International Marketing Assignment The China Factor

China
Health Insurance

Amit Mani Tripathi, Roll nu 11 Shivam Mishra, Roll nu 10 Nitish Narayan, Roll nu

Where does china rank in terms of size?

1st 3rd

2nd

4th

5th

19.18% of world population

Ancient Chinese civilization flourished in the fertile basin of the Yellow River in the North China Plain. Earliest dynasty - Xia dynasty of the Yellow River basin (approx. 2000 BC) In 221 BC, the Qin Dynasty first conquered several states to form a Chinese empire The Republic of China, founded in 1911 after the overthrow of the Qing dynasty In the 19461949 phase of the Chinese Civil War, the Chinese Communist Party defeated the nationalist Kuomintang in mainland

History...

Sneak peak

Chinese proclaim themselves "Lung Tik Chuan Ren" which translates to descendants of the

The dragon is regarded as the symbol of the Chinese It's easy to tell the difference between Chinese, Korean and Japanese dragons. Just count the dragon's toes.

Chinese dragons have five toes Korean dragons have four toes Japanese dragons have three toes

Enter the Dragon

Sneak Peak

China surpassed the United States as the world's largest automobile market in 2009 Annual car sales in China may rise as high as 40 million by 2020

Car Nation

Side-effect of the rapid growth of road network

a significant rise in traffic accidents in 2011, 62 thousand accident deaths Pollution
insur ance

carbon credits

opportunities

Sneak Peak

China will add 400 million people to its urban population by 2025 Urbanization rate increased from 17.4% to 46.8% between 1978 and 2009 Between 150 and 200 million migrant workers returning home to the countryside periodically with their earnings
Urbanization

IT

Training

opportunities

Trivial Crucial Facts

When you write your name in China you put your family name first then your first name. There are about 42,000 characters in Chinese language. An adult is only expected to know 5,000 of them. For example, means American marriages are made in china 30% of Chinese adults still live with their parents. Approximately 200 million people in China live on less than $1 a day.

Trivial Crucial Facts

China is the source of 68% of the worlds "pirated" goods. China produces 66% of the world's garlic, 15 billion pounds in 2009. Next are South Korea 6%, India 5%, and the USA 2.5%.

Social Environment

Peoples Republic of China Vs Republic of China

(1912) Qing Dynasty overthrown by revolution under Sun Yat Sen. Republic of China established. (1912-1946) Struggle between KMT and CPC (19461949) Chinese Civil War. Communist Party of China establish Peoples Republic of China

Social Environment
Population : 1.34 Billion Population below poverty line: 2% Literacy Rate : 90.92% Life Expectancy : 71.44 yrs

Male: 69.71 yrs Female : 73.26 yrs

Social Environment (contd.)

Labor Force : 812.7 million

Labor force distribution

services 33%

agriculture 40%

industry 27%

Social Environment(contd.)
Official Language : Mandarin Other Major Languages : Wu, Yue (incl. Cantonese), Min , Xiang, Gan and Haka Major Religions : Buddhism, Taoism, Chinese Folk Religion Strong sporting culture. Basketball gaining popularity amongst Youth.

Cities

Legal Environment
Under the World Trade Organization (WTO) framework, the Chinese government lowered entry barriers to foreign insurers, allowing them to establish joint-venture insurance firms in China As of 2007, China had 100 insurance companies, 59 of which are domestic-funded and the rest 41 are foreignfunded. Investors may consult the Peoples Republic of Chinas embassies or consultants stationed in their respective countries or regions. Alternatively, they can contact the local governments Department of Promotion of International Trade - the department in charge of the promotion of foreign trade and foreign investment.

Legal Environment (contd.)

Main Foreign Investment Laws and Regulations Law of Chinese-Foreign Equity Joint Ventures and its implementation regulations:

Law of Chinese-Foreign Contractual Joint Ventures and its implementation regulations Law of Wholly-Owned Foreign Enterprise and its implementation regulations Law of Foreign-invested enterprises, the income tax and its implementation regulations Law on the Protection of Taiwan Compatriots Investment

Economic Environment

GDP:- $ 7.3 trillion (2012 est. Nominal Value)

GDP growth:- 9.5% (2011 est.) (CIA World fact book)

Currency : Yuan ($1 = 6.3 Yuan)

Per Capita Disposable Income :- $3,243 (2012 est.)

Unemployment Rate:- 6.1%

Inflation rate:- 2.97%

Population below poverty line 13.4% (2012 est.)

Economic Environment (contd.)

Labor force: 815.3 million (2010); agriculture 10.2%, industry 46.9%, services 43% (2010 est.).
Exports: $1.581 trillion (2010 est.): machinery and equipment, plastics, optical and medical equipment, iron and steel. Imports: $1.327 trillion (2010 est.): machinery and equipment, oil and mineral fuels, plastics, optical and medical equipment, organic chemicals, iron and steel. Ranked 8th in FDI as per CIA World Fact book in 2010

Political Environment
The People's Republic of China, along with Vietnam, North Korea, Laos, and Cuba, is one of the five remaining official communist states in the world. The country is ruled by the Communist Party of China President : Hu Jintao Premier : Wen Jiabao

Political Environment (contd.)

Government holds a strong power on the economy.
Insurance business in China is supervised by the CIRC, under Insurance Law, Provisions on the Adminstration of Insurance Companies, and Law of on Anti-Money Laudering. Microinsurance policy backed up by the Chinese government, experimenting in areas including Sichuan Province.

Technology Environment

Internet users:-500 million (2011)

Internet hosts: 15.251 million (2010).

China Telecom alone serves 55 million broadband subscribers

Tianhe-1A worlds fastest supercomputer developed in 2010.

China has been pioneering the deployment of pebble bed nuclear reactors, which run cooler and safer than conventional nuclear reactors. In 2011, China unveiled a prototype train capable of reaching speeds of 310 mph (500 km/h), the first ultra-high-speed train developed solely by its domestic railway industry.

Technological Environment (contd.)

In September 2011, the first Chinese space station module, Tiangong-1, was successfully launched, marking the first step in a decade-long project to construct a large manned space station. made its first attempt at the robotic exploration of Mars in November 2011.
China conducted a successful test of an anti-satellite missile. JL-2 missile, a new submarine-launched nuclear ICBM with multiple-warhead delivery capabilities.

Member at WTO
The World Trade Organization (WTO), like many clubs, denies patrons the right of automatic readmission. Having quit the organization's predecessor shortly after the Communist revolution of 1949, China had to wait 15 long years to gain entry after reapplying in the 1980s. The doors finally opened on December 11th 2001. The price of re-entry was as steep as the wait was long. China had to relax over 7,000 tariffs, quotas and other trade barriers.

Healthcare Development in China

80 67.9 60 57 68.6 71.4 73

40

35

20

1949

1957

1981

1990

2000

2005

Life expectancy at birth increased from 35y in mid-1950s to 73y in 2005!

Healthcare Development in China

1949 to 1960s Gradually established a health system in line with the national situation at that time Hardly any progress made except for in rural areas

1960s to late1970s

Late 1970s to mid1990s Mid1990s up to now

Reform exploring and progressing

Further reforms have been being carried out

Grey Areas
Health insurance system: Some part of the population was still not covered by the health insurance systems;

Lack of integration of different health insurance systems, especially challenges from the mobility of the population; Level of assurance and government investment are still relatively low; Reform is desirable in the mode of payment;

Key Reforms Required for Improving Healthcare Insurance

To cover basic medical insurance system in an all-round way, and ensure the participation rate of basic medical insurance scheme for urban and rural residents to reach 90% or higher. Basic Medical Insurance System for Urban Employees Basic Medical Insurance System for Urban Residents New Rural Cooperative Medical Care Scheme To raise the percentage of medical costs for hospitalization in insurance, and incorporate outpatient fees of common diseases and frequent diseases into medicare reimbursement. To provide hassle-free insurance to university students, people employed flexibly, retirees from bankrupt stateowned enterprises, retirees and workers of ill-functioning companies, and farmer-turned workers. To appropriately address medical insurance for migrant population. To improve the urban and rural medical relief system.

China Regulator: To Open Insurance Market More To Foreign Firms:

Insurance Regulatory Commission

Wu Dingfu, chairman of the China

The head of China's insurance regulator said China will further open its markets to foreign competition, apparently addressing rising complaints among foreign financial institutions about their shrinking shares in China's domestic market. "China's insurance market will become one of the world's most important markets in the coming years, and provide huge development potential for foreign insurers, Wu said he expects China's insurance market, which is now the world's sixth-largest insurance markets by premiums, to keep high growth rates in anticipation of a robust economy in the coming years. "China will further open its insurance market to foreign companies, and let foreign insurers play a bigger role in the local market," Wu said, without elaborating.

Product: Health Insurance

Key Benefits Comprehensive coverage for your family with floater benefit Flexibility to structure the premium as per individuals requirement Entry age no bar- Minimum entry age 3 months Guaranteed lifelong renewability Option of choosing 1 or 2 year policy period as per plans offered No medical tests for insurance cover below 25 years age Cashless claims facility at over 4,000+ network hospitals across China Continue to enjoy quality service even during claim settlements with our own in-house health claim processing and wellness team Avail tax benefits under China Income Tax Act 1961 Get additional bonus for every claim free year EMI facility is available Keep your family secured even against expenses for hospitalization due to Natural Calamities Existing diseases will be covered under the insurance

Emotional Benefits:

Sight: Our Offices will be attractive, modern and well architected. Special waiting rooms, comfortable chairs for customers and employee. (good looking agents) Sound: In customer waiting room we will play soothing and relaxing music. Smell: Use of room fresheners in all the offices Skin: hygienic environment and comfortable chairs. Simplicity: Offices and agents will be customer friendly. The handouts and broachers will be deigned with utmost simplicity. Snob Value: Acting in accordance with our beliefs and values, Complete protection, immediate response during any complains. Taste: N\A

Apex Body Approval

The China Insurance Regulatory Commission (the "CIRC"), established on November 18, 1998 Formulate policies for developing the insurance industry Scrutinize and approval of insurance companies, subsidiaries, insurance holding companies Examine and approve the qualifications of managers of various insurance companies Pricing regulation, insurance schemes Supervise the financial health of insurance companies Supervise policy-oriented insurance and compulsory insurance Supervise fair competition in industry Supervise insurance companies with overseas operations Create framework for insurance industry for information, risk, forecast, supervision. To undertake other jobs delegated by the State Council

Understanding Chinese Regulatory Strategy : A Key First Step in Approaching the Market

The regulatory framework for the insurance sector was codified in the "Insurance Law of China," promulgated in 1995.

Nonlife insurance approval is required to establish a representative office in China.

The Chinese policy regarding life insurance has been to require foreign life insurance companies to form joint ventures with domestic companies with limit foreign equity share to 50 percent

Management control must also be shared.

Health insurance, foreign life companies (JVs) may be established only in "open" cities (currently Shanghai and Shenzhen).

Third Party Inspection

Pricing:

The Chinese market for most products, including insurance, is highly price sensitive.

Product pricing is subject to approval by CIRC.

Companies are allowed to set prices within a limited range. Currency Sensitivity: Chinese Yuan (RMB)will be the trading currency Forex Rate: 1 Chinese Yuan = 8.7138 Indian rupees Philosophy : Cost + Fair Play We have four international Medical Insurance plans

Place:

Corporate HQ and Insurance Office at Queen Marys Hospital Campus in Hong Kong. Tie up with Bethune International Peace Hospital and Peking Union Medical College and Hospital at Beijing by setting up information kiosks and Sales office. Nodal Office at Renji and Xinhua Hospital at Shanghai with suitably trained personnel to assist Clients with their queries regarding the Insurance. Partnership with Australia and New Zealand Banking Group Limited (ANZ) at Dongcheng & Industrial Commercial Bank of China (ICBC) at Xicheng District to gain access to customers from Rural Areas. A Toll Free Number that operates 24*5 for any clarifications regarding payment / Renewal & Cancellation. A highly interactive and updated Web Interface customizable to both English, Mandarin and Cantonese which automates the entire policy purchase process, with suitable payment options.

Promotion:

Target Prospects, Customer, End User

Opinion Makers: Private Companies Banks Testimony Creators: Prestigious Users (Use of CRM) Celebrity endorsement(Common Public)

Promotion Medium:
Bancassurance : 50% Direct Sales: 10% Telemarketing: 5% Insurance Agent(Tied): 2% Independent Financial Advisor: 3% Brokers: 20% Internet: 10%

Packaging:
Free health coupon Discount coupon Online chat with doctor, dietician and Nutritionist e-consultation Specialist e-consultation with one follow up session EMI facility 24*7 Support

People

People (contd.)
Government only allows establishment of joint-venture insurance firms in China Choosing the right partner is of paramount importance. Following aspects need to be considered :

Market Focus Target Market Business Stability Financial Security Soundness and Structure Does their process and practice fit with yours Technical Expertise What Knowledge do they have of you? What is their Partnership mentality? Legal validation

Policies

The Sales and Distribution policies will center around the following objective
Increase agent productivity Improve recruitment of new agents and retention of existing agents Improve customer retention and customer profitability Enable cross-selling and up-selling of products Explore new products and alternate channels for sales growth

Policies (contd.)

After Sales Service

After sales service plays an important role in customer satisfaction and customer retention. It generates loyal customers Sales Professionals need to stay in touch with the customers even after the policy has been sold. Give them the necessary support whenever they need , wherever they need.

Policies (contd.)
Opening up multiple communication channels for customer issue redressal It would be wise to adopt CRM

THANK YOU