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Net Cafe Licenses Getting Costly in Shanghai
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The cost of a permit to run an Internet cafe in Shanghai rocketed past 1 million yuan (US$132,000) on the black market in the wake of the government's decision earlier this year to stop issuing business licenses to new operators.

The authorities regard the black market trade of such permits as illegal, but admitted that it would be difficult to stop people from selling them because it would be difficult to trace such transactions.

An Internet cafe in downtown Xujiahui was selling for 1.5 million yuan, according to a report by the Shanghai Morning Post. The online advertisement said the price included 100 computers and a business license.

Deducting the cost of the computers, the license itself is worth 1.2 million yuan.

An Internet search for Internet cafe business license transactions uncovered numerous price tags of about 1 million yuan.

The soaring prices are widely seen as a consequence of the government's efforts to tighten control over an industry in which there have been numerous reports of operators allowing underage people to use the Internet and neglecting public safety. Parents and teachers have complained about students skipping classes to play games at Internet cafes day and night.

And in 2002, a fire in an Internet cafe killed 25 people and injured 13. Many of them were students. The authorities decided to tighten supervision of the industry and that same year, the Shanghai municipal administration of culture, radio, film and TV stopped issuing new licenses. Before that, individuals were able to get a license for as little as a few dozen yuan.

People who wish to enter the trade can join a franchised Internet cafe operator for a fee, but the high cost drives many away.

Yang, a Shanghai Internet caf operator, said he had sold his business about four years ago for 350,000 yuan. His successor picked up more than 500,000 yuan when he resold the business last year.

"It could be worth more than a million now," Yang said.

It is easy to arrange such a transaction. The two parties only need arrange the sale of the business, and the license changes hands along with it, he explained.

His successor said he was simply reacting to the market.

"You just don't say how much you bought the business for," he said.

(China Daily July 23, 2007)

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