In this chapter there will be information about several subjects that define aspects of Chinas culture. These subjects contain information about the economy, the administration, the culture and its geological behavior. This method is called CAGE1, it helps to give the research some clear facts and information about the country. The other method that will be used in this report is the DESTEP2, that give an insight about the extern environments from an organization. Demographic A total of 1.370.302.771 people live in China, according to the CIA (Central Intelligence Agency, 1947) in 2017. There are many ethnic groups in China as well, these are as follows 91.6% Han Chinese, 1.3% Zhuang and 7.1% other (including Dai, Kazakh, Tibetan, Korean, Miao, Yi, and other nationalities). Officially there 56 recognized ethnic groups by the Chinese Government. (Central Intelligence Agency, 1947) The age-structure will be shown in a chart down below containing age, percentages: Tabel 1. Age structure China Ages China’s population Percentages 15-24 years 12.78% 25-54 years 48.51% Source: (Central Intelligence Agency, 1947) The table shows information about the potential ages for Netflix customers. Together they make up about 50% of the population. Of course, internet is a must for a subscription, there is a reference to internet connections in ”Technology”-paragraph. Economic The valuate of the country is the Chinese renminbi. The gross domestic product in China (PPP) is estimated $15,400. This tells how much wealth there is in the society, that is important for Netflix. It could explain whether people can spend some extra money for movies and shows besides their normal costs. The growth of this product was 6.7% comparing to the year before. This is important for Netflix, to see if people are able to afford a monthly subscription. This can vary from 9$ to 15$ per month. The expenses for this number goes to several secondary compositions: 39.2% household consumption, 14.4% government consumption, 42.7% fixed capital, 1.4% inventories and 19.5% exports. The inflation for 2015 amounted to 1.5%, for 2016 this was an actual of 2%. (Central Intelligence Agency, 1947) The labour force amounts in total 807.1 million, for the agriculture this is 28.3%, the industry 29.3% and services 42.4%. The unemployment rate in China amounts 4%, this only applies to urban employment. There is 3.3% of the population that qualify to come below poverty line: this is approximately US 400$. This can tell how people do have work and what percentage doesn’t have. Most of the rich people live in the big cities and probably have more money to spent for their spare time. (Central Intelligence Agency, 1947) Social-cultural There are many religions within China, more than 5 different ones. The biggest part of them is Buddhism (18.2%), there is about 5.1% Christian, 1.8% Muslim, a big part of 21.9% folk religion and some very few Hindu, Jewish and other religions. The advantage in China for Netflix is that the mainly spoken language is Mandarin (official Chinese). This is relevant for the favour of subtitles or dubbed streaming. The Chinese society is very restrained3, this information is from Hofstede Insights, (Hofstede, 2014). This can be seen in the comparison from Hofstede, the score is very low in the list, 24th place. This low place can tell that there is more tendency for cynicism and pessimism. There is a value that tells how leisure time is not much necessary. Control needs to be taken over gratifications of the desires. So, if there needs to be control over life and its situations it can be expected that a low tolerance is valued. There may be a chance that people do not want to spend time together to stream (mostly American and English) movies or shows because people are not so tolerant to outside cultures. (Hofstede, 2014) Technological In total 730,723,960 people in China are internet users, this is a percentage of 53.2%. When a look is taken on the fixed lines there is a total of 206.64 million subscriptions, which is 15 phones per 100 inhabitants. Comparing to the mobile cellular this is very little. In total 1.364.934 million mobiles (cellular) are being used, this is 99 phones per 100 inhabitants. It can be interesting for people to stream shows or movies on their mobile devices. (Central Intelligence Agency, 1947) Ecological China consists of a total 9,596,960 square km, of which 9,326,410 square km land and 270,550 square km water. All data comes from the source of The World fact book from the website of the Central Intelligence Agency, (Central Intelligence Agency, 1947) This country is located in the continent Asia. The weather climate is extremely diverse because of the large country size. In the North, it’s a subarctic climate and in the south, it’s tropical climate. There is a very diverse terrain spreading throughout China, there are mostly mountains, high plateaus with deserts in the west of the country. In the West-side you will find plains and deltas, whereas there are hills to find in the East of China. In places like this people may not have connection and cannot be considered as potential customers for Netflix. Environmental issues that can be found within the country: acid rain caused by air pollution from reliance on coal, water shortages, coastal destruction etcetera. Then there is the problem with natural hazards occurring like frequent typhoons, damaging floods, earthquakes and tsunamis. These weather conditions can be a real problem for people with a Netflix subscription, there internet may have bad connections or might not be working at all. Political-legal China is a communist state lead by current president Xi Jinping. The international organization participates with the ADB, APEC, ICC, UN and many more. The political party is called Chinese Communist Party (CCP). There is a really big limit because of the censorship on the internet arranged by the government. There is even punishment and death penalty for crimes. Therefore, Netflix would not be allowed by the Chinese government to have all the movies and shows being watched be the citizens. Taxes are 21.4% of the gross domestic product. These taxes should be taken into consideration for Netflix, they make the prices higher. The image shows how corrupt a country really is, the meter goes from 0-100. This means how darker red the colour is, the more corrupt the country. For China, the corruption is in the orange zone, about 40%. This is a very low percentage and may be a real problem for Netflix. (Transparency International, 1993) The government controls the economy and this can be a great limit for the US Netflix. Source: (Transparency International, 1993) For the next step, the CAGE-method will be used for research about China, with first the six cultural dimensions from Hofstede. (Hofstede, 2014) Cultural distance The Power distance scores very high with 80, which means that all individuals in societies are not equal. The individuals are influenced by the formal authority and they cannot defend themselves against power abuse from superiors. This could be a problem for Netflix because people might not have interests or be allowed beyond formal authority to get a subscription. The score of China’s Individualism is 20, this is very low and means that there is a high collectivist culture. The dimension is about the fact that people belong to ‘groups’ that take care of each other. This means that taking care is in exchange for loyalty. This can be interesting fact for Netflix to the people who may want to watch shows together as a family. People can share their accounts or even interest other who haven’t got a subscription. (Hofstede, 2014) A high score of the Masculinity indicates that society is driven by being the best, success and achievement in life. An example of this is that students want to achieve high exam scores for a better career opportunity. With a low 30 China scores for (4) Uncertainty avoidance. This subject is about whether to control the future or not and let it happen. People in China are very adaptable, entrepreneurial and adherence to laws and rules is common for the pragmatic look on life. Chinese like ambiguity: they have a language full of ambiguous meanings. This can be very hard for outsiders and other cultures to understand, but Netflix could take advantage of this because people widely speak Mandarin. (Hofstede, 2014) There is also a very high score for the (5) Long-term orientation, 87. China has a pragmatic culture: encouraging for education to prepare for the future. Indulgence scores very low. People have a relatively strong control that is called the opposite: restrained. Languages that are often spoken in China are standard Chinese or Mandarin, Yue, Wu, Minbei, Minnan Xiang, Gan and Hakka dialects. These languages are widely spoken in China, this can be an opportunity for Netflix. They could add new spoken or subtitled languages for people who have interest to watch shows or movies. Administrative China has a bilateral trade with the US and the EU of which the EU is the second largest trading partner, this is according to the China Customs. In 2005 the bilateral trade between China and the EU reached up to $217.31 billion, this is an 22.6% increase. In the same year China’s export to the EU was $143.71 billion, this is an 34.1% increase. China’s import was slightly less with an amount of $73.60 billion, an increase of 5%. In the year of 2003 China’s Central Government signed the Closer Economic Partnership Arrangement (CEPA). This was signed with the government of the Special Administrative Region of Hong Kong and Macao. The CEPA is an application of the ‘One country, Two systems’ principle, this is a free trade agreement. (Central Intelligence Agency, 1947) Geographic In total China has a border of 22,117 km from the Gulf of Tulkin to the mouth of the Yalu River. This is the longest combined land border in the world and explains a lot about the physical distance in terms of land borders and rivers. This explains why there is a geographical distance with Chinese export towards partners. China shares its land borders with 14 other nations, this is many more than any other country in the world. (Central Intelligence Agency, 1947) The Yellow River is crucial to the Chinese civilization. Due to this geographical neighbor Russia, the bilateral trade volume reached $29.1 billion in the year of 2005 (increase of 37.1%). In 2006 China’s export to Russia amounted $13.21 billion, an increase of 45.2%. China’s military helps secure against pirate on high sea. There are railways that are owned by the state, they make up a quarter of the world’s shipment and passenger travel. In some railways there is internet connection, people can stream their favorite movies while traveling. Economic The GDP (PPP) amounted $21.29 trillion for the year of 2016, this is a growth of 6.7%. China also has a big amount fixed for the reserves of foreign exchange and gold, $3.098 trillion according to 16 December 2016. The total revenue generated from global sourcing effort amounted $5 billion, this is one-fifth of the total due. This amount came from China particularly. (Average GDP , 2014) Another important economic source for China is Hong Kong, its Foreign Direct Investment (FDI) results $46.311 billion in 2014. This explains the pattern of China’s export as well, in 2010 its actual capital investment accounted for 89.5% of its actual use of the FDI. Hong Kong is in possession of the largest amount of renminbi liquidity outside Main China since the year 2004. Hong Kong is also the largest receiver of outward direct investment from China, then there is about 30% trade volume in forms of offshore trade and re-exports that all go to Hong Kong. This is relevant information because it tells China is corrupt, also in the economy. (Transparency International, 1993) If there is not enough transparency the economy will be less stable. That will be negative for Netflix and the Chinese market.