To develop insurance and pension infrastructures while financing infrastructure projects outside its borders, China wants to tap into national savings.
With Western-style expertise, the Chinese financial sector, which is now mainly focused on its local economy, wants to provide more complex services by moving closer to Western institutions.
The bosses of Western insurance companies like to praise the great opportunity to develop in China.
If you want to know more, read on.
- The great prospects of the Chinese market
- The difficulty of the Chinese market
- Foreign insurers pay attention to China
I. The good prospects of the Chinese market
China will be its “fastest growing market … for many years to come”, – says Prudential’s head of Asia.
Allianz’s managing director calls it a “strategic market”.
Considering the relatively small percentage of people with insurance and China’s huge population, this enthusiasm is quite clear.
Today, hoping that the long-awaited relaxation of the foreign ownership regime will serve as a springboard, foreign insurers are preparing to take a big step forward in China.
II. China’s difficult market
But the big foreign insurance companies tried to make their existence palpable against the local giants.
Although they have been operating in China for a dozen years, their consolidated market share is less than 50%.
Even so, domestic rules are likely to dampen the spirits of global companies.
After joining the World Trade Organization in 2003, China was pushed to open its financial services sector to foreign players.
In front of some of the world’s largest banks and insurance companies, the changes were slow and Beijing.
Most foreign insurers were allowed to hold 50 per cent shares, but other significant reforms were blocked.
III. Foreign insurers pay attention to China
As part of the operation, which was marked as the first industry in China, the French company Axa acquired the 50% of the Chinese collaborative companies Axa Tianping.
The German company Allianz obtained the authorization to create a holding company wholly owned in the country.
Changes have taken place a few years before the April deadline, suggesting that China is under pressure to demonstrate real changes in the way it refers to foreign financial companies.
Oliver Bite, the executive director of Allianz, said “China’s leaders have hesitated for a long time and have now decided to open up”.
Other foreign companies are interested in increasing their shares.
“We would like to have a larger share of our collaborative venture in China, but this should be legally possible and we would need the full agreement of our partner,” – said Philippe Donnet, executive director of Generali.
The British company Prudential, considering China as one of the main drivers of its growth in Asia, would also like to increase its stake in its two Chinese joint ventures to more than 50%.
In September, it signed an agreement with the government to help develop the country’s pension system.
Chinese insurance companies now have the largest agent base in the world, a power that will protect them against the infringements of new companies in the market.
The leaders said that the policy of foreign companies should not wage war with local competition.
Allowing foreign companies to own 100 per cent would not eliminate many of the other regulatory problems they face, which are precisely the claim to extend to different provinces.