THE Shenhao Internet cafe is a venue for gatherings of online game addicts in the Hongkou District. The cafe is crowded with young people all day and night, especially in the early evening and late at night.

The number of Internet cafes in Shanghai has grown to some 5,000 since playing on the Net became a vogue in the late-1990s, but the number is now starting to decrease as stricter regulations are being enforced. In recent years, many measures have been taken to standardize and regulate the operation of the cafes.

The latest regulation says an ID card is the necessary passport to enter a cafe where previously money was all anyone worried about. Young people have to show they have reached the legal age of over 18 to play Internet games just like teenagers in other countries who want to buy alcohol.

"The Internet cafe is a paradise for young people, especially gaming addicts," said Sun Jun, the boss of Shenhao. He has run the cafe since 1998 when Internet cafes were fashionable places to be.

"I love to go to the Internet cafe to meet my friends there or online to play games together, or just chat with one another," said Shi Wei, 17, an expert online game player.

The players like to stay in the cafe even if they have their own computers at home. "No one will watch me in the cafe, unlike the situation with my parents at home. I am relaxed and feel comfortable in the Internet cafe," Shi said.

But for Shi's parents, the Internet cafe is a hell of temptation for their son. They have often found their son focusing his eyes on the screen as if in a trance.

Thriving market

Although Internet cafes suffered from skepticism and have cultural critics, they are playing an increasingly important role in the online game market. The Internet cafe has become an important part of the operation of online game agencies who are aiming to attract more young people to play games.

Statistics from the China Internet Information Centre show that there are 40 million online game players in China. Most of them are young people aged between 15 and 25.

The number of players provides a huge market, which is growing at the rapid rate of 50 per cent annually.

Chen Tianqiao, general manager of Shanda Networking Development Co Ltd, one of China's leading online game operators, said that by 2006 online games will bring 8 billion yuan (US$960 million) to the online game agencies and servers and 100 billion yuan to related industries such as media, telecommunications and computer software and hardware manufacture in China.

Since "King of Kings", the first large-scale online game, entered the Chinese mainland market, online games have drawn in millions of players and investors. Nearly 200 online games have mushroomed in China, including titles such as 'Mir" and "Mu".

Enthusiasm and money have joined to create several online giant online game servers such as "Ourgame" and "Shanda".

"Shanghai Shanda" became a legend after getting the rights to promote the game "Legend of Mir" in 2002 for 4 million yuan (US$480,000). But the game has paid off for their investment. Online players reached 40,000 in the first few months with the number still rising.

Few Chinese brands

But Made-in-China online games are less than 20 per cent of the 200 games being played online. Games from South Korea make up more than 70 per cent of the total. Most of the online game companies play a role as agencies for online game players.

The agencies buy permission to run online games in China and earn money after players become "hooked" on the game.

The agencies get a share of the income from the Internet cafe chains when the number of online players cross a certain threshold. The arms, equipments and skills required to access higher levels can also be sold to players for money.

"But a lack of innovation and core technology will hinder the further development of the online game market in China," said an expert from the Shanghai Academy.

"The poor communication between the agencies and the game makers can lead to some problems with service efficiency and the updating of the online games. And the unsteady relationship between them is harmful to the successful promotion of the game," he said.

Chinese online game developers play a passive role in the market as the agencies for foreign online game makers.

"Monkey King II" is one of the few successful Made-in-China online games. It is made by Tease, one of the top online service providers in China based on the Chinese legend of the Monkey King, a clever and funny character. The high number of online players of the game led to a rise in the stocks of the company.

But the game required a long period of research and development, resulting in financial problems for the company.

"Online games are not just a name," said Kuai Dasheng, an expert on culture and literature of Shanghai Academy. "The games show an unreal world but one with real cultural influences. The players will accept the way the heroes speak and act in the game and will learn from them," Kuai said. "Our young generation should know more about our own culture."

Online cheatings

The online games are often based on legends or stories including those about war and violence. And most of them represent a different culture and have their own attitude towards life values. Experts have suggested a grading system be used to categorize online games.

The lack of a relevant laws and the inefficient management of online games are also problems for the industry.

Online crimes such as cheating have increased sharply, especially in online games where there is no law to which the players can turn to protect their rights.

Three in four online users have had the bitter experience of having their "unreal" possessions stolen online.

"Their rights to their belongings in the unreal world must be protected because they have spent time and money on them," said Yi Yong, the director of the Shanghai Electronic Business Association.

He also pointed out that the efficiency of online game management badly needs addressing as the online population sky-rockets.

"The disputes between the players and the agencies could not be handled without a law or measures which will harm the healthy development of the online game market," Yi added.