Cybercafes losing business to smartphones

Gu Ruocun, a student at Shandong Normal University, said many cybercafes around his college have shut down in recent years.

"I paid membership fees to a cafe four years ago, but I couldn't claim my deposit back after it went bankrupt," he said.

He said his classmates would rather play video games in their dormitories than go to a cybercafe because it's more convenient and cheaper.

"All our classmates have computers, and we needn't go to the cybercafes to search online information like our predecessors did," he said.

Rising costs

Han, in Mengzhou, said the cost of running a cybercafe has been rising - she has to upgrade her hardware every 18 months to meet players' rising demands.

"In 2006, computer screens were 14 inches, thick and heavy. Then they were replaced with 17-inch LED screens, then 21-inch and now 27-inch high-definition," she said, adding she is planning to buy 3-D screens to provide a more vivid experience to customers.

She pays about 60,000 yuan a year in rent for 300 square meters, accounting for about 10 percent of her total investment.

The salaries of her employees have also risen from 400 yuan a month in 2006 to 1,500 yuan, which has also affected profits, she said.

According to the Ministry of Culture in April, cybercafes had a combined income of 53.7 billion yuan in 2012 - 13.2 percent less than the previous year.

About 126 million people visited a cybercafe in 2012, a drop of 5.5 percent, the ministry said.

Ding Ruixue, a 20-year-old cafe owner in rural Rizhao, Shandong province, said her business remains the first choice for local adolescents since there are not so many nearby entertainment venues.

Even though the business is booming in her village, Ding said she has felt pressure since many rural families have bought computers and have access to the Internet at home.

"Five years ago, people went to my cybercafe for various purposes, including checking e-mail, but nowadays they mostly come here to play games since they could search online information with their private computers," she said.

To attract more customers, Ding offers discounts to players who deposit money on membership cards and improved the environment of the cafe.