China's life insurance industry : opportunities and challenges for foreign companies

Abstract

Since China began its "open door" policy in the late 1970s, this huge undeveloped market has attracted the attention of investors from all over the world. The fast growing economy has also stimulated demand in the insurance business. China opened its insurance market to foreign entrants in 1992. However, this is only a gradual step due to numerous restrictions on licensing, geographical scope, product scope and operation. In the US-China WTO agreement, China has committed to more fully open the insurance market, and this will provide some opportunities for foreign companies. This thesis attempts to examine the life insurance industry in Mainland China and to identify the opportunities and challenges for foreign entrants. In addition to describing the current industrial environment by investigating regulatory issues, the major players, competition, market factors, and the dynamics of foreign and domestic companies, this thesis will also discuss the market potential, the impacts of the WTO agreement, and changes and opportunities for the future. Some critical non-market factors associated with the market are also addressed including political and economic issues, the legal framework and administrative system, working relationships, cultural differences, and investment issues. There is no intention for a conclusion in this thesis, since for most foreign insurers, multinational insurance groups in particular, it is not likely that they can refuse becoming involved in this market. Therefore, the main purpose of this thesis is to describe an overview of this market, to point out the risks, and to provide some suggestions for foreign companies to take into account before they enter China.