Culture Shock in China
China’s potential for financial services is enormous: 300 million Chinese belong to the middle class and the average savings rate is one-third of household income. But business is tough. Handelsblatt reports.
Weeping mothers with seriously ill babies in their arms beg doctors to treat them. Some have broken bones, others suffer from serious diseases such as jaundice or pneumonia. But the doctors in the hospitals are rarely compassionate. If you cannot pay cash for the treatment immediately, or if you do not have health insurance, you are dismissed. Sometimes the children die before the eyes of doctors – the cruelty of everyday life in the background of China’s economic miracle.
Many older people people are sharing the same fate. In the metropolises of the vast empire, the garbage collectors belong to the street scape just like Ferrari or Mercedes: elderly women and men with faces soiled in soot, dirty clothes in one hand and a plastic bag in the other, search for empty bottles and cans in trash cans. Junk dealers will pay them a few cents for these items.
Financial services providers and insurance companies have long been wanting to make big business out of the lack of pension and health insurance among the 1.3 billion Chinese. But the attempts to do so locally in China are examples in the teachings of trial and error. Europe’s industry leader Allianz is having a lot of difficulty despite early entry into the market. The DKV Health Insurance, a subsidiary of the Düsseldorf Ergo Group, exited the market altogether. The bank Schwäbisch Hall just tried it again for a second time.
“We were well prepared, and yet we did not take the cultural differences among customers and our Chinese joint venture partners strongly enough into consideration,” says Matthias Metz, Schwäbisch Hall’s chief.
China’s business potential for financial services is enormous. 300 million Chinese belong to the relatively affluent middle class. The average savings rate is one-third of household income – three times more than on the grazed European markets. But China’s operators recognize this business opportunity as well. “The market share of foreign insurers is likely to fall further,” warns the German financial manager of a major Chinese insurer. Success and failure go hand in hand.
Uwe Michel is the face of Allianz in Asia. The 48-year-old German leads the Asia region out of Shanghai, and raves. “This country has been growing dramatically for years, and we want to be there.” His starting point is the meager protection of China’s citizens against social risks.The issue was hotly debated for 18 years straight. But since 2011, the Chinese social security system is now regulated by law. Roughly speaking, there is now insurance for most everything: pension insurance, sickness insurance, unemployment insurance, insurance against occupational accidents, maternity protection, all the way down to a fund that helps with the purchase of a home. Workers and employers each pay a share of the premiums.
Germany’s insurer, Allianz, stands ready with life insurance policies. Because should the insured die before reaching his agreed annuity payouts, his family members will receive the money – so the family will be protected. While these policies are becoming increasingly unpopular with customers in Europe because of lower interest rates, the Allianz is banking on growth in China, where the investment of premiums in government securities yield about four to five percent.