The China-Britain Business Council (CBBC) recently hosted a seminar entitled “Opportunities for Financial and Professional Services in SW China” to highlight the increasing strength of opportunities for British financial services companies in the region. The keynote speaker, Lord Green (Minister of State for Trade and Investment) described the market’s potential as “limitless” for companies looking to enter the region, particularly in insurance. The cities of Chengdu and Chongqing are emerging as new financial centres in the country, buoyed by a sustained government focus on development of the West of China. Willis was invited to participate as a speaker to discuss its unique successes in China, represented by our international sales and marketing director, John Carter.
Why We Should “Go West”
Chengdu and Chongqing are amongst a cluster of cities in the South West region that form part of a fast-growing and vibrant local economy, whose continued growth will both require and encourage investment from international companies. 90% of the total foreign direct investment (FDI) that goes into the region goes into these two key cities, and there are also strong tax incentives. Many global companies already have a strong presence there too; 212 of Fortune 500 companies are established in Chengdu.
With the onus on development of financial products to support economic expansion there is great opportunity for insurers and brokers to invest in Chengdu and Chongqing. The China Insurance Regulatory Commission (CIRC) reports that in Chengdu and Chongqing the market is now worth RMB 31.18 billion (US$ 4.92bn), comprising mostly property and personal insurance lines. A desire to build up local capability in the sector therefore creates a strong demand for those with insurance expertise to step in. Moreover, CIRC are encouraging international firms into the region and proactively helping them to set up and get to grips with local regulations and customs. Willis has been conducting business in China since 1926 and therefore has an excellent grasp of such matters, as well as strong connections in the local business and insurance markets. What are the challenges?
A key consideration for UK companies looking to expand in South West China is that although local insurance markets are growing, the value of risk management and the need for business insurance covers are still relatively unexplored by the local market. Other concerns include:
- Currency – this is still not entirely convertible at present
- Location of risks – South West China is earthquake-exposed
- Chinese courts currently only recognize Chinese-approved policy wordings
- For business interruption losses, advanced appointment of an international loss adjuster is essential
- At present employers liability is only an elective cover
These issues notwithstanding, the vibrant real economy of the South West China region offers excellent prospects for investment for insurance providers. Chengdu and Chongqing in particular offer reduced competition and cheaper costs compared to the well-known east coast cities, and a steady growth pattern means the future for insurance market development in this dynamic province looks very bright indeed.
by Claire Rumbellow
Claire is a Communications Manager for Willis International, responsible for the company’s internal and external communications in all regions outside of North America. Claire joined Willis in 2010, and is based in London.