Cultural analysis China 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. Cultural analysis Israel Demographic The demographic shown by the Israel Central Bureau of Statistics (ICBS). Israel counts approximately 8,6 million inhabitants. Israel is separated in different ethnicities. 74.8%, so the biggest part of Israel are the Jews, 20.85 of the population are Aran and the remaining 4,4% of this population are called the others. The others in this case can be defined as members of the family of Jewish immigrants who are not registered as Jews and the others are non-Arabs. (Central Intelligence Agency, 1947) There are not that many ethnicities in Israel as you can see. That means that u do not have to make like 20 different kind of subtitles or change the content. It is easy to reach the biggest part of the country and Netflix is able to use a fewer different languages that most of this country is able to understand. And that is not hard in Israel, because most of the inhabitants do speak English over here. The age-structure will be shown down below containing age, percentages: Table 2. Age structure Israel Age structure Percentage 15-24 years 15.52% 25-54 years 37.15% Source: (Central Intelligence Agency, 1947) In this age structure, you are able to see that more than 50% of this country is aged between 15-54. These people are potential customers for Netflix. And this is a lot of people that probably will take Netflix into their possession. Economic The valuate that is been used in Israel is called shekel. Israel has a technologically advanced free market. The GDP growth of Israel in 2014 till 2017 was roughly 3% per year. And this a lot. If we look at the purchasing power parity of Israel we can see that its growing with more than 10 billion a year. In 2016 it reached more than 300 billion dollars. The growth rate in 2016 was 4% in Israel, so in the last 3 years the growth rate of the last year was the highest of them. If a look is taken at the GDP per capita in Israel, this is $35200. Compared to the world they ended up on place 54 of the countries with the highest PPP. Most common industries in Israel are the high-technology product. (Central Intelligence Agency, 1947) The high amount of the GDP per capita shows that Israel is a wealthy country and that the inhabitants earn more than enough to purchase Netflix. Besides the fact the PPP of Israel high they also have a large budget, 83 billion-dollar available revenues and more than 90$ billion for expenditures. Israel does actually face some structural issues in long terms, including the fact that the low labour participation has low rates for its fastest growing social segments. (Central Intelligence Agency, 1947) They are able to use this money to improve their infrastructure as example. And to make internet accessible for everywhere in the country. So that the inhabitants are able to watch Netflix without bugs and full resolution. Pagina-einde Social-cultural The population of Israel is split in a few groups. With 75,4% of the country is Jewish as you may already know, 20,6% is Arab and the other 4,1% are minority groups. Most of Israel used to be Palestine in the past. So we cannot say that there is not still noises here and there. Tel Aviv and Jerusalem are considered as the main cultural hubs of Israel. And Jerusalem in particular gets the most attention, because this city is very important for the Jewish people as for the Muslims. If we look at the languages that are spoken are Hebrew and Arabic the official languages which are spoken in Israel. But like I said before most of the inhabitants in Israel can speak English. About education we can say that Israel is a well-educated country. In 2012 was Israel the second most educated country in the world. Then we have the film industry of Israel. Filmmaking has undergone a major development since the 1950’s. The Israeli film industry continues to gain worldwide recognition through international awards. This shows us that the inhabitants of Israel are interested in the world of the film industry. Maybe it is even possible that their own made movies will be shown on Netflix. Technological In a total of 6.521.539 people in Israel 79.8% of the population uses the internet. This means that almost 80% of the inhabitant are using the internet and they are also able to watch Netflix. When a look is taken on the mobile phones, the subscriptions per 100 inhabitants are 129 (Central Intelligence Agency, 1947). So some of the inhabitants do own more than one mobile phone. As you may know, it is also possible to watch Netflix on your mobile phone. All these people that do own one (or more) can use it to watch Netflix. Last of all, most of the citizens have a working internet connection or even mobiles phones and other devices. Israel had the most highly developed devices in the middle east. They also have a good system of coaxial cable and microwave radio relay this means that all systems are digital. Geographic Israel consists of a of 20.770 square km, of which 20.230 square km is land and 440 square km of Israel is water. Israel also has a 273-km coastline which can be easily reached. As you can see Israel is not that big of a country, so it is not that hard to reach all parts of it and provide a good internet connection for the inhabitants. (Central Intelligence Agency, 1947) If we take a look at the border countries Jordan, Syria, Egypt, Lebanon, and Gaze strip, we can say that there are conflicts going on in most of these border countries. This maybe can affect Israel if these conflicts do get out of hand. If we look at the population of this country we can say that this is concentrated in and around Tel-Aviv, as well as the Sea of Galilee. But the south remains sparsely populated. This make it easier to provide good internet connection for the people over there. (Central Intelligence Agency, 1947) Political-legal Israel has a parliamentary democracy in which they have mixed legal system of English common law, British mandate regulations and Jewish, Christian, and Muslim religious laws. In Israel, there are some active political pressure groups like the Breaking the silence, B’tselem, peace now and Yesha council. But Israel is not corrupt at all, they got a president and a head of government and they also have elections where you are free to vote for the party you like. Israel rates with a score of 64 on the World Transparency, that is the 28th places in from all total 176 registered countries across the world. (Transparency International, 1993) Because of the transparancy you also wont have things like censorship etc. for movies and series on Netflix. This is a very important key for streaming, people will be able to watch their favorite movies or shows. Israel (CAGE) Cultural Distance Power Distance Israel has a low score if a look is taken at the power distance, Israel scores 13 to be exact. And that is very low compared to China. The power distance means that the power is not distributed evenly. In the society individuals are not equal. This leads to an unbalanced country (Hofstede, sd). Individualism With a score of 54 point, does it clearly show that Israel has a mixture of collectivistic and individualist. Often do families have many children, and have good bands with other family members. The communication towards people is meaningful, a very strict to the point (Hofstede, sd). Those aspects have much potentials, Netflix has a standard option which have multiple user accounts so it can easily shared between family members. (Hofstede, 2014) Masculinity Israel scores also high on masculinity, with an exact amount of 47. This means Israel is neither a Feminine nor Masculine society. If a look is taken at the masculinity that is in Israel, this masculinity is shown by success and achievement. And a Feminine society is often shown by the quality of life (Hofstede, sd). The potential regarding achievement in life and the quality of life, means that some things are shown in different ways. Netflix can make the quality of life much better, watch your favorite movie or show anywhere and everywhere. Uncertainty avoidance Israel is a strong uncertainty avoidant country (81). Rules are very important, rules like time is money, precision is the norm and also have the inner urge to work hard (Hofstede, sd). Netflix cares about customer satisfactions, because Israeli people have other interest regarding what they like to see on Netflix. Netflix can adjust their content library, to match the interest of the Israeli people. Long term orientation This dimension describes how the country is dealing with their past and how they handle in the future. For this Israeli scores 38 points, this is very low. This means that the people in Israel do have thoughts in a normative way (Hofstede, sd). Indulgence It is clear that Israel is a restraint country, and stick to their laws and rules that they keep following. This indulgence restraint means the way that people do control their desires, these desires are based on their education. This can also tell whether the Israeli society would have interests to watch movies in their spare time. (Hofstede, sd). Administrative Distance The State of Israel is divided into six main administrative districts, known as Mehozot singular: Center, Haifa, Jerusalem, North, South, and Tel Aviv districts, as well as the Judea and Samaria Area in the West Bank. All of the Judea and Samaria Area and parts of the Jerusalem and Northern districts are not recognized internationally as part of Israel. Geographic Israel is situated in the Middle East with a 273-km coastline bordering the Levantine Sea. The country has a total area of 20,700 square kilometers that makes it slightly larger than the American state of New Jersey (Central Intelligence Agency, 2018). The capital of Israel is Jerusalem. Despite that, there are some uncertainties about that and was recently in the news again. Palestine also claims that this city belongs to their state (United Nations, 2017; Central Intelligence Agency, 2018). Most of the Israeli citizens lives in and around Tel Aviv. This major city is located at the coastline of the country which can be easy accessed by sea and by air. This is the city where the country welcomes the most international flights using the Ben Gurion International Airport. In contrast is Jerusalem located more in the midlands near de Palestinian border (Central Intelligence Agency, 2018). Because most of the citizens lives in the urban areas, there are more chance for Netflix to gain customers. According to Central Intelligence Agency (2018) 92.3% of the Israeli citizens lives in an urban area. The cities Tel Aviv, Haifa and Jerusalem are the major urban areas. The urban areas are more likely to have a better internet connection than in the midlands. Netflix could take advantage of it by focusing on these three cities. Economic (According to Doing Business (sd), Israel is categorized as a high-income country. This Mediterranean country has a GDP per capita of $35,200 and an unemployment rate of 4.8% (Doing Business, sd). Besides that, there are no more than 22% of the populations that are below the poverty line ($7.30 per person per day). So, most of the Israeli citizens has a decent income that can afford a Netflix subscription. Israel has their own currency they liked to call the Israeli new shekel. One ILS is equal to $0.294412 (XE, 2018). Netflix should consider this exchange rates, because the New Shekel is getting since last year more value. This can be a disadvantage for setting up subscriptions prices for the country. As of January 2016, all business in the country are paying a corporate tax rate of 25%. When doing business in Israel, Netflix must present their profit 33 times a year to pay the Israeli taxes. The Value-added tax (VAT) is 17%, which means that Netflix must include this 17% of tax in her pricing (Doing Business, sd). The country has according to CIA (2018) an 83.55 billion-dollars revenue which 90.53 billion will be spend. These facts make Israel with more than 124 billion dollars, the 20th country in the world with the most current account balance. So, overall, Israel is a country with citizens who can afford Netflix subscriptions.