Shanghai Favored by Foreign Insurance Giants

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Last updated at: (Beijing Time) Sunday, August 11, 2002

Shanghai Favored by Foreign Insurance Giants

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Insurance giants from overseas are being drawn to Shanghai with its population of 16 million, a per-capita gross domestic product of 4,500 US dollars and its close economic contacts with the outside world.

Shanghai municipality had 14 foreign-funded insurance firms by the end of last year, and at least three foreign insurance firms plan to set up Shanghai subsidiaries this year, according to the Shanghai Office of the China Insurance Regulatory Commission.

The New York Life Insurance Company, the largest in the United States, obtained a "permit" to enter China's insurance market at the end of 2001.

This 156-year-old insurance giant chose Haier Group, China's leading manufacturer of household electric appliances, as its cooperative partner to set up a joint insurance company in Shanghai. Sources said the joint company was expected to be established in Pudong New District before the end of the year.

The American International Group (AIG) of the United States, Manufacture Life Insurance Company of Canada, Axa National Mutual of France, and Allianz of Germany have already slected Shanghai as the launch pad for business in China.

Shanghai was one of the first Chinese cities designated to open to the outside world and foreign funds accounted for 13.6 percent of its insurance market in 2001.

The Chinese government's commitments for entry to the World Trade Organization will necessitate easing its control of where foreign firms can operate. In addition to Shanghai and Guangzhou, 10 more cities, including Beijing, will be open to foreign insurance firms within two years. China will revoke its control of where foreign insurance firms can operate within three years.

The American International Assurance Company (AIA) marked the 10th founding anniversary of its Shanghai subsidiary this year. Xu Zhengguang, the first general-manager of the AIA Shanghai subsidiary, disclosed that AIA plans to open more subsidiaries in the city of Suzhou in east China's Jiangsu province, and Dongguan and Jiangmen cities in southern Guangdong province, in addition to Shanghai and Beijing.

"We are satisfied with our business in Shanghai," said Xu, adding the successful experience in Shanghai facilitated AIA's business expansion in other parts of China.

According to sources with a French insurance company, a number of international insurance giants regard Shanghai, which is most attractive with its huge space for development, as vital in their "China strategy".

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