Aztec Technology closing five outlets

The Internet-cafe chain Aztec Technology (戰略高手), yesterday announced that it would close five of its 34 outlets in order to comply with government regulations, a company executive said at a press conference.

"We will soon shut down five outlets in the Greater Taipei area and will take an estimated loss of NT$50 million," company president Chien Shu-hui (簡淑慧) said.

Chien said two outlets -- one on Changchun Road and one on Tunhua North Road -- would be closed because they were in violation of government regulations that stipulate Internet cafes must be at least 200m away from a school.

The closure of the other three outlets -- in Panchiao, Hsimenting and on Nanking West Road -- was attributed to the company's difficulties in obtaining operating licenses due to safety concerns, Chien said.

The announcement came after two days of widespread media speculation that the firm was in financial trouble -- assertions Chien denied.

"None of the closures are related to the company's financial status," she said.

Local Chinese-language media reported yesterday that Aztec Technology's financial troubles began earlier this week when it bounced a NT$120,000 check.

It was also reported that the company may face up to several hundred million NT dollars in losses and that employees have only received half-salary over the last two months.

Chien denied both allegations.

"Our financial problems are not as serious as [reported] ... But our board is aware of the [cash flow] problem and is now working to resolve it," Chien said.

Aztec Technology is a subsidiary of software distributor Chinasoft Co (華彩軟體), which holds a 30 percent stake.

Chinasoft has formed a four-member task force to help turn the Internet cafe chain around, Chien added.

The veteran of Internet cafes also said the Taipei City Government regulations which prohibit youngsters under the age of 18 from visiting Internet cafes or video games parlors at during certain times of the day took its toll on the business.

Those regulations make such businesses off limits from 8am to 6pm Monday to Friday and from 10pm to 8am daily.

"The regulations have actually undercut Aztec Technology revenues by a third so far," Chien said.

With authorities keen on keeping students away from Internet cafes during school hours, the number of Web cafes has dropped from 11,000 to 4,320 as of August, according to Wu Cheng-chang (吳振彰), chairman of the Taiwan Cybercafe Industry Development Association (中華民國網咖協會).

Many Internet cafes have been turned into video game centers, which require a special license. According to the Electronic Game Regulation Act (電子遊戲場業管理

條例), operating an Internet cafe without a license is subject to a fine ranging from NT$50,000 to NT$250,000.

Chien said the company's goal was to offer a comfortable environment for surfing the Web or playing computer games, including offering an array of food and drink.

Existing government regulations could damage the growth potential of broadband Internet infrastructure in Taiwan.

"We will continue to shut down our outlets unless we get a license from the government," Chien said.

Currently only three of Aztec Technology's Internet cafes in Taipei are legal.