Netflix Doesn't Understand China, New Report Says

According to a new report by TechInAsia.com, Netflix, Inc. NFLX and its CEO Reed Hastings still don't understand the challenges of the Chinese market.

The report centers on the following comments Hastings made about China just this week: "It may be soon that we have a license in China. It may take several years. So we’re going to be patient.”

TechInAsia believes that this quote raises several red flags that Hastings has unrealistic expectations for China. First, it is unrealistic for Netflix to expect its own license from the Chinese government that is notoriously stingy with issuing licenses, particularly to American companies.

Related Link: Is Netflix's Chart Finally Breaking Down?

Second, Netflix can't wait around for years on a license when competition like Alibaba Group Holding Ltd BABA's Taobao Box Office (TBO) and others are establishing themselves at China's market leaders in streaming entertainment.

"If Netflix doesn't find some way into the Chinese market soon, there's a good chance that it’s going to be effectively out of the running, forced to resign itself to a tiny sliver of market share," TechInAsia concludes.

Netflix is scheduled to reports its Q4 2015 earnings shortly after Tuesday's closing bell.

Disclosure: the author owns shares of Alibaba.