Journal - Allianz

ASIA
Allianz in China
Beijing
Liaoning
Roth
Allianz Group Journal 2/2013
Shandong
Sichuan
Jiangsu
Shanghai
Chongqing
Zhejiang
Guangdong
Uwe Michel
Hong Kong
Mr. Michel, the One Allianz in China Initiative
was recently launched under your
leadership. What’s the story behind it?
We want to showcase ourselves to the Chinese
public as a company that can offer the
entire gamut of financial services. We have
ten units in China, from Euler Hermes to
Allianz Global Assistance and Pimco. None
of the foreign competitors can boast such a
broad product range and we need to make
this clearer in the public’s mind. Until now
the units have operated largely independently
of each other. The aim of the initiative
is to generate more profitable business
and the key to that is better cooperation
and concerted action in our dealings with
clients. We want Allianz in China to become
synonymous with financial solidity – just as
Mercedes stands for solidity in automobile
manufacturing.
Western companies complain about
difficult market access. What obstacles
does Allianz have to overcome in China?
Tough competition for one. The former state
insurers are still the dominant force in the
market. Regulatory restrictions are also a
problem. Foreign suppliers have a 4.8 percent
share in the life insurance market and
just a 1.2 percent slice of the nonlife segment.
The supervisory authorities don’t let
foreign insurers near the really rich pickings,
although the Communist Party has now
promised a measure of liberalization.
Not for the first time.
I’m not going to be naïve about it, nor will
I rule out the possibility. Chinese insurance
companies have become so strong that
they won’t have to tighten their belts even
without the protective hand of the state.
In a threshold country like China you need
a healthy dose of optimism, otherwise
there’d be no point in entering the market
at all. And you need to be in it for the long
haul. The time horizons in China are different
to what we’re perhaps used to.
Does One Allianz in China mean that
Munich is picking up the reins?
Not at all. One Allianz in China is an initiative
of the ten Allianz units in China. We see it as
our job to bring them closer together. They
should be seen in the marketplace as a single
Allianz. But the reins will remain in the hands
of the local Group companies. They know the
market, their clients and their needs. What
we’re providing is support. China works from
the top down. That’s why our executives
and experts should visit more often. In the
future we need to clarify what we have to
offer the Chinese and expand our role as a
knowledge provider in order to enhance our
brand image.
What does that mean specifically?
We’re going to send our experts to China
to give presentations, meet with decisionmakers
and get the media on board. Recently,
for instance, our chief economist, Michael
Heise, traveled to China to hold a lecture
on the future of the euro and the European
Union. This was well received in the press.
We don’t want to spend more money on
marketing – that would be ineffective in
such a big country with so many megacities
– but we do want to put our knowhow
to better use, for instance in the fields of
demography and infrastructure projects.
Who’s the target group in China?
The main target group is the growing middle
classes in the cities, now numbering 300 million
people. They’re increasingly interested
in insuring their wealth. This opens up
opportunities in all areas, particularly in life
and health insurance. We’ve just set up a
health insurance company with our partner
CPIC. But there are also opportunities for
Allianz Global Corporate & Specialty (AGCS).
China wants to expand its green technology –
which is understandable given the country’s
huge environmental problems – and Germany
is a leading player in this area. We will
of course support our German insurance
clients in this respect as well but we’re also
setting our sights on Chinese companies.
China is a huge market. Are people
even aware of a foreign supplier like
Allianz there?
We’re strong in certain niches where the
Chinese can learn from us. Health insurance
is a typical example where the Chinese lack
experience. Private health insurance still
accounts for only a small fraction of healthcare
expenditure. We can contribute expertise
in terms of products, risk management
and IT. CPIC, with whom we’ve set up the
joint venture, is contributing its sales network
and contacts with state agencies. I’m
optimistic that we can secure a slice of the
pie in China. Of course we need to ensure
that the gains from this knowledge transfer
will benefit all parties concerned.
Allianz will be the minority partner in the
joint venture. Is that a paradigm shift?
It’s quite a step for Allianz to be the minority
partner in a joint venture, as is the case in
the health insurance company we’ve just set
up. But we realized that we wouldn’t stand
a chance if we entered the market alone.
So we asked ourselves three key questions:
What is the added value for Allianz? How
big is the risk as the minority partner? And
will we be able to take any profit we make
out of China?
Other companies have decided to
cut back or give up their commitment
in China. Is that also an option for
Allianz?
It’s always an option. Of course we must
ensure that we don’t fall by the wayside.
The question is whether we can do something
constructive in China with the money
that our shareholders put at our disposal.
I’m certain that we’re in a position to do
so, and One Allianz in China can make an
important contribution. Needless to say,
clients won’t take out insurance just because
we’ve launched this initiative. They’ll do
so because Global Automotive has a good
product range or because AGCS offers good
cover. One Allianz in China aims to facilitate
information exchange between the subsidiaries.
They need to discuss who’s got which
clients and how the units can cooperate in
supporting them. Customer managers from
the various Allianz units are already teaming
up to approach major clients.
How’s that working out?
The response has been extremely positive.
Allianz China, Global Automotive and
Allianz Global Assistance have already
signed contracts with an international
telematics company. The premium income
amounts to ten million euros. And we have
many other companies on our target list.
As Allianz is a European provider, isn’t
the financial crisis throwing a wrench in
the works?
Europe is no longer seen as a bastion of
security, and naturally the state of the euro
crops up in every conversation. But Allianz is
still regarded as a stable company in China,
and our good rating helps a lot. This is exactly
the strong image that we want to convey to
the public. It will also enhance our attractiveness
as an employer. Employee loyalty is an
on going issue for us in China.
Are people running away?
We have a very high staff turnover. It’s hard
to find good employees in China, and even
harder to keep them. We train them and
then they’re poached by the competition. In
April, we had our first internal China job fair.
More than 40 Chinese speaking employees
from different Allianz departments who can
see themselves working in China took part.
That gives me hope. We have to get the
message across that Allianz is a top-notch
company that is listed on the Fortune 100
Index and that, thanks to its wide-ranging
activities, offers exciting advancement and
career opportunities. Then we can get to
grips with staff turnover. We need to be
seen on the market as a single multifaceted
unit. This is precisely the aim of One Allianz
in China. I’m convinced that we can adapt
to the Chinese market and be successful.
How far should adaption go?
It’s got nothing to do with currying favor.
It’s about understanding the market so that
we can put our knowledge to good use.
The Chinese want to work with us precisely
because we’re German, because we’re European.
We’ve created a good base in China in
the past few years, also in terms of business
licenses. But now it’s finally time to reap the
harvest.
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