetary penalties

and confiscation of unlawful equipment must be submitted to the national treasury.37 Interviews with a State Council Information Office official and a former Ministry of

Information Industry official, Beijing, January 2004.38 More specifically, those who admit minors will face monetary fines and the

possibility of losing their operating permits depending on the severity of the offense(Article 30). Ditto for those who fail to meet the fire code (Article 32). Cafe operators

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allowing customers to access socially disruptive content may face criminal charges(Article 29). Those who operate without licenses may have all their equipmentconfiscated in addition to fine and criminal prosecution (Article 27).

39 Kathleen Hartford, “Cyberspace with Chinese Characteristics,” Current History 99(September 2000): 255–62.

40 The Measures stipulate that those under 18 shall not be admitted except between8 a.m. and 9 p.m. on national holidays, and children under 14 shall not be allowed atany time if not accompanied by their legal guardians (Articles 10 and 13). These articleswere however deleted in the Regulations, which currently have no specific definition forminors at all, leaving widely different interpretations by different regulatory bodies inlocal implementation. A cafe owner in Jiaxin, Zhejiang Province, complained about thechaos and said, “We all have to give up figuring out what is nonadult. Fourteen, 16, or18—it’s whatever they say it is whenever they want to catch you.”

41 Guo, “Internet Development in Chinese Small Cities.”42 This does not necessarily mean that a downturn has started for investment in

internet cafes. On the one hand, there are only a few urban centers with strict regulationand fierce commercial competition, and the two conditions almost never coexist in smalltowns and the countryside. On the other hand, the futuristic enthusiasm of certainoperators is not to be underestimated for these people make up the very core of theinternet cafe business. One cafe owner in Nanhai, Guangdong Province, for example, lostabout RMB 300,000 in 1998 when the city stopped renewing cafe licenses and his shophad to be shut down. But he reopened in 2001 with another RMB 300,000 shortly afterinternet cafe was relegalized by local authorities.

43 According to Article 8 of the Regulations, the Ministry of Culture and itssubsidiaries are entitled to specify requirements for the minimum number of computers,minimum space per computer in internet cafes. The Cultural Affairs Bureau of BeijingMunicipality, for example, required at least 80 computer terminals and at least2.5 square meters per computer in 2003. At the same time, in Guangshui City, HubeiProvince, the minimum requirement was only 20 computers per shop; Guo, “InternetDevelopment in Chinese Small Cities.”

44 Ibid.45 Interview with the manager of an internet cafe next to Shanghai’s Huaihai Street,

conducted in December 2003. By far the largest figure we have heard was RMB240,000, which is not representative of the rest of the country. The price is for the licenseonly and does not include any equipment or computer networking expense. The highprice is due to the city’s booming economy and the large number of gamers with strongdemand for high-end online gaming facilities in downtown Shanghai. As a result, thereare many wealthy investors hoping to open upscale internet cafes in the city, thus drivingup the black market price for licenses.

46 See <http://www.pubwin.com.cn/html/product.html>, accessed 9 March 2004.47 This means, for an ordinary internet cafe of 50 computers, the installation fee for

China Net Pioneer is RMB 2,250, which is much more expensive than the cost ofPubwin.

48 Haitao Zhao, “Shui neng fenxiang wangba liansuo de baiyiyuan dangao?”(Who can share in the ten billion-worth cake of internet cafe chain?),<http://www.enorth.com.cn>, accessed 11 October 2003.

49 Interviews carried out in Shanghai, Ningbo, Suzhou, Hangzhou, and Jiaxing duringDecember 2003–January 2004.

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50 George Tsebelis, Nested Games: Rational Choice in Comparative Politics (Berkeley:University of California Press, 1990).

51 <http://www.ccnt.gov.cn/newccnt/document/2003.05/001_2003.05.19.1053318533.php>, accessed 10 December 2003.

52 See note 19.53 These include a better physical environment (e.g. nonsmoking) as well as faster

internet access to information and entertainment with problematic content being filteredout.

54 “Wenhuabu wenhuashichangsi guanyu quanguoxing hulianwangshangwangfuwu yingyechangsuo liansuojingyingdanwei shenpiqingkuang de tongzhi”(Announcement of Ministry of Culture Cultural Market Department on the examinationand approval of nationwide chain-store operation of internet access services), 5 June2003, <http://www.ccnt.gov.cn/newccnt/document/2003.06/001_2003.06.06.1054886737.php>, accessed 10 December 2003.

55 The involvement of the Communist Youth League indicates that the “problem” ofinternet cafes is considered to affect mostly the younger generation. Since 1999, theYouth League has attempted to reach its traditional goals by using the internet, markedby the founding of China Youth Computer Information Network (zhongqingwang) on 4May 1999, <http:// www.cycnet.com/aboutcyc/index.htm>, accessed 10 March 2004.

56 This is understandable because the general competitive strategy of China Unicom isto engage in niche markets vis-a-vis the more mass-oriented approach used by ChinaTelecom and China Mobile.

57 See <http://www.eastdaybar.com> and <http://news.eastday.com/eastday/node4577/index.html>.

58 See Chen Nian, “Shanghai liansuo wangbaye shengzhangdianbing” (Campaignbegan in Shanghai’s internet cafe chain-store market), Jisuanji shijie (China computerworld), 8 December 2003.

59 Interviews in Shanghai, December 2003.60 The requirements to join EastdayBar are in general more stringent than the

Regulations. The minimum number of computers is 100 in each shop, and there has tobe at least 2.5 square meters for each computer. EastdayBar also has some very specificrequirements that are not found in the MoC Announcement for national chain storessuch as the standardization of dress code among all employees.

61 Xuming Fu, “Liansuo wangba zhenneng huoqilai ma?” (Will chain-store internetcafe be a hot business?,” Zhongguo jingji shibao (China economy times), 18 June 2003;Jian Yang, “Wangba liansuo jingying youxu guanli, chongxin xipai damu chuqi”(Internet cafe: chain-store operation for market order, curtain up for reshuffling), Renminribao (People’s daily), 17 July 2003.

62 Ding, “Liansuo wangba zaoyu diyu bilei.”63 Fu, “Liansuo wangba zhenneng huoqilai ma?”

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through the prism of the internet cafemanaging access in an ecology of games

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