Chinese Internet Cafe Pioneer Retreats

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Last updated at: (Beijing Time) Thursday, August 01, 2002

Chinese Internet Cafe Pioneer Retreats

Sparkice Inc., one of China's earliest Internet cafe chains, has closed its 14 Internet cafes throughout the country, six years after they first opened in Beijing.

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Sparkice Inc., one of China's earliest Internet cafe chains, has closed its 14 Internet cafes throughout the country, six years after they first opened in Beijing.

Thursday's Beijing Youth Daily quoted Sparkice Inc. Chairman and CEO Edward Zeng as saying that the company intends to focus on the B-to-B (Business to Business) e-commerce business.

It cost 40 US dollars per hour to get on line in China when Sparkice opened its first Internet cafe in 1996 and now costs from two to four yuan (0.24 to 0.48 US dollars) per hour.

Insiders note the Sparkice Internet cafes charges were higher than average and fewer people are now going to Internet cafes as more and more people can get on line at home.

Sparkice Internet cafes, once legendary in the industry, have hosted US former president Bill Clinton and ex-secretary of state Madeleine Korbel Albright.

Zeng regards the closing of Sparkice outlets as a strategic business shift even though the company has managed to turn money-losing Internet cafes into profitmakers.

The company has been eyeing the B-to-B e-commerce and believes it can have a leading position in the field and wants to put all its eggs into one basket, he said.

The government's attitude towards Internet cafes remains guarded, compared with the obvious support for B-to-B e-commerce, Zeng added.

Sparkice Inc., with total assets estimated at 100 million US dollars, changed its business focus from Internet cafes to Internet service provider, then to Internet content provider and Business to Customers e-commerce and finally settled as online trade facilitator.

HSBC Holdings plc, one of the world's largest banking and financial services organisations, invested an additional 5 millionUS dollars in Sparkice last month, increasing its interest from 5 percent to 10 percent.

Some 711 deals are underway on Sparkice's online trading platform and its supplier database has grown from 2,000 last year to 10,000.

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