Opinion: Elusive China tempts, teases tech industry

China is a highly coveted market for the technology industry. But, to add a yin to that yang, the country is also a thorn in its side.

It’s often in the news that tech firms and entertainment companies foreign to China have had tremendous difficulty entering what is essentially a cash cow, given the sheer population of the country and its potential for media consumption.

I write for Springfield Business Journal’s Today in Business e-newsletter each morning, and it’s not uncommon for China to appear in the headlines. Often, the country’s government is depicted as a bit draconian, as it commonly censors online content from residents and shuns tech from other countries. Facebook, for example, has had a rough ride in China with censorship and outright bans. From an admittedly outsider’s perspective, it appears the country is blocking its residents from the rest of the world.

Still, when Netflix Inc. announced early this year it had expanded its service to a majority of the globe, the fact China was not a part of that list stood out to me.

An online map I found of Netflix’s service area really drives home the point. A world map is nearly covered in red, to indicate where the streaming movie and television service is available, minus a huge chunk of Asia that appears as a gray glob. The service also isn’t available in Crimea, North Korea and Syria, where Netflix officials say restrictions exist against American companies.

North Korea makes sense. That’s arguably the most isolated area of condensed population in the world. But China? It struck me as odd.

Chinese political systems differ much from that of the United States, but the country doesn’t exist in a vacuum.

Missouri State University seemingly has good relations with its Dalian, China, branch campus at Liaoning Normal University. The country also is the third-largest buyer of Missouri goods, having purchased $872 million worth in 2014, according to the U.S. Census Bureau Foreign Trade Division.

Even in the tech world, not all companies are excluded. Uber, for example, is engaged in a billion-dollar battle with rival Didi Kuaidi to control China, the world’s largest ride-hailing market, according to a recent Forbes article.

Articles about American companies’ cravings for China have a host of opinions and speculations as to why the world’s most populous nation has such a steep barrier to entry.

I think it comes back to how guarded China has been historically. The communist country did literally build a wall to keep others out at one point.

In the case of Netflix, China has its own interests to protect.

Last summer, Beijing Gehua CATV Network – the capital city’s municipally owned cable TV monopoly – announced a partnership to create what is essentially the Netflix of China. According to Forbes, the company’s partners are e-commerce giant Alibaba Group; National Radio and TV Network, which got its start in 2014 with some $700 million in support from China’s Ministry of Finance; and China Film Group Corp., which is considered the country’s largest state-run film enterprise that all imported films must work with. The service, operating as China TV Theaters Operating Co. Ltd., reportedly started this month.

It logically follows that China simply would not allow Netflix to enter the country.

However, on Jan. 14, London-based independent film streaming service Mubi announced plans to launch in China. Offering a selection of only around 30 films, the service is hardly gigantic. But it could represent the start of outside streaming into China. It helps that Mubi partnered with Huanxi Media, a Hong Kong-listed entertainment company that’s investing $40 million for a 70 percent stake in the joint venture dubbed Mubi China. Huanxi also is depositing $10 million directly in Mubi.

Perhaps that’s the play Netflix should make as well.

Now available in over 190 countries, Netflix is bent on pursuing Chinese pay dirt.

Still, if China’s government doesn’t want Netflix to come, it won’t.

World domination may not be in Netflix’s future, but I’ve got a tub of popcorn ready as I watch this drama unfold.

Web Producer Geoff Pickle can be reached at gpickle@sbj.net.