Netflix gives up its plans to enter the China market and invest US$6 billion in content next year

As of now, more than 190 countries and regions can use Netflix. Countries that cannot use Netflix include North Korea, Syria, Crimea-and, for the time being, China.

Original title: Netflix abandons plans to enter the China market On

October 17, Netflix said in its third-quarter earnings report that it would no longer have hope of entering the China market.

"The control policies of foreign online content providers in the China market are becoming increasingly stringent. In the near term, we will not choose to operate independently in China, but will choose to license content to online video service providers in China. We expect that profits from copyright sales will be very meager. In the long run, we are certainly willing to provide services to the people of China, and we also hope to eventually release our products and services in China."

Typically, news of setbacks in major markets causes a company's share price to plummet. But in fact, Netflix's share price surged 20% in after-hours trading after Monday's earnings release. Investors obviously see Netflix's excellent performance in other overseas markets other than China. In the third quarter, Netflix's overseas membership increased by 3.2 million, while attracting only 368,000 new subscribers in the United States.

Netflix's failure in China also shows us a common problem: strict censorship and other regulatory policies have made China a tough nut that many American Internet companies cannot crack. Just last month, car-sharing service provider Uber sold its China business and products to Didi Chuxing after several rounds of burning money.

Netflix may follow the same path: looking for local service providers to cooperate with. Fortunately, investors have long predicted the risks that Netflix may encounter directly entering the China market, so the stock price has not been affected by this bad news.

"We believe that there is a high risk in entering the China market because China's government regulations are relatively strict and industry competition is fierce." Given Netflix's high valuation, Deutsche Bank analyst Bryan Kraft gave Netflix a sell rating in a report.

Netflix's business adjustments in China are not surprising. Earlier this month, Netflix CEO Reed Hastings said in an interview with New Yorker TechFest that business expansion in China was "not going well." He mentioned that American companies such as Apple and Disney also encountered a lot of policy disagreements when entering the China market. "We will focus on other markets around the world. Regions such as India, Poland, Turkey, Latin America and Vietnam provide us with more opportunities."

In January this year, Netflix simultaneously launched new service deployments in 130 countries and regions around the world. As of now, more than 190 countries and regions can use Netflix. Countries that cannot use Netflix include North Korea, Syria, Crimea-and, for the time being, China.

The financial report also shows that Netflix will increase its investment in content in the future. In 2017, Netflix will invest $6 billion to produce new shows, movies and documentaries.

Editor: Nancy