◼ BUSINESS Bloomberg Businessweek July 27, 2020
11says Larry Wortzel, a member of the U.S.-China
Economic and Security Review Commission. One
way for Comac to jump-start its regional jet pro-
gram would be an alliance with Embraer, whose
debt rating was cut to junk soon after the Boeing
deal cratered. A partnership could address Comac’s
shortcomings in both production and its ability to
provide post-sales service, says Ferguson. When
askedinJuneaboutjoiningwitha Chinesecompany,
EmbraerChiefExecutiveOfficerFranciscoGomes
Netosaidonlythatthecompanyisconsidering part-
nerships. Comac declined to comment.
Yet heightened tensions between the U.S. and
China could be an obstacle to Comac’s expansion.
The Trump administration in June published a
list of 20 companies it says have links to China’s
military, including Aviation Industry Corp. of
China, a Comac shareholder. “As the U.S. govern-
ment expands sanctions on Chinese companies,
this could make a Comac-Embraer deal nonvia-
ble,” says Thiago Aragao, a political analyst with
Brasilia-based Arko Advice. �Bruce Einhorn, with
ChunyingZhangandMuriloFagundes
● China’s tech giants are facing off against
Netflix and Disney in Southeast Asia
The Next U.S.-China
Battle: Streaming
As streaming has transformed much of the world’s
media landscape, most of the competition has been
between Western outfits vying to conquer the big
video markets of the U.S., Europe, Latin America,
and India. But now two of China’s largest online
video companies, Tencent and IQiyi, are expand-
ing across much of Southeast Asia, setting up the
first real battle between Chinese streaming giants
and their Western counterparts, Netflix and Disney.
In early June, IQiyi Inc., in which Baidu Inc. owns
a controlling stake, hired away Kuek Yu-Chuang,
Netflix’s main liaison to governments in Southeast
Asia. A couple of weeks later, Tencent Holdings Ltd.
acquired IFlix Ltd., a video service in the region.
Both companies have recently ramped up efforts to
produce and license local content and are looking to
add staff in markets including Thailand, Indonesia,
and the Philippines.
For both Tencent Video and IQiyi, the growing
investment in Southeast Asia marks the companies’
most significant expansion outside China. Neither
Netflix Inc. nor Disney+ operates there because of
the country’s strict rules governing foreign owner-
ship of media. Tencent declined to comment for
this story, but it said its acquisition of IFlix is part of
its plan to expand WeTV, its international streaming
service. In a statement, IQiyi noted it was commit-
ted “to serving users of different markets.”
The Chinese streaming services are entering the
fray before any company has established a dom-
inant position in the region. Netflix, the leading
streaming service globally, has yet to surpass 1 mil-
lion subscribers in any country in Southeast Asia,
according to consultant Media Partners Asia. Walt
Disney Co.—which is Netflix’s biggest competitor in
the U.S.—is planning to roll out Disney+ in Southeast
Asia before the end of the year, according to a per-
son familiar with the matter. “The Chinese compa-
nies are seeing an opening,” says Vivek Couto, who
runs Media Partners Asia. “It’s neutral territory.”
Still, Southeast Asia presents a challenge for any
global entertainment company. Outside a couple
of pockets of affluence such as Singapore, most
people in the region earn an average of less than
$10,000 a year. And Indonesia, the area’s most pop-
ulous nation, is home to hundreds of different lan-
guages and is one of several countries where the
government imposes strict censorship rules. Before
Kuek left Netflix, his primary focus was helping
the streaming giant navigate such diplomatic chal-
lenges. He will serve a similar role at IQiyi, which
first expanded overseas in June 2019.
The difficulty is evident in the story of IFlix. In
2015 entrepreneurs Mark Britt and Patrick Grove
formed the service offering second-run Hollywood
movies and local programs for about $3 a month, a
fraction of the price of Netflix. They thought the2.14.Philippines3Singapore ThailandTop Streaming
Platforms
Minutes streamed
Q1 2020
◼IFlix/WeTV Line TV
◼IWant
◼Netflix
◼Viu
◼ Other platforms Indonesia9.2bVidioTHEBOTTOMLINE ComacexpectsChinawillneedtobuy
$1.3trillion in new airliners over the next two decades. It’s
expanding its product line to share in the bounty.