Marketing Death
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MARKETING DEATH
Culture and the Making of a Life
Insurance Market in China
CHERIS SHUN- CHING CHAN
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Library of Congress Cataloging-in-Publication Data
Chan, Cheris Shun-ching.
Marketing death : culture and the making of a life insurance market in China / Cheris Shun-ching Chan.
p. cm.
Includes bibliographical references and index.
Summary: “Marketing Death is the first book to offer a penetrating sociological analysis of the emergence of
a life insurance market outside of the Euro-American context. Drawing on rich ethnographic data, it documents
the processes and micro-politics through which local cultures shape the way a market is formed and, hence, sheds
light on the dynamics through which modern capitalist enterprises are diffused to regions with different cultural
traditions.”—Publisher’s description.
ISBN 978-0-19-539407-8 (cloth : alk. paper) 1. Life insurance—Social aspects—China. I. Title.
HG9169.C48 2011
368.3200951—dc23
2011018554
1 3 5 7 9 8 6 4 2
Printed in the United States of America
on acid-free paper
To my mother
Cheng Suet King
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Contents
Acknowledgments
ix
Illustrations
xv
Introduction
3
1. Is China an Inviting Place for Life Insurance?
Societal Conditions, the Market, and Remaining Puzzles
19
2. Defining Life Insurance and Product Development:
Divergent Institutional Logics
51
3. Manufacturing Sales Agents: Cultural Capital
and Management Strategies
76
4. Making Transactions: Selling Strategies and Sales Discourses
115
5. Buying Life Insurance : Multiple Motives but Consistent Preferences
143
6. How Culture Matters: Culture, Market, and Globalization
169
Appendix A : Methods
195
Appendix B: Life Insurance Companies in China: 2009
227
Notes
231
Glossary
245
Bibliography
247
Index
267
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Acknowledgments
have long been surprising to friends and colleagues
alike. When friends and colleagues outside the circle of sociology first heard that
my area of research was insurance, their common response was, “What has sociology got to do with insurance?” And when sociology colleagues learned that my
earlier work was on religion, they were also quite surprised by the disjunctive shift
in my research areas. Fortunately, it did not require much effort to convince my
colleagues of the connection between my earlier work and my current project; all
it took was a brief elaboration on my theoretical interest in the role of culture in
making a life insurance market. The idea of researching the emergence of life
insurance in China was first inspired by Arjun Appadurai, who probably did not
imagine that his 15-minute meeting with me would propel me into this project
for 10 years now. In our conversations about culture and modernity, Appadurai
found the commensuration of the value of human life to a probabilistic calculation of risks sociologically intriguing. Although the ultimate outcome of my
project is not entirely about the commensurate logic of life insurance and modernity, I thank him for his stimulating conversation that triggered this project in
the first place.
My deepest gratitude goes to my informants that, unfortunately, I cannot
name individually here. They include the sales agents, in-house managers and
assistants, and life insurance clients and prospects. I am especially grateful to the
sales agents, who shared their invaluable time with me when they could have been
prospecting clients and for their unreserved openness to me and trust in my
research. I warmly thank those friends who connected me to the field. Cao Yang,
Chen Xiangming, Fan Lizhu, James Farrer, He Min, Jane Hu, Hu Jun, Charlie
Lu, Tracy Shu, Sun Han, Sun Jiaming, Sun Jiwei, Tang Nie, To Yushan, Wang
Jiangguo, Wang Lihua, Calvin Wong, Wu Yuxiao, Terry Xu, George Yang, Yap
Chong Huat, Terence Yip, Yu Hai, Yu Zhiyuan, Zhang Ji, and Zhao Dingxin all
connected me to my informants in China. My field research would have been
impossible without their help. In particular, I would like to acknowledge Zhiyuan’s
MY RESEARCH INTERESTS
x
Acknowledgments
parents, Yu Min and Zhao Qi, for their hospitality and assistance in my settling
in Shanghai, as well as Terence Yip and his colleague Ronald Wan, who worked
in the life insurance industry in Shanghai, for their help and patience with my
endless questions.
This book derives from my doctoral research. I was fortunate to work with
superb faculty during graduate school. I owe a tremendous debt of gratitude to
Gary Alan Fine, the chair of my dissertation committee, for his unfailing support
and encouragement throughout the ups and downs of my six-year-long stay at
Northwestern University. Gary and I were initially connected by our commitment to ethnography and cultural sociology. But I must admit that I was a bit
worried in the beginning that my theoretical position might not fit exactly with
his tradition. Luckily, I soon realized how open and appreciative Gary is to different theoretical positions. For this, and for his unreserved confidence in my work,
I am extremely grateful. Gary has been a good friend, and his generosity as my
mentor continued even after I left Northwestern University.
I also owe great thanks to the members of my dissertation committee: Wendy
Griswold, who followed my project from the very beginning and guided me to
locate my position in cultural sociology; Bruce Carruthers, who offered his
expertise in economic sociology that helpfully shaped my theoretical formulation; and Bobai Li, whose sharp and critical comments pushed me to make
improvements along the way. I express special thanks to Charles Ragin for launching research funding for the Center for International and Comparative Studies
(CICS) at Northwestern University, which made my first stage of research possible. I am also indebted to Charles’s engagement in my project early on and his
continuous support to me and my project after his departure from Northwestern.
My gratitude extends to my teachers and the peers who gave me feedback,
comments, and suggestions at different stages of my research. Chen Xiangming,
Matthew Chew, Lee Ching Kwan, Liu Xin, Hermann Maiba, Geeta Patel, Alvin
So, Arthur Stinchcome, Yeh Wen-hsin, Viviana Zelizer, Zhang Xiaodan, and
Zhao Dingxin—all gave me constructive comments and suggestions in the proposal stage. Participants and organizers of the Culture and Society Workshop,
Ethnography Workshop, and CICS Graduate Students Workshop at Northwestern University and the East Asia Workshop at the University Chicago deserve my
thanks for their useful feedback during my dissertation writing. Friends and colleagues who read part of my manuscript in different occasions and gave me constructive feedback include Michael Adorjan, Tom Baker, Peer Fiss, Debbie
Gould, Ho Sik Ying, Jin Lei, Erin Leddon, Assata Richards, Hovann Simonian,
Colin Smith, Ling Tang, Tao Lin, Wang Danling, Viviana Zelizer, participants of
Cultural Transformation in a Global Age Forum at the Department of Sociology,
University of Pittsburgh, participants in various seminars and workshops at
Acknowledgments
xi
UCLA (including the Global Seminar and the Center for Chinese Studies Seminar at the International Institute, and the Seminar on Theory and Research in
Comparative Social Analysis, the Culture Working Group and the Ethnography
Working Group in the Department of Sociology), and participants in the Culture Workshop at the Sociology Department of UC San Diego. I am indebted to
all these people for sharing their brilliant minds with me.
Parts of the manuscript were presented at various institutions and conferences, including the Asian Studies Center at the University of Pittsburgh; the
Departments of Sociology at Boston University, the Chinese University of Hong
Kong, and Taiwan National University; the School of Sociology and Anthropology at Sun Yat Sen University; the Department of Anthropology at the Chinese
University of Hong Kong; the Centre of Asian Studies at the University of Hong
Kong; the Half-Day Forum with the University of Sydney at the University of
Hong Kong; the annual meeting of the Association for Asian Studies in New
York (2003); the Globalization Conference at the University of Chicago (2004);
the Interim Conference on Values and Beliefs held by International Sociological
Association Research Committee on Sociological Theory in Rio de Janeiro
(2004); the World Congress of the International Institute of Sociology in Stockholm (2005); the annual meeting of the American Sociological Association in
Atlanta (2003) and in Montreal (2006). I was fortunate to have numerous engaging audiences who often raised sharp, thoughtful, challenging, and constructive
questions to push me to ponder and refine my arguments. I also had the privilege
of participating in the Summer Institute on “Economy and Society: Trajectories
of Capitalism,” held by Neil Fligstein and Walter Powell at the Center for
Advanced Study in the Behavioral Sciences in the summer of 2006, where I benefited from exchanging ideas with a group of superlative young scholars.
My year-long ethnography in China would not have been possible without
funding support from the International Dissertation Field Research Fellowship
offered by the Social Science Research Council, the research grants by the CICS
and the Graduate School at Northwestern University, and the Scholarship Development Award by the Midwest Sociological Society. The Alumnae Dissertation
Fellowship offered by Northwestern University freed me from teaching and
made my dissertation writing more efficient. The University Center for International Studies, Asian Studies Center, and China Council at the University of
Pittsburgh all provided financial support for my follow-up fieldwork in 2004.
The Center for Asian Studies at the University of Hong Kong kindly hosted me
during my writing in Hong Kong. The International Institute at the University of
California, Los Angeles generously extended a fellowship for completing the
manuscript. I am grateful to these funding institutions not only for their financial
contributions but also for their recognition of the significance of this project.
xii
Acknowledgments
I thank the team at Oxford University Press for their great efforts in moving
this book along. James Cook, the editor of this volume, deserves special thanks
for his appreciation of the manuscript early on and his enthusiasm in making this
book as perfect as it can be (though it is still far from perfect). While some editors from other publishers complained about the difficulties of securing reviewers
for my manuscript, James incredibly convinced seven highly engaging reviewers
to read through the entire manuscript at two different points of time. I have
undoubtedly benefited from these anonymous reviewers’ insightful comments
and constructive suggestions. I thank each of them for their critical eye and generous feedback that improves this book in many ways, particularly Viviana
Zelizer, who decided to reveal herself as one of the reviewers, and offered enthusiastic encouragement and specific comments to sharpen this book. My thanks
also extends to James Cook and Joe Jackson for their patience in working with me
for the cover, and to Jenny Wolkowicki and Lora Friedenthal for their hard work
at coordinating the production process. I thank Helen Chen, Maurice Choi,
Owen Fung, Elaine Lau, Nichole Lu, and Sherese Tong for their research assistance in some rather tedious but indispensable tasks.
It was in 2000 when I commenced this project. The journey over the years
would have been impossible without love and support from friends and family. I
thank all my dear friends in Chicago, Pittsburgh, Los Angeles, and Hong Kong
for their joyful companionship and enduring friendship, particularly Yenni,
Wing, Fabian, Alice, Moonlight, Sik Ying, Kaire, Mei Sin, Wong Tao, and Ming
Ming. For Lucy and Anna, apart from keeping me companies through my graduate studies, I thank them for cheering me up and pulled me through some very
difficult moments in Chicago. Eng, a special friend with a passionate heart,
accompanied me through my transition from Chicago to Pittsburgh and offered
tremendous practical help that made my life so much easier. His heartily generosity will never be forgotten. My colleagues at the University of Pittsburgh, including Nicole Constable, Evelyn Rawski, Tom Rawski, Tang Wenfang, and Bell
Yung, treated me like a family member and offered unflagging support throughout my stay in Pittsburgh. I wish to express my gratitude to them from the bottom of my heart. The main body of this book was written when I resided in Los
Angeles. Ken, despite being thousands miles away, was always at my side spiritually and affectionately. His love and enthusiasm suffused me with energy and
inspiration. His enormous patience and enthusiastic encouragement embraced
and indulged me to venture to take risk for possibly most rewarding returns. I am
deeply grateful to him for sharing all the joys and pains throughout this process.
I am also lucky to have four loving siblings, who have always been supportive of
me in so many ways over the years. Finally, my dear mother and great friend,
Cheng Suet King, contributed to this book in a special way. Her eagerness to
Acknowledgments
xiii
pursue knowledge, despite the nearly insurmountable odds present in China in
the 1950s and 1960s, was passed on to her children, who have had the privilege to
pursue knowledge in a much more conducive environment. Her endurance, her
stubbornness in upholding principles, and her boundless love for her family have
nurtured us to be who we are. This book is dedicated to her.
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Illustrations
Figures
1
2
1.1
1.2
1.3
1.4
2.1
3.1
6.1
Total Insurance Premium and Life Insurance
Premium Income in China, 1984–2004
Life Insurance Penetration in China and Shanghai
Compared to the United States, 1991–2004
Real Growth Rate of Life Insurance Premium Income in
China and Shanghai, 1994–2004
Life Insurance Growth in Relation to GDP and Per Capita
Disposable Income Growth in Shanghai, 1994–2004
Insurers’ Market Shares of the Individual Life Insurance
Business in Shanghai, 1997–2004
Estimated Numbers of Personal Accident and
Investment Policies Sold in Shanghai, 2001–2004
Insurers’ Market Shares of the Life Insurance Business
in Shanghai, 1994–2004
Sources of Top Managers’ Cultural Capital
and Its Impacts on Management Strategies
Interactive Multiple-Process Model of Culture
in Market Formation
5
6
45
46
48
49
62
113
172
Tables
3.1
5.1
5.2
5.3
Summary of Differences among Insurers Studied
Perceived Functions of Life Insurance
by Clients and Prospects
Perceived Functions of Life Insurance
by Socioeconomic Status
Types of Life Insurance Policies Purchased
as Reported by 128 Clients
83–84
158
159–160
161
xvi
Illustrations
A.1
A.2
A.3
Summary of Fieldwork, 2000–2004
Summary of the Socioeconomic Profiles of the
Insurance Practitioners Interviewed (N=143)
Summary of the Socioeconomic Profiles of the
Clients and Prospects Interviewed (N=131)
203
204
204–205
Marketing Death
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Introduction
To dramatize their impact, life insurance publications did not hesitate in using death as
their “solicitor,” invoking the brevity of life to hesitant customers. . . . [Life insurance
agents] were a visible reminder of the “gloomy and disagreeable prospective” of death.
—VIVIANA
Z E L I Z E R,
Morals and Markets, 1979
For many Victorians, their first taste of life insurance appeared as an invitation to imagine,
like Scrooge in A Christmas Carol, the haunting spectre of their future mortality. Salesmen
combined plaintive scenes of the uninsured’s deathbed with sensational threats of
premature death, which in their foretelling invariably struck without warning.
—TIMOTHY
ALBORN,
Regulated Lives, 2009
If you died suddenly, would your spouse have enough money to cover your funeral costs? . . . .
If you died tomorrow, would your spouse have the financial wherewithal to provide your
children with the opportunities you always dreamed they’d have? . . . [I]f you died today . . . [w]
ould your spouse have to make drastic lifestyle adjustments to make ends meet? . . . If someone
would suffer financially upon your death, you need life insurance.
— A D V E R T I S E M E N T , Time, September 2006
We can’t talk about death, you know, it’s a taboo. . . . [The Chinese] don’t want to hear
about misfortunes. They don’t want to think about those things. They don’t want to talk
about those things. It’s very difficult!
—LIFE
INSURANCE SALES AGENT IN SHANGHAI,
2002
commercial life insurers have aggressively expanded
their business to Asia, Latin America, and Central-Eastern Europe as markets in
Western Europe and North America began to saturate. Home to one-fifth of the
world’s population and noted for its impressive economic growth, China has
become a primary target for this global expansion. Dozens of transnational life
insurance corporations had established offices in Beijing by the end of the 1980s,
impatiently awaiting their operating licenses. On September 25, 1992, American
International Assurance Company, Ltd. (AIA), a subsidiary of American International Group, Inc., was the first among its competitors to obtain a license to operate in Shanghai, gaining the first toehold in the People’s Republic of China. A
SINCE THE MID-1980S,
4
MARKETING DEATH
number of foreign life insurance corporations were subsequently granted licenses,
operating as joint ventures with domestic partners. By the late 1990s, locally established life insurance firms began to appear on the scene as well. Yet despite the arrival
of all of these players, creating a market for life insurance was not, and has never
been, a simple process.
In China, the local public’s resistance to the concept of life insurance was evident at the start. In the mid-1990s, one could see shopkeepers and offices in
Shanghai post signs in their windows and doors that said, “Life insurance salespeople are not welcome!”1 In 1998, Richard Huber, then chairman and CEO of
the Hartford, Connecticut–based Aetna Insurance Company, commented that a
bigger obstacle to the life insurance business than China’s bureaucracy was its
culture, specifically, that its population had “very little concept of insurance.”2
During an interview in 2000, the general manager of the Sino-German joint venture Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong) complained that the Chinese still held, in his words, “a stupid superstitious belief ”
that the topic of death should be avoided at all costs. Throughout my field
research from 2000 to 2004, Chinese life insurance sales agents were frustrated
that people “didn’t want to talk about death or hear about misfortunes.” While
advertisements in the United States give meaning to life insurance by defining it
as “a plan for if,”3 this if is “unthinkable” for the Chinese.
Intriguingly, despite the cultural taboo on death and insurance practitioners’
complaints about the difficulty of disseminating the idea of life insurance, the
life insurance business in China has been growing rapidly since the mid-1990s.
The average annual real growth of life insurance premium income from 1995 to
2004 reached 30.7 percent, compared to only 9.1 percent growth for property
insurance.4 Moreover, the proportion of revenue coming from life insurance
sales compared to revenue generated by the entire insurance industry soared
from 34 percent in 1995 to 75 percent in 2004.5 Although life insurance penetration, or its proportion of the nation’s gross domestic product (GDP), was
relatively low compared to developed markets, it did increase from 0.34 percent
to 2.02 percent during the same period. This time frame witnessed a comparable
dramatic growth in Shanghai, where average annual real growth attained 33.6
percent and penetration jumped from 0.68 percent to 2.87 percent. This impressive growth of the Chinese life insurance market starting in the mid-1990s is
vividly displayed in figures 1 and 2. Yet the puzzle remains: How could a life
insurance market grow so rapidly when death and fatal misfortunes are taboo
subjects?
This book documents the processes, the dynamics, and the micropolitics
through which a Chinese life insurance market emerged in the presence of
cultural barriers. It examines how life insurance develops in a society where
Introduction
5
the cultural setting is substantially different from the places in which it originated and where cultural values are largely incompatible with the probabilistic
logic of life insurance. This case study is intended to address a more general
question about the role of culture in economic practice and the role of local
cultures in the global diffusion of capitalist enterprises. Specifically, how can a
particular market emerge in the face of local cultural barriers? How do local
cultures shape the way a market is formed? To what extent and in what way do
local cultures wield the power to selectively adopt and reject certain modern
capitalist ideas and practices?
The Puzzle: Marketing Death When Death Is Taboo
The global expansion of the insurance industry coincided nicely with China’s
dramatic economic and institutional restructuring. Launched in 1979, Deng
Xiaoping’s daring economic reforms spurred stunning economic growth, escalating purchasing power of the Chinese people and the birth of a new middle class.
These changes created the necessary economic conditions for commercial life
insurance to emerge. At the same time, an obvious process of metropolitanization took place, with the number and size of large metropolitan areas developing
Premium
income
(billion yuan)
500
450
Life Premium Income
400
Total Premium Income
350
300
250
200
150
100
50
0
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
19
00
20
02
20
04
Year
20
Figure 1 Total Insurance Premium and Life Insurance Premium Income in China,
1984–2004
Sources: Wang, Fei, and Li (2003) for data from 1984 to 1996 and Almanac of China’s Insurance
1998–2005 for data from 1997 to 2004.
6
MARKETING DEATH
Figure 2 Life Insurance Penetration in China and Shanghai Compared to the United
States, 1991–2004
Sources: Author’s calculations based on the following data: (1) Wang et al. (2003) for life premium income in China from 1991 to 1996; (2) the marketing and research department of Haier
New York Life Insurance Company, Ltd. in Shanghai for life premium income in Shanghai from
1991 to 1996; (3) Almanac of China’s Insurance 1998–2005 for life premium income in China
and Shanghai from 1997 to 2004; (4) China Statistical Yearbook 2005 for China’s GDP; (5)
Shanghai Statistical Yearbook 2005 for Shanghai’s GDP; (7) Life Insurers Fact Book 2009 for life
premium income in the United States; and (8) the Bureau of Economic Analysis of the U.S.
Department of Commence for U.S. GDP.
rapidly (Yan, Fia, Li, and Weng 2002). The institutional and sociocultural
changes associated with the shift from communal to metropolitan cities have
largely followed Georg Simmel’s ([1903] 1971, 1950) description of the rise of
new modern life. Rapid urbanization, progressive privatization of enterprises,
contractualization of labor relations, shrinking provision of state welfare, and
reduced family sizes have exposed the urban population to various social and
economic risks. Together with the Chinese government’s welcoming and supportive attitude toward the development of commercial insurance, the institutional environment in China in the early 1990s was propitious for the emergence
of a life insurance market.
The cultural context, at first glance, was similarly promising. Urban China’s
openness to foreign cultural influences, ranging from fast-food consumption to
legal-rational business practices, has been well documented (see, e.g., Yan 1997;
Guthrie 1999). Transnational life insurance companies entered China in concert
with a number of other modern capitalist enterprises. The Shanghai stock market
was inaugurated in 1990 (Hertz 1998), the world’s largest McDonald’s restaurant
Introduction
7
opened in Beijing in 1992 (Yan 1997), and Amway, a direct selling corporation,
officially started its operation in China in 1995 ( Jeffery 2001). These new enterprises all received “feverish” receptions from the Chinese. Against this cultural
backdrop, commercial life insurance, which is a foreign and modern means of
risk management, may have been expected to receive a comparable reception by
urbanites.
However, complaints about the difficulties of disseminating the concept of life
insurance to the Chinese were noted by both the insurance sales agents and the
executives of the insurance companies. The Chinese cultural context, which I discuss in chapter 1, is not as conducive to the development of life insurance as it
appears to be. To begin with, the Chinese have long-established risk management
practices, mainly through savings and kinship support, that could not be changed
overnight. More important, the Chinese concepts of life and death conceive of
sudden, premature death as morally and spiritually frightening, which in turn has
resulted in a cultural taboo on thinking and talking about death, especially accidental, unexpected death. This ingrained and pervasive taboo constitutes a resilient cultural resistance to accepting life insurance and poses a cultural obstacle to
marketing life insurance products. Furthermore, the Chinese concepts of life and
death define a “good life” as living well toward the end of life, and a “good death”
as dying in full life. They also assign an intergenerational economic obligation to
living family members and filter people’s selective attention to fatal risks. All of
these cultural elements are incompatible with the ideological logic of life insurance
and the idea of insuring against death.
Of course, the Chinese are not unique in refusing the idea of insuring against
death. Modern insurance emerged with a rather ambitious agenda to convert
uncontrollable risks into calculable, manageable ones based on probabilistic
logic. Commercial life insurance goes further to assume that the loss of human
life or parts of the human body can be compensated in part by pecuniary terms.
This alien, extreme form of rationality through which incommensurable beings
and events are made commensurable (Espeland and Stevens 1998) has destined
commercial life insurance to face resilient cultural resistance throughout the history of its development (Zelizer 1979; Clark 1999; Alborn 2009; Murphy 2010;
Post 1976). In the United States, for example, it took almost a century for the life
insurance industry to take off, because people refused to put a price on human life
(Zelizer 1979, 1985).
Viviana Zelizer’s seminal book, Morals and Markets (1979), poses a radical
challenge to the conventional economic accounts of the development of life
insurance. These conventional accounts center on economic growth, urbanization, the purchasing power of a population, and the advent of technical, statistical knowledge. To Zelizer, they failed to explain why the American life insurance
8
MARKETING DEATH
market did not develop earlier than the mid-nineteenth century, despite favorable
economic conditions. Instead, she puts forward a cultural argument, attesting
that the societal cultural values in the United States before the 1840s were
incompatible with the ideological logic of life insurance. The most critical cultural obstacle, among all, was the societal value that human life was sacred and
priceless. Such a value was profoundly in tension with the logic of pricing
human life, and buying life insurance was seen as gambling on life for “dirty
money.” However, since the 1840s, changes in the cultural context made the
public more receptive to adopting life insurance as a new form of risk management. The most critical changes included an increasing rational speculation on
economic risk and a growing awareness of the economic loss consequent to a
death. This recognition of the economic value of death, Zelizer argues, channeled the public to be receptive to insurers’ rhetorical discourse that linked the
benefits of life insurance to the notion of a “good death” and a “responsible
death.” Thus, the underdevelopment of the life insurance business in American
society prior to the mid-nineteenth century was attributed to the impeding
power of certain moral values. Its sudden expansion since then, to a large
extent, could therefore be attributed to a subsequent change in cultural values
( Zelizer 1979:34–39).
Zelizer’s argument suggests that cultural values can suppress the emergence of
a market and that life insurance as an ideologically embedded entity could only
develop when a favorable, namely, rationalized, cultural context arose. In line
with Zelizer’s argument is Geoffrey Clark’s Betting on Lives (1999). Examining
how life insurance became a field of gambling on lives, Clark suggests that the
sudden expansion of life insurance in England in the late seventeenth to the early
eighteenth century expressed an essential feature of modernity. It represented a
bold effort to extend human control over uncertainty and required a particular
cultural logic that reflected “an economic calculus of human life” (Clark 1999:5).
Likewise, scholars who study the life insurance market in Taiwan contend that
Asian cultural values only hamper the development of life insurance markets (Li,
Duberstein-Lindberg, and Lin 1996). They argue that the development of the
life insurance markets in Chinese and other Asian societies requires a prior
change in their societal cultural values.
This “cultural values matter” argument about the development of life insurance, while compelling and convincing, nevertheless leaves some questions unanswered: If cultural values can suppress a market from emerging, how can modern
enterprises originating in culturally specific Western contexts be expanded to
places with different cultural traditions? The sudden emergence of a life insurance market in mainland China is a case in point. How could the market emerge
in the presence of incompatible cultural values?
Introduction
9
In Search of an Answer
My initial analytic frame presupposed that in order to create a life insurance market, insurance practitioners would have to create a sense of risk that misfortunes
could happen unpredictably, anytime and, in doing so, create a feeling of need
for the new commodity. In other words, I expected to see insurance sales agents
sell “pessimistic futures” to prospects, hearing many stories of misfortune from
sales agents intending to induce a sense of fear about the vulnerability of life, as
Zelizer (1979) documented about the American case and Alborn (2009) about
the British case.
To my surprise, however, I rarely heard the Chinese agents talk about death,
accidents, or misfortune when they were persuading prospects to buy. Correspondingly, I found it very difficult to ask one particular hypothetical question
when I interviewed clients and prospects: What would happen to your child if
you were to die suddenly, or die accidentally? I did not use the word “die” or
“death,” but instead asked what would happen if “something bad happened to
you, or to your husband, that made you or your husband lose your earning ability?” However, I hardly got an answer. Their common responses were, “I’ve never
thought about this.” If I pushed them to think about it, they would say, “I only
think about good things. I don’t think about those bad things,” or “That won’t
happen: I can’t be that unfortunate.” Their evasive attitude to my question
intrigued me. As cognitive consent can only be inferred from silences in texts,
and normative consent can be discerned by the unthinkability of alternatives or
hypotheses (Schneiberg and Clemens 2006), the general absence of a risk discourse and the “unthinkability” of my hypothetical scenarios about misfortune
cued me to the critical role of the cultural taboo. My participant observations
allowed me to discern the cultural taboo as utterly taken for granted but unarticulated knowledge among the local people. Yet I wondered where the cultural
taboo came from.
To complicate matters, I was wrestling with a salient contradiction that
emerged early on in my field research. On the one hand, sales agents claimed that
the Chinese were family centered and that they would sacrifice anything for the
benefits of their family. On the other hand, they complained that the Chinese
were selfish because they were reluctant to buy insurance policies that would benefit beneficiaries. As my field research continued and the data grew, it became
clear to me that the underlying cultural force of the taboo on death, and the reluctance to buy life policies making payments to beneficiaries, lies in the Chinese
concepts of life and death. I elaborate on these concepts and their link to the
taboo in chapter 1, and how they shape people’s choices of insurance products in
chapter 5.
10
MARKETING DEATH
The insights generated from my observations highlight the impacts of societal worldviews and values on members’ preferences and dispositions. To explicate how culture shapes economic behaviors through shared ideas and values, I
go back to Max Weber’s masterpiece The Protestant Ethic and the Spirit of Capitalism ([1904–5] 1991). In Weber’s account, ideas or conceptions, such as the
religious ideas of “calling” and “predestination,” have the power to drive the
behaviors of those who share them in a certain direction, through constituting
certain psychological attributes (e.g., fears) and motivations (e.g., serving God).
The notion of culture in this classical tradition is conceived of as a coherent system of meanings shared by members of a social group (Geertz 1973). The shared
subjectivities, though socially constructed, are central to both economic and
noneconomic action. In Weber’s famous metaphor, shared ideas that exist in
individuals’ heads act like “switchmen” that “determine the tracks along which
action has been pushed by the dynamic of interest” ([1922–23] 1946:280).6
Zelizer’s and others’ “cultural values matter” argument about life insurance development is in line with this classical notion of culture.
The classical view, with its emphasis on the impact of overarching societal
culture on social and economic action, has been criticized for disclaiming the
agency of individual actors. This criticism was first put forward by symbolic interactionists, who attend to culture’s practical dimension and emphasize the creativity of individual actors in using and reproducing generally accepted meanings
(Goffman 1959; Blumer 1969; Fine 1979). Yet, symbolic interactionism does
not repudiate the coherent concept of culture. In fact, on this view, smooth interactions can be accomplished only with shared, consistent cultural rules and
assumptions.
The focus on the practical capacity of culture has been taken further by some
contemporary cultural sociologists, most noticeably Ann Swidler, who challenges
the fundamental classical notion of culture. In her groundbreaking article “Culture in Action,” Swidler (1986) uses the metaphor of a “tool kit” to argue that
culture matters as a repertoire—an array of cultural resources upon which individuals can draw to construct their strategies of action to solve various kinds of
problems. Along the lines of Pierre Bourdieu’s (1977) theory of practice and the
concept of cultural capital that centers on bodily know-how (or habitus), Swidler
(1986, 2001) argues that culture in terms of practical skills, habits, and knowledge constitutes human action more directly than shared values and beliefs.
What sets Swidler’s theory of culture apart from Bourdieu’s, however, is the fragmented image of culture and the voluntaristic underpinning of individual actors
in relation to culture. Contrary to the classical conception, culture in Swidler’s
theory contains diverse or even “conflicting symbols, rituals, stories, and guides
to action” (1986:277). Its incoherent and fragmented nature is grasped by Paul
Introduction
11
DiMaggio’s bold analogy, a “grab-bag of odds and ends” (1997:267). With this
notion of culture, people who share similar values and beliefs may behave very
differently, often depending on an individual’s practical urgency, cultural competences, and institutional demands.
In my inquiry about the role of culture in the creation of a Chinese life insurance market, I find the tool kit or “repertoire” approach to culture useful for
resolving the puzzle left by the “culture values matter” argument. As the story
unfolds in the following chapters, when culture as shared values and ideas conflicts with the ideological logic of life insurance, economic actors mobilize the
tool kit properties of culture to circumvent the values and ideas that prohibit
market development. They strategically capitalize on their local cultural knowledge, symbols, and practices to frame life insurance into a locally sensible entity
and to smooth the path for transactions on the ground. Hence, the tool kit
approach is particularly useful for extending the cultural perspective to make
sense of the global diffusion of capitalist enterprises to places with different cultural traditions.
Nonetheless, I maintain that the tool kit or repertoire paradigm alone is insufficient to explain the characteristics of the Chinese life insurance market. Shared
cultural values and ideas do steer the direction along which the market is emerging. While life insurance in Euro-American societies first emerged as risk management and gradually moved to risk-cum-money management (Zelizer 1979;
Ransom and Sutch 1987; Quinn 2008; Alborn 2009; Murphy 2010; Pearson
1990), life insurance in China first emerged as money management before moving toward money-cum-risk management. This new commodity was traded as savings and investment plans, instead of a protection against unexpected misfortunes.
This trajectory, I argue, is shaped by the Chinese concepts of life and death. Defining life insurance as a money management instrument during its emerging stage,
as I illustrate in chapter 2, went against the transnational insurance players’ intent,
because it proved unprofitable. (I use “transnational” or “foreign” as a generic category throughout this book to include joint ventures, which were indeed headed
and operated by foreign partners and were categorized as “foreign” companies in
official publications.) The experienced transnational insurers failed to create a risk
management market to serve their interests, because the cultural resistance forged
by local values and ideas was resilient. Thus, collective subjectivities manifested by
folklore, values, moralities, and perceptions constitute a rather consistent pattern
of preferences that affect the track by which the market takes shape. They act like
“switchmen” by constituting obstacles, necessitating circumventing strategies, and
circumscribing a range of possible and impossible actions.
Thus, this book brings together the classical and contemporary views of culture to understand the formation of the Chinese life insurance market. It argues
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against the theoretical divide between the coherent and fragmented paradigms of
culture, a divide that I argue elsewhere is unproductive to the field of cultural
sociology (Chan 2009a). The important question is not which concept should be
prioritized in relation to action, but how to conceptualize the articulation of the
two (Sewell 1999). This project addresses this line of inquiry. I propose an “interactive multiple-process model of culture” and argue that culture matters, but it
matters not as either cultural values or practical tool kits. It matters through the
interplay of both. Culture matters not only as a regulatory force but also as a constitutive agent.7 Throughout this volume, I analyze how different forms of culture
interplay to regulate and constitute the behaviors of various economic actors,
including top managers, sales agents, and consumers. I argue that the very cultural barriers rooted in shared ideas and values that compose the local resistance
to a new economic practice also necessitate the mobilization of the tool kit to
circumvent this resistance. These dual processes, shared ideas composing the resistance and the cultural tool kit circumventing the resistance, result in a market with
local characteristics. Such processes also manifest the interplay of agency and
structure. My analysis throughout this book highlights the agency of economic
actors in materializing symbolic elements into resources and yet puts equal weight
on the structural constraints that culture exercises in the process.
In Search of a Site
To dig into the microprocesses by which a new economic practice is introduced
to a population, and the dynamics through which macroforces shape these microprocesses, I confined my ethnographic research to one city, Shanghai. In addition,
I also interviewed a dozen insurance practitioners in Beijing to assess the generalizability of the Shanghai case and five insurance sales agents in Chicago to discern
the distinctiveness of the Chinese case.
Shanghai presents itself as an ideal place for this study for three major reasons.
First, the city represents the “lowest end” of how Chinese culture plays a role in
the construction of a modern capitalist enterprise. With its distinctive historical
background as an international settlement from the 1860s to the 1930s, Shanghai is especially receptive to foreign influences. In the 1990s, Shanghai was an
experimental city for everything new, modern, and capitalist, ranging from fashions (Chew 2007), to toys (Davis 2000), to sexual discourses (Farrer 2002), to
the stock market (Hertz 1998). The city and its people are known to take the lead
in appreciating and accepting Western concepts and practices. In this context, if
we find that the economic behaviors of people in Shanghai (a city that is relatively
“westernized” and eager to be further westernized) are shaped by certain Chinese
cultural elements, then we can be confident that these cultural elements are as
Introduction
13
influential, if not more so, in other Chinese cities. Second, Shanghai represents
the “highest end” of global–local dynamics. In 2000, there were seven transnational life insurers in mainland China, six of which started their operations in
Shanghai. The city has been described as the “Olympic stadium” for commercial
life insurance and the “insurance hub of China,” where competition between
transnational and domestic life insurers has been most intense. This fierce competition provides rich data on global–local interactions. Lastly, because the majority
of the transnational insurance firms started their operations in Shanghai, using it
as a base for future expansion to other cities, their operations and experiences in
this city often served as a model for other cities to follow.
To begin my case study, I conducted six weeks of preliminary research in the
summer of 2000. My initial contacts with informants provided two useful findings that helped in identifying the major field sites for the subsequent ethnography during 2001–2002. First, I found that there was a strong tension at both the
managerial and sales levels between the first wholly foreign-owned insurer, AIA,
and a newly formed domestic insurer, Ping An Life Insurance Company of China,
Ltd. (Ping An). Second, I noticed the contrasting morale of the sales agents and
the conspicuous difference in business growth between two joint ventures that
started at about the same time: Pacific-Aetna Life Insurance Company, Ltd.
(Pacific-Aetna) and Allianz-Dazhong. Therefore, I selected these four insurers,
which represented the widest range of variety, to be the major field sites for this
study. Data were collected through formal and informal interviews, participant
observations, and questionnaires and by referencing public documents and insurers’ publications. I spent most of the time in participant observations, visiting the
agency offices of each selected insurer on a daily basis. I attended training sessions
for the agents, joined in morning assemblies, and participated in small group
meetings on a regular basis. With the consent of certain agents, I went with them
to prospect potential buyers, to sell products, and to visit existing clients. My
empirical inquiry was centered on the creation of an individual life insurance
market, through which the ideas of life insurance is diffused and negotiated.8 (See
appendix A for details of my ethnographic journey and data collection.)
Culture and Life Insurance in China
Insurance is indisputably a social and cultural product (Baker 2000, 2002). Life
insurance, in particular, is sociologically interesting. The instrumental rational
assumptions on which life insurance operates are often confronted with, and
simultaneously attempt to challenge, incompatible societal cultural logics. Selling life insurance requires the sale of not just a commodity but a concept, an idea.
Commercial life insurers in all different sociocultural settings have to convince
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the public of the necessity of life insurance. How they manage to do so, however,
is culturally specific.
The development of life insurance in China is particularly suggestive of the
mechanism through which culture works, because the market has only recently
been germinating. Culture in this process, prior to the establishment of an institutionalized market, is at the forefront in “living” form, as opposed to culture in “dead”
form when cultural constructs have been congealed through institutionalization
( Jepperson and Swidler 1994). In other words, the “living” form of culture can be
found in preinstitutionalized practices, events, activities, and organizations. Studying the making of a new market therefore allows us to foreground the multifaceted
nature of culture and its nuances when investigating its role. Furthermore, it opens
an avenue to capturing the micropolitics and dynamics of an institutionalization
project in the context of globalization: How do transnational life insurance firms
establish themselves as legitimate organizations in a specific locale? How do domestic firms as novice players cultivate their legitimacy? How do transnational and
domestic firms contest and collaborate with each other in forging the organizational
field? This institutionalization process is where conflict, tension, negotiation, compromise, and cooperation among economic actors are imperative and intense. It is
where market as a “societal field” and organization as a “negotiated order” are realized (Swedberg 1994; Strauss, Schatzman, Ehrlich, Bucher, and Sabshin 1963; Fine
1984). It is also where the interest and agency of economic actors come to center
stage (DiMaggio 1988).
This book is based on a social constructive image of the market, as common
among economic sociologists. What distinguishes this project from others, however, is its emphasis on both the production and the demand that forged the market. Prominent economic sociologists, more often than not, prioritize the
importance of production in market formation and economic institutions, focusing on organization and management (e.g., White 1981; Fligstein 1990, 2001;
Van Maanen and Kunda 1989; Martin 1992; Smith 1990; see comments in
Zelizer 1988). Consumers are either invisible or presented in abstract terms, leaving the demand side and market exchange to economists and anthropologists.
Seldom do economic sociologists explore the dynamics from production to consumption, investigating the interactions among producers, distributors, and consumers that constitute the market.9 While I agree that the production side of the
market is important, because producers create demand and needs (Fligstein
2001; White 1981, 2002), I maintain that producers must react to the lived experiences of consumers (Bourdieu 1984; Zelizer 2005b ; Beckert 2009; Aspers
2009). The emerging Chinese life insurance market presents an opportunity to
scrutinize how producers introduce a new concept and a new practice to the local
population, and how the local public receives and responds to this something
Introduction
15
new. As life insurance involves complex products, the valuation criteria in this
emergent stage must be contested and established in political and social processes
(Beckert 2009; Krippner 2001). The case of Chinese life insurance thus calls for
a multilevel analysis of organizational strategies, interpersonal interactions, and
individual motives and rationales: How do transnational and domestic insurers
negotiate with consumers? How do insurance firms manage and socialize their
Chinese sales agents? How do sales agents strategically interact with prospects to
prompt purchase? What drives the Chinese prospects to buy? How do they
choose among different products? And, what are the meanings of their purchases? All of these questions lie at the core of this book.
Apart from contributing to cultural sociology and economic sociology, this
project also offers a sociological lens for understanding China in the context of
globalization. It reveals the global–local dynamics of making a market for something conceptually new to the Chinese, detailing how local people interact with
foreign entities and ideas. It assesses to what extent and in what ways transnational players impose a set of rationalities and practices on the Chinese population and how the Chinese respond in the process. Furthermore, it seeks to grasp
the dynamics between the dramatic sociocultural changes in China and its cultural heritage.
Overview of the Book
This project asks why a life insurance market has been emerging and growing
impressively in China despite cultural resistance. However, as “why” often cannot
be observed directly but only addressed inductively through a series of “how”
questions (Katz 2001, 2002), this book is replete with a number of how processes
and dynamics. To decipher how culture matters in the development of the Chinese life insurance market, I begin with a survey of the economic, institutional,
and cultural conditions under which commercial life insurance was introduced in
urban China. Then, I present the characteristics of the emergent market and analyze how different levels of economic activities compose it: from insurance firms
as the units of analysis, to interactions among managers, sales agents, and potential
customers, and finally to individual buyers’ motives for purchasing life insurance.
To protect the anonymity of informants, I use pseudonyms throughout the book.10
However, I kept the names of the companies, because there were only few of them
during the market’s emergent stage, and their identities will be obvious to anyone
who cares to look them up. For the same reason, I have not invented pseudonyms
for the general managers of the companies, using their real surnames instead.
Chapter 1 provides a context for the ethnographic stories that unfold in subsequent chapters. It begins with a brief historical background of commercial life
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insurance in China, dating back to the early nineteenth century through the end
of the Maoist regime. Then, I detail the economic, institutional, and cultural
conditions in urban China in the late 1980s to the 1990s, and assess each of these
conditions’ possible impacts on the development of commercial life insurance,
both favorable and unfavorable. In particular, I discuss how major cultural barriers to life insurance, including the Chinese cultural taboo on death, are rooted in
Chinese philosophical and folk religious traditions. Finally, I relate these institutional and cultural conditions to the theoretical questions of the book. This
chapter ends with a presentation of the characteristics of the emergent Chinese
market, namely its uneven growth pattern, the dominance of domestic insurers,
and its disproportionate focus on money management, and argues that neither
the cultural value nor the cultural tool kit model alone is sufficient to explain
these characteristics.
Chapters 2 through 5 present rich ethnographic details of the micropolitics
and dynamics through which the market is emerging. Chapters 2 and 3 focus on
the organizational strategies of insurance companies. Chapters 4 and 5 center on
the market exchange. Chapter 2 analyzes the disparity between transnational and
domestic life insurance firms’ strategies. Insurance firms from both camps faced a
conflict between local preferences and profits when designing their products.
However, they handled this conflict very differently. While transnational firms
defined life insurance as modern risk management and offered products for managing unexpected misfortunes; domestic firms defined life insurance as money
management and launched products for savings and investment purposes. The
former adopted a profit-oriented model by attempting to change local preferences; whereas the latter took on a market-share approach by accommodating
local preferences. Through a chronology of the ebbs and flows of the market’s
development, I demonstrate the tension between the local cultural logics and the
profit-oriented institutional logic of life insurance. I document the battle between
the transnational and domestic players in the field, explaining how their battle is
rooted in their different ways of handling cultural obstacles, and in their divergent institutional logics of operation.
Chapter 3 discusses the variation among individual insurers. As the life insurance business relies heavily on sales agents, manufacturing a productive sales force
is the core organizational task of a life insurance company. However, some insurers are more effective than others in orchestrating a committed and spirited sales
force. The Sino-American joint venture Pacific-Aetna was most effective in motivating its sales agents and boosting their morale, whereas the Sino-German joint
venture Allianz-Dazhong was least capable of doing so. The domestic insurer
Ping An adopted a paternalistic approach to control their agents, while the
American AIA used a mix of professional and missionary models. Why was this
Introduction
17
so? By offering a comparative picture of the labor–management techniques that
various insurers deployed, I relate their heterogeneity to the top executives’ cultural capital, which, I argue, is in part a product of the institutional and cultural
environments of these executives’ home regions and the organizational cultures
of their former workplaces.
How sales agents prompt people to buy life insurance is the question addressed
in chapter 4, which narrates and explains the strategies, dramaturgical performances, and sales discourses of the insurance agents that lead to transactions. It
describes how Chinese insurance agents facilitated their sales by mobilizing the
local practice of guanxi (interpersonal relationships) and renqing (interpersonal
obligation) and by capitalizing on the norm of reciprocity, the Chinese guanxi
hierarchy, and stereotypical gender roles. Chapter 4 further investigates how
agents from domestic and foreign insurers adopted subtly different sales talks in
broaching the need for life insurance. It ends with an analysis of how culture of
different forms, together with institutions, affects the adoption and the effectiveness of various sales discourses.
Chapter 5 asks what makes people buy life insurance, what kinds of products
they buy, and why. Through studying the intentions and interpretations of their
choices, I aim to explain the meaning of buying life insurance from the clients’
perspectives. The data suggest that while Chinese clients had multiple and mutable motives for buying life insurance that shifted over time, their preferences for
money management products were universal and consistent. Furthermore, buyers from different walks of life shared the same definition of life insurance: they
all defined life insurance as money management. I examine how this definition
and buyers’ preferences were shaped by their shared folklore, values, moralities,
and perceptions, and how shifts in prevailing motives over time were brought
about by institutional changes.
My theoretical argument about how culture matters in creating a market is
discussed in chapter 6. This concluding chapter includes three parts. First, it
addresses the questions raised in the introduction. It elaborates how, on the one
hand, Chinese concepts of life and death as shared ideas and beliefs produce public resistance to receiving life insurance as risk management and how, on the other
hand, insurance practitioners mobilize local cultural symbols and practices to get
around this resistance. Moving beyond the specifics of this case, it proposes a
theoretical model that links the two manifestations of culture, one as a coherent
meaning system and the other as a fragmented tool kit, to the construction and
adoption of a new economic practice. Second, this chapter includes a comparative analysis of the life insurance markets in Hong Kong and Taiwan to scrutinize
the extent to which local cultures and agents wield the power to construct and
sustain alternative models of capitalist practices. It maintains that the presence of
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MARKETING DEATH
competitive domestic players in the field is critical to strengthening the agency of
the indigenous parties. Finally, this chapter reports on the changes in some insurance firms over the years, discusses how Chinese clients may change their attitudes toward risk management insurance, and offers projections about the
market’s future development.
1
Is China an Inviting Place
for Life Insurance?
Societal Conditions, the Market,
and Remaining Puzzles
T O E X A M I N E T H E role of culture in the process of market formation, we have to
first delineate the societal conditions, both theoretically favorable and unfavorable, that were present when commercial life insurance was introduced. This chapter is dedicated to this task. I first give a brief history of commercial insurance,
particularly life insurance, in China and describe the revival of the domestic insurance industry and the arrival of the transnational insurance firms during the
reform era. Next, I examine in detail the economic, institutional, and cultural
conditions in contemporary China that could affect the development of life insurance. Based on these conditions, I present three potential hypotheses about how
culture may or may not affect the emergence of a Chinese life insurance market. In
characterizing the key features of the emergent market, I consider the strengths
and weaknesses of these hypotheses and discuss the open questions that remain.
Historical Background of Commercial
Insurance in China
Commercial insurance is an imported concept on Chinese soil. It was first introduced
by the British during their imperialist reign in China. The development of the insurance industry in China prior to Deng Xiaoping’s economic reforms can be divided
into a pre-1949 and post-1949 periods.
The Pre-1949 Period
The first insurance company to appear in China was a British marine insurer
that entered Guangdong, South China, as early as 1805. The earliest life
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insurance company, Standard Life Assurance Company, British, appeared in
South China in 1846. It sold life policies mainly to foreigners residing in
China.1 Subsequently from the mid-nineteenth century to the first quarter of
the twentieth century, numerous foreign insurance companies landed in
China, mostly in Shanghai, Guangzhou, and some other major cities ( Wu and
Zheng 1993).
Having seen that the foreign insurers were making promising profits, local
businessmen were eager to set up their own insurance companies by modeling the
operation of the foreign firms. At the same time, China’s Self-Strengthening
Movement (1861–1895), led by intellectuals, strongly encouraged the public
and private sectors to learn from the West, including learning about the insurance
business. The first domestic insurance company, a small-scale marine insurer, was
established in Shanghai in 1865. The first domestic life insurance company, however, did not come on the scene until 1894, almost 50 years after the first foreign
life insurer arrived ( Wu and Zheng 1993).
The development of the insurance industry in China reached its climax in the
late 1920s and 1930s. Nonetheless, the market was dominated by foreign players. By 1929, there were more than 30 foreign insurers but fewer than 20 domestic ones. The number of domestic insurers increased to 45 by 1935. Nevertheless,
the number of foreign insurers increased even more rapidly to 166, coming from
16 countries, mostly Britain, America, Japan, and Germany. At the same time the
regulatory bodies were controlled by foreigners. Consequently, more than 80
percent of the insurance business was in the hands of foreign enterprises (Xu,
Cao, and Zhou 2001).
In 1925, the first Chinese insurance handbook, Baoxianxue (The Knowledge of Insurance), was published. It closely referenced British and American
insurance books. In the section on life insurance, the authors commented
that many people still did not understand the meaning or the benefits of life
insurance. Citing American and Japanese scholars’ definitions and concepts
of life insurance and supplementing them with some Chinese aphorisms, the
authors promoted the idea that life insurance was “for preventing danger”
( Wu and Zheng 1993). Beginning with a Chinese aphorism tian you bu ce
feng yun, ren you dan xi huo fu (the sky has unpredictable clouds and winds;
life has misfortunes and fortunes) in the first chapter, the concept of life
insurance as a means of risk management was first introduced to the Chinese
through this locally published text. However, as the circulation of this lengthy
insurance handbook was limited to the intellectual elite, so was the idea of
life insurance.
Throughout this period of significant growth in the insurance industry, life
insurance accounted for only a small proportion of the business (Huebner 1930).
Is China an Inviting Place for Life Insurance?
21
Only about one-fifth of the insurance companies carried life policies. Among
these, the China United Assurance Society Ltd., founded by a local businessman
in 1912, was the largest domestic life insurer. However, like the smaller domestic
companies, it sold mainly group policies ( Wu and Zheng 1993). Furthermore,
the largest part of the policies sold were endowment for savings purposes rather
than traditional risk management policies (Huebner 1930). Foreign life insurers
offered more individual policies, but their clients were mostly expatriates. Therefore, life insurance was never popular among the locals at the individual level
during the boom of the insurance development in the 1920s and 1930s ( Wu and
Zheng 1993).
With the outbreak of the Sino-Japanese War in 1937, followed by the Second
World War, many insurers shut down their operations in China. Nevertheless, a
number of them resumed their business soon after. Again, the foreign insurers
dominated and completely controlled the regulatory bodies of the industry.
American International Assurance Company, Ltd. (AIA) was the first foreign
insurer to restart its business, and it subsequently became the largest and most
influential insurer in Shanghai until the establishment of the People’s Republic of
China (PRC) in 1949 (Xu et al. 2001).
The Post-1949 Period
When the Chinese Communist Party (CCP) took over in 1949, there were still
63 domestic and 42 foreign insurers in Shanghai. With no business prospects in
sight, all foreign insurers pulled out of China by 1952. A number of domestic
insurers merged to become two large companies operating with joint public and
private capital and continued to operate into the 1950s. In October 1949, the
People’s Insurance Company of China (PICC) was founded as the first national
state-owned insurer, unifying the former regional state-owned insurance companies. Two life insurance products were offered in 1951, one for groups and one
for individuals, and both carried endowments for savings purposes. By the end of
1952, only about 100,000 life policies were sold nationwide, of which more than
80 percent belonged to group policies.2
The growth of PICC ceased in 1958 when Mao’s aggressive agriculturalization
and industrialization campaign, the Great Leap Forward, began. From 1959 to
1964, during the campaign and its disastrous aftermath, PICC’s business plummeted, and insurance was only sparsely seen in Shanghai, Tianjin, Guangzhou,
and Harbin. Subsequently, during the widespread political and social upheaval of
the Great Proletarian Cultural Revolution in 1966–1976, the insurance industry
all but disappeared (Xu et al. 2001).
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The Reappearance of the Insurance Industry
The reemergence of the insurance industry in the PRC can be divided into two
distinct stages. From 1979 to 1991, the state-run PICC resumed operations. The
insurance business was closed to foreign firms, and PICC practically monopolized the business. Beginning in 1992, an entirely new scenario emerged. New
ideas and practices were brought in by the American-owned AIA. New private
domestic insurers emerged, and a number of Sino-foreign joint ventures appeared.
The Revival of Domestic Insurance
As part of its market reforms, the PRC government enthusiastically promoted
the reestablishment of commercial insurance. In April 1979, the State Council
gave authority for the People’s Bank of China to revive PICC’s business. In 1982,
group life and accident insurance policies were offered and sold to employers as
benefits for their employees. In the same year, an individual life policy to be sold
to workers in state-owned enterprises (SOEs) and collective enterprises was also
available.3 This individual policy, called Simple Life Insurance, combined both
features of whole life and term life. The insured amount would be given to the
policyholder who survived the term or to the beneficiary if the policyholder died
within the term. One of my informants, a woman in her early 50s, said that she
bought the policy in 1984 as an expression of renqing, or interpersonal obligations. None of the workers in her work unit wanted the policy, but about 20
percent of them bought it in order to give face to the department head, who had
a personal relationship with the PICC salesperson. The general public at large
had no concept of life insurance, and PICC did not launch any serious training
for their salespersons or any education for the public about this new commodity.
As a result, life insurance never became popular when PICC was the only
insurance provider.
In November 1987, the Bank of Communication (Shanghai Branch) set up
an insurance division. This division became independent and was named China
Pacific Insurance Company Ltd. in April 1991. With its headquarters in Shanghai, China Pacific was the first private insurer to expand its business throughout
the country. It started selling life insurance policies in 1995. Another domestic
insurer, Ping An Insurance Company (Ping An), was founded in Shenzhen in
March 1988. Ping An’s business was initially confined to property insurance,
mainly in Shenzhen and a few other cities. But in September 1992, it was renamed
as Ping An Insurance Company of China and began to expand its business to the
entire country. It opened a branch in Shanghai in November 1993, and started to
sell life insurance in July 1994. In 1997, the company restructured its ownership
Is China an Inviting Place for Life Insurance?
23
into stock shares and adopted the name Ping An Insurance Company of China,
Ltd. In January 2003, it was restructured into a holding company, and its name
was further changed to Ping An Insurance (Group) Company of China, Ltd.
[Ping An (Group)]. The life business sector was then taken over by Ping An Life
Insurance Company of China, Ltd., which was set up in December 2002 to subsequently become a subsidiary of Ping An (Group). (To avoid confusion, I adopt
Ping An’s title in 1997–2002 as its official name throughout this volume.) With
the emergence of domestic private insurers and the advent of foreign insurers,
PICC was under pressure to reform its organization in order to stay competitive.
This state-owned insurer spun off business to three independent share-holding
companies in 1996: China Life Insurance Company, Ltd. (China Life) took over
its life insurance business, PICC Property Insurance Company, Ltd. took over its
property insurance business, and China Reinsurance Company, Ltd. took over its
reinsurance business.
The Reentry of Foreign Insurance
Since 1992, China has been permitting foreign access to the emerging insurance sector, due to both its new open door policies and pressure from the major
players of the World Trade Organization (WTO). Unlike its crippled position
in the face of foreign superpowers during the nineteenth through the early
twentieth century, Chinese authorities in the 1990s maintained control to
avoid falling prey to foreign forces. They kept a tight rein on the access of foreign insurers, especially those selling life insurance. They limited their regional
access, first only to Shanghai and Guangzhou in 1992 and 1995, respectively. A
few more cities, including Tianjin, Dalian, Chongqing, and Shengzhen, were
added to the list in 1999. After China’s entry into the WTO in November
2001, a dozen more cities were opened to foreign players, including the capital,
Beijing. In 2004, the Chinese authorities lifted the regional restriction by opening the entire country to foreign entrance. However, except for AIA, all foreign
life insurers had to join with a local partner and run their business as a joint
venture.
In 1992, two of the subsidiaries of American International Group, Inc. (AIG),
AIA and American International Underwriters Insurance Company (AIU), were
the first foreign insurers granted licenses to operate in the PRC. AIA specialized
in life insurance and AIU in general insurance. Since the second half of the 1990s,
a number of foreign life insurers have arrived to form joint ventures. The Manulife Group from Canada, Prudential from the United Kingdom, the Allianz
Group of Germany, American-based Aetna Life Insurance, and the AXA Group
of France were among them. Between 1993 and 2000, six joint ventures were
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formed. The number of foreign life insurers multiplied to 20 by the end of 2004.
(See appendix B for a list of life insurance companies in China up to 2009.)
How ready was the local population to enthusiastically greet these insurers? To
assess the possible influences of economic, institutional, and cultural factors on people’s reception to commercial life insurance, I explore these conditions in detail below.
Economic and Institutional Conditions in Urban China
Economic Growth and Rising Purchasing Power
Since life insurance can hardly be perceived as a necessity when people can barely
make ends meet, its development requires substantial economic growth and an
increase in the purchasing power of a population. Viviana Zelizer (1979) notes that
the sudden expansion of the life insurance industry in the United States occurred at
a time when the economic environment proved propitious and savings deposits were
mounting. These necessary economic conditions were obviously present in China.
The expansion of the Chinese economy in the 1980s and 1990s astonished
the world. It grew from one of the poorest economies in 1978 to the seventh
largest in the world in 2000. During this period, per capita GDP increased 5.2
times, and per capita income increased 4.7 times for rural residents and 3.6 times
for urbanites (Bian 2002). The economic growth from the mid-1980s and especially in the early 1990s was remarkable. The average annual growth of GDP was
8.8 percent from 1985 to the end of 1990 and 12.3 percent from 1991 to the end
of 1993.4
The financial surplus in ordinary people’s pockets was evidenced by China’s
high personal or household savings rates. The urban household savings rate, measured by the proportion of savings to disposable income, increased from around 10
percent in the mid-1980s to almost 20 percent in the mid-1990s (Kuijs 2005). In
Shanghai, the savings of city households surged from 15.5 billion yuan (~ US$1.9
billion) in 1978 to 518.8 billion yuan (~ US$62.7 billion) in 1990; in other words,
it increased 33.5 times. By 1994, the figure further tripled to 1.6 trillion yuan (~
US$193 billion) in just four years.5 There is no doubt that the Chinese population
in the early 1990s, especially those in coastal cities, had strong purchasing power
and substantial disposable income for a new commodity like life insurance.
The Birth of a New Middle Class
Another socioeconomic condition necessary for the emergence of a life insurance market is the existence of social stratification and a middle class. Life insurance companies elsewhere often target those in the middle class as their primary
Is China an Inviting Place for Life Insurance?
25
clientele, because these people have extra money (to buy life insurance) and yet
are vulnerable to a sudden downturn in the economy or unexpected misfortunes
in families (Murphy 2010).
In China, rapid economic growth has accompanied by the birth of a new
middle class. In the 1990s, the new class was mainly composed of white-collar
employees, such as office personnel, managers, and professionals, along with
private entrepreneurs (Bian 2002). Although the lifestyle and values of this
emerging middle class have yet to be stabilized, its members have been found to
seek material comforts and be especially open to foreign products and ideas
(Davis 2000). Except for those who were cadres in the prereform era, the majority of the people who belong to the middle class now are either former SOE
workers or children of SOE workers. They have experienced an upward mobility of their financial, material, and symbolic status but are expected to be less
dependent on the state provision of welfare than their parents’ generation.
These people have the highest propensity to buy life insurance as a means of risk
management.
Increasing Job Insecurity
Economic growth and the existence of a new middle class are only the very basic
conditions for the possibility of a life insurance market. A strong purchasing
power of the population does not automatically transform into demand for life
insurance, if people do not have a higher sense of risk.
The booming Chinese economy and growing wealth of its people come with
the price of increasing job insecurity. The permanent status of the employees of
SOEs, the so-called “iron rice bowl,” was shattered by the advent of the new
market economy. In October 1986, the labor contract system was implemented,
causing new employees of SOEs to lose de facto lifetime employment and comprehensive welfare benefits ( Tomba and Tomba 2002). New entrants to state
jobs were hired on limited term contracts, usually three to five years. Those who
chose to work for private corporations, of course, were also hired on a contract
basis and could be fired at any time. In Shanghai, the proportion of contract
employees in production firms increased from an initial 5 percent prior to the
economic reforms to 85 percent in 1995 (Davis 1999). At the same time, the
old employees in the SOEs and collective enterprises, who were supposed to
enjoy lifetime employment, faced a wave of massive furloughs (xiagang, literally
“stepping down from a position”) beginning in the second half of the 1980s.
Initially, furloughed employees were provided with partial wage payments and
continued to enjoy the welfare benefits of their employment terms. Starting in
1992, however, intensified marketization drove numerous SOEs to bankruptcy.
The pace of furloughs accelerated, and laid-off workers received subsistence pay
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MARKETING DEATH
and reduced benefits. It was estimated that about 17–28 percent of SOE
employees in Shanghai, Chongqing, and Shenyang were furloughed by 1994
(Rawski 1995).
Thus, Chinese employees, both the old and the new, in the reform era have
been subject to a full range of job insecurities. The dramatic changes in Chinese
workplaces should have raised people’s general sense of risk and their receptivity
to the idea of insurance in general and life insurance in particular. This is especially the case when existing risk management mechanisms have been quite
severely weakened by drastic institutional changes.
Eroding State Provision of Welfare
Family and kinship support had always been the informal, communal form of
assistance one could expect to receive in times of adversity in pre-Communist
Chinese society. After 1949, the state implemented a comprehensive social insurance scheme through a danwei system. Danwei refers to one’s work unit, which
was a unique economic and social organization in China during the Maoist era.
It was considered a “microcosm society” in which economic and social life were
inseparable (Lu 1989). For nearly 50 years, the danwei system provided cradle-tograve welfare benefits to its workers and therefore was the primary institution
people could count on apart from their immediate families. Housing, health care,
education, retirement benefits, and childcare were either provided for or substantially subsidized by one’s danwei. As early as 1953, free medical services were provided for workers who had a danwei. Retired workers could receive a pension
equivalent to 70 percent of their working wage (Li 1993). This comprehensive
social insurance eroded in the 1990s as a result of the rapid pace of market
reforms.
To increase their competitive edge during the market reforms, state and collective firms scaled back various fringe benefits for their employees (Davis 1999;
Guo 2003). A decreasing proportion of the work force was entitled to free medical care and housing benefits.6 At the same time, medical and hospital fees have
been escalating. In her studies in 1995, Deborah Davis (1999) found that hospitals in Shanghai, as in many other cities, required either written guarantee of payment by danwei or down payments of 5,000–10,000 yuan (~ US$604–1,208)
before any major surgeries. After July 1994, an increasing number of enterprises
no longer provided such guarantees, leaving patients and their families desperate
to borrow from relatives as the only alternative.
Pension reform in China also went hand in hand with the restructuring of
SOEs. A nationwide pension reform was launched as early as 1986 to transform
the enterprise-based pay-as-you-go system into a municipal-based three pillars
Is China an Inviting Place for Life Insurance?
27
system (Zhao and Xu 2002). The three pillars refer to a public defined benefit for
redistribution of funds, a mandatory funded contribution for each worker, and a
voluntary supplement pension managed by each individual firm or private insurance company. The last pillar obviously opens the door to the commercial insurance industry. The difference between the old pay-as-you-go system and the new
three pillars system was not only practical but also conceptual. Under the old
system, the existing working population supported the retired population, so it
was one collective group supporting another collective group. Under the new system, how much one will receive depends on his or her contribution to the pension fund. This individualized scheme reflects an idea of self-reliance and
individual responsibility.
Although the new pension system is mandatory and supposedly covers all
workers in both the state and private sector through the first and second pillars,
the system has been widely evaded in the private sector (Zhao and Xu 2002; Lee
2007). Furthermore, the long-term viability of the system and its capability to
provide adequate support for future pensioners are unclear. For example, Ching
Kwan Lee (2002) finds that the retirement pension fund in Guangdong registered a 10 million yuan (~ US$1.2 million) deficit in 1996. Consequently, Chinese employees have been facing an increasing uncertainty about their future
pension benefits.
The erosion of the state provision of social insurance has exposed the population to higher economic and social risks. Together with an increase in the numbers
of urban poor, the government has been encouraging family and local community
services to provide assistance or relief (Croll 1999). While it once attempted to
weaken the Chinese familial culture during Mao’s regime, the government now
emphasizes the important and central role of family in intergenerational care.
However, rapid urbanization, changes in living arrangements, and shrinking family sizes have largely impeded the resurrection of familial and communal care.
Urbanization and Increasing Difficulties
of Informal Mutual Help
Urbanization in China has been characterized by conspicuous metropolitanization. From 1980 to 1990, the number of metropolitan cities (defined in terms of
having a nonagricultural population above one million) doubled from 15 to 31
(Yan, Fia, Li, and Weng 2002). At the same time, these and other cities experienced an influx of people from rural areas seeking jobs (Lee 2007). Although
rural migrants face the highest level of economic and physical risks, commercial
insurers do not regard them as potential clients, both because of their high-risk
profiles and their inability to pay for premiums. I therefore limit my discussion
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about the impact of urbanization to those who are identified as potential clients
for commercial life insurance.
Besides migration, urbanization is always accompanied by a reduction in family size. The average size of urban households in China dropped from 4.4 to 3.6
members in just eight years from 1980 to 1988 (Davis and Harrell 1993). Once
married, young people now tend to move away from their parents. Extended
families are increasingly rare in urban areas, accounting for only about 20 percent
of the 800 sampled families in Shanghai in a survey in 1996. In an inland city,
Chengdu, extended families made up less than 30 percent of the sample in this
same survey (Shen, Yang, and Li 1999). The average family size in Shanghai was
3.26, which is quite comparable to the 3.31 in Chengdu. This decline of the
extended family was accompanied by shrinkage of kinship networks, thanks to
the one-child policy launched in 1979. This policy, apart from accelerating the
decrease in family sizes, has substantially weakened kinship linkages, as fewer
people have siblings, cousins, aunts, and uncles. By the early 1990s, lineage
resources were rarely available to the urban population (Davis and Harrell 1993).7
The thinning kinship networks and decreasing family sizes mean that traditional
“insurance” through kinship support has been breaking down. Each nuclear family has had to become socially and economically more self-reliant.
Another obvious sign of urbanization in China are the new housing arrangements that manifest a shift from a Gemeinschaft (community) to a Gesellschaft
(society). The living arrangements in prereform China largely facilitated intimate
social interactions among neighbors. Housing was provided by danwei, and
neighbors were normally colleagues as well. In Shanghai, the typical dwellings
during the Mao’s era were called shikumen (literally translated as “stone multiplestoried gate”). In each shikumen, there were public or semipublic areas where residents interacted with each other on a daily basis. The intimate relations among
residents of shikumen were described by Deborah Pellow as follows: “They knew
each other, cared about each other—even while they also quarreled with one
another about sharing the water tap or kitchen. At dinner time, one could casually
drop by a neighbor’s house, rice bowl in hand, and be fed. If one were ill, he/she
could depend upon neighbors for help” (1993:421). Thus, neighbors provided
each other with informal mutual help and constituted part of the resources for
risk management should any unexpected contingencies occur. In the 1970s and
early 1980s, some shikumen were converted to xincun (literally translated as “new
villages,” comparable to American townhouse complexes, but usually with five
stories and without elevators). The physical layout of a xincun was to some extent
similar to that of a shikumen, which facilitated mutual help among neighbors.
Since the late 1980s, however, high-rise apartment buildings have been replacing shikumen and xincun (Pellow 1993). In Shanghai, the number of residential
Is China an Inviting Place for Life Insurance?
29
buildings higher than eight stories increased from 959 in 1990 to 4,498 in 1998.
The change in residential setting resulted in infrequent interactions among neighbors. A 1993 survey on neighborhood interactions in Shanghai indicates that
exchanges of help among neighbors were infrequent (Logan 1999). Furthermore,
burglaries have been reported to be on the rise since the late 1980s. Many apartment dwellers began to install iron-bar doors with padlocks in the early 1990s
(Pellow 1993). During my field research in 2001–2002, I noticed that the iron
doors had actually been fortified. Those I saw were no longer iron bars with padlocks but solid pieces of iron comprising the entire door, much like the door to a
prison cell. Each iron door has a peephole of less than half an inch in diameter for
seeing through to the outside. I saw these doors not only in Shanghai but also in
Beijing.8 As there were no contacts among neighbors, the sense of community
was weak. In fact, each household had become an isolated island ( Wu and Li
2002). It is not surprising that quite a large number of my informants nostalgically recalled their relations with their old neighbors in the past:
In the 70s and 80s, Shanghai people lived in xincun. There were longtang
(lane halls) as common areas. Neighbors shared many things together. . . .
In the 90s, households became independent units. Now neighbors do not
talk to each other. You will not even borrow an egg from your neighbors.
It’s completely different. If you need any help, your neighbors will not
help you.9
What this informant described illustrates the breakdown of community and the
rise of individualism ( Yan 2008), even though the individual unit might well
refer to a family.
The shrinking sizes of kinship networks and families, and increasing alienation among neighbors, have undermined the traditional informal mutual help
system that the government intended to resurrect. Furthermore, the one-child
policy has also restructured demographic patterns, resulting in a rapidly aging
population. The wealth generated by an only child will eventually need to support two parents and, perhaps, four grandparents. Traditional intergenerational
care through children’s support for old age is simply unfeasible, regardless of
whether the younger generations are willing to resume such a responsibility.
In addition, compared to the United States in the mid-nineteenth century
when life insurance emerged, China in the 1990s had far fewer religious charity
associations that could offer communal support to those suffering misfortunes.
The state’s diminishing provision of welfare for the population and the breakdown of the informal mutual help system, indisputably, created an institutional
environment highly conducive to the development of commercial life insurance.
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Government’s Supportive Attitude and Legalization
In addition to the socioeconomic changes, the government’s stance on commercial life insurance has always been a crucial factor in its development ( Zelizer
1979; Clark 1999; Alborn 2009). The Chinese authorities’ espousal of the development of commercial insurance has been realized through their abandoning
certain ideological principles, opening the door to foreign economic players and
building the legal infrastructure for the industry.
The year 1992 marked a new phase and a new direction for China’s economic
reforms, when a “socialist market economy” was officially adopted by the CCP.
The CCP officially declared that economic reforms should no longer be constrained by the abstract, ideological question of whether the innovations were
capitalist or socialist, as long as they could spur economic development. The significance of this official declaration lies in the abandonment of the requirement
for “ideological correctness” in introducing reform measures (Chen 2000). Modern businesses and enterprises, as well as foreign capital, technologies, and human
resources, were allowed to enter China, and commercial life insurance was one of
them.
For practical reasons, the Chinese government has been very supportive of
the development of commercial life insurance, in order to reduce its financial
burdens. A “medical reform and insurance” pamphlet distributed by an insurer in
Shanghai cited Prime Minister Zhu Rongji’s speech promoting commercial
insurance:
The basic medical care [provided by the state] is low level. . . . protection.
Any medical needs that go beyond this minimal, basic level should be
resolved by commercial insurance. Now is the time to change the old concepts. Investment in health is everyone’s responsibility. No one can be entirely dependent on society. Society requires us to actively participate in
commercial insurance.10
Hence, the government implicitly and explicitly encouraged the public to supplement the new pension and medical schemes with private insurance, as part of its
efforts to launch pension and medical reforms.
By opening the door first to AIG, state authorities also aimed at importing
the technology and management of commercial insurance for the development
of the domestic insurance industry. In return, it accelerated the process of legalizing and regulating insurance practices as a form of support for foreign insurers.
In October 1995, the National People’s Congress promulgated the first formal
insurance law to regulate and enforce legal activities of insurance firms. The
Is China an Inviting Place for Life Insurance?
31
People’s Bank of China was delegated legal authority to grant operation licenses
and to supervise the operation of the insurance industry. In 1998, an independent
official regulatory body, the China Insurance Regulatory Commission (CIRC),
was set up to take over the role of the People’s Bank of China. The CIRC carries
the functions of formulating and enforcing insurance law and regulations, overseeing insurance business operations, protecting the interests of policyholders,
maintaining order, ensuring fair competition, and facilitating the development of
insurance in China. The legalization of the insurance business, though still in the
process of being formalized, has provided a critical source for cultivating the local
population’s sense of trust in this new enterprise.
Taken together, the economic and institutional conditions in China in the
1990s were promising for the development of a commercial life insurance market. The cultural conditions, on the other hand, were rather mixed. The cultural
situation in China in the 1990s consisted of an array of both disenchantment
and reenchantment. On the one hand, signs of rationalization were noticeable.
On the other hand, traditional Chinese cultures and practices resurfaced in the
increasingly rationalized and modernized China. The postreform cultural
milieu in urban China can be characterized as a combination of market rationalism and neotraditionalism (King 1991). Some of the cultural contents were
favorable to the development of a life insurance market, whereas others were
resilient obstacles.
Cultural Elements Congenial to Life Insurance
In post-Mao China, cultural elements congenial to life insurance are numerous.
Intensified marketization, the birth of a consumer society, welcoming or even
feverish reception of things new and foreign, the return of familialism, the materialization of a child-centered ethos, and the central role of reciprocity in defining
Chinese guanxi (interpersonal relations) are all facilitative cultural properties.
Intensified Marketization and the Birth of a Consumer Society
Bold economic reform is itself a manifestation of an instrumental rational movement that goes along with the evaporation of the communist utopia. Deng
Xiaoping once voiced his reformist position before Mao’s death with this metaphor: “It does not matter whether it is a white cat or a black cat, it is a good cat as
long as it can catch mice.” This metaphor once got him into the trouble, as he was
accused of “going bourgeois.” In the early 1990s, however, this metaphor was
resuscitated to justify radical marketization and intensive commercialization.
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MARKETING DEATH
Chinese scholars convincingly argue that the progressive marketization and commercialization beginning in 1992 was a post-1989 state strategy to move the public’s attention away from the political arena in the aftermath of the crackdown on
the students’ pro-democratic movement (Dai 1999; Xu 1999). They contend
that the state orchestrated a consumer society to replace socialist or democratic
ideals. Consequently, countless shopping malls were opened, and a consumer
society began to take shape in the early 1990s (Li 2006; Dai 1999).
Only a few years after the onset of economic reforms, refrigerators, televisions, and washing machines began to appear in urban households. By the early
1990s, these appliances were found in almost every urban household (Davis
2000). Ownership of consumer goods became the major form of displaying personal wealth. “Making money, spending hard” became a fashionable new lifestyle
that has been widely reported in the media (Lu 2000). The emergence of a culture
of consumerism requires new definitions of needs and necessities, as well as an
emphasis on individualization of lifestyle (Simmel [1903] 1971). Magazines and
advertisements teaching individuals how to acquire “fine taste” through consumption exploded (Dai 1999). The public, especially the new middle class, was
very receptive to these new definitions of needs and necessities that go along with
the central tenets of consumerism (Li 2006). If people in general adopt a rather
open attitude to new concepts of needs and necessities, they would be expected
to accept life insurance as a new necessity in the face of increasing risks in an everchanging institutional environment.
Cravings for New and Foreign Commodities and Ideas
From the mid-nineteenth to the mid-twentieth century, China attempted to
import Western technology and certain economic practices but resisted Western
political or cultural ideals (Calhoun 1994). The idea of integrating Chinese culture for essence and Western technology for utilitarian ends (zhongxue wei ti,
xixue wei yong) was adopted by the Chinese as a possible solution for asserting a
viable national identity, on one hand, and strengthening the national defense in
the face of hostile imperialism, on the other. However, after a century of suffering
foreign invasions and occupations, followed by three decades of being closed off
from the world, the Chinese could not be more eager to see, touch, and acquire
something new and to catch up. The economic reforms begun in 1979 thus are
fundamentally different from those in the pre-Communist period. The current
reforms encourage importing both technological and cultural elements from the
West. The open attitude to the new capitalist games is found not only in the
younger generations born after the 1970s. The older generations are no less eager
to participate in the new games.
Is China an Inviting Place for Life Insurance?
33
Ellen Hertz’s ethnographic study of local responses to the arrival of the stock
market in Shanghai finds a “remarkable outpouring of enthusiasm for stock trading at the popular level” (1998:3). While the Shanghai Securities Exchange was
opened in December 1990, a “stock fever” (gupiao re) culture sprang up in 1992.
Hertz was stunned to find that participation in the stock market cut across all
social classes and categories. Basically, “everyone”—peasants, workers, hooligans,
intellectuals, and government officials—was getting on the stock market bandwagon in Shanghai (Hertz 1998). During my research in 2000–2002, I observed
that even furloughed workers were among the active participants.11 The Chinese’s
fervor for new economic activities, of course, was not limited to the stock market.
Lyn Jeffery’s (2001) study of direct selling illustrates the same degree of enthusiastic reception to this new form of marketing. In fact, the reception to direct
selling was so feverish that some people got cheated out of money, pushing the
government to outlaw this marketing approach in March 1998.
Perhaps the extent of the urban Chinese’s openness to a new way of life is best
illustrated by their daring adoption of a new money management practice. With
the commercialization of housing, individual households began to take out
mortgages to purchase property. By the summer of 1992, five million urban
households in China held 12-year mortgages from the China Construction Bank
(Davis 2000). By 2001, Shanghai ranked number one in lending money to residents through mortgages and credit card loans. Thus, residents of Shanghai took
the lead in taking out mortgages and building credit card debt.12 Living on loans
was, indeed, a very new money management and consumption experience for the
average Chinese. It not only manifested how open the Chinese were to newness
but also put the households at higher economic risk if the breadwinners lose their
earning abilities. Taking on mortgages as a new consumption behavior should
facilitate the willingness to buy life insurance for protecting the family dependents from bearing huge debts or losing their houses.
Furthermore, the Chinese people’s eagerness for “American experiences” and
a modern way of life was vividly captured by Yunxiang Yan’s (1997) ethnographic
study of the McDonald’s in Beijing. For the local Chinese, eating at McDonald’s
in the 1990s carried a positive connotation of yang (oceanic, meaning Westernized and modern), which stood in opposition to tu (soil, meaning rustic and oldfashioned). Although the food quality at McDonald’s was not appreciated by the
locals, the fast food restaurant was very well received in China because of its symbolic association with modernity and Americanism. Likewise, Davis and Sensenbrenner (2000) found that Western-style toys have successfully penetrated the
children’s market, especially in urban Shanghai. They observed that the toys sold
in Shanghai stores had similar features as those in the 1995 Disney film Toy Story,
and Chicago Bulls tank tops were popular among boys 8–18 years of age. At the
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MARKETING DEATH
same time, disco dancing was made popular, also in Shanghai, through American
films like Break Dance and Flash Dance (Farrer 2000). James Farrer found that
the disco culture in Shanghai resonated with mid-twentieth century American
culture, and through disco dancing and expression, the young people embraced
dominant market values rather than resisting them.
It is no accident that Shanghai was the first city opened to foreign life insurance firms. Once a treaty port and an international settlement, Shanghai carries
a high propensity to adopt “Western” culture. The identity of the citizens of
Shanghai taken in relation to the rest of China can be compared to that of New
Yorkers in the United States. Shanghai residents are especially receptive to anything new and yang. On several occasions, when I purchased in Shanghai simple
items such as jackets, pants, a diary, or pens, the salespeople suggested to me to
pick one style over the other because it was “yang qi” (Western style). Sticking to
the “old-fashioned stuff ” bears a negative connotation of backwardness, meaning out of place and out of time. Commercial life insurance, which is not only
new but also a modern invention from the West, should be well received by a
people fond of “anything foreign and modern.”
Family- and Child-Centered Ethos
In creating a life insurance market in the United States and Britain in the nineteenth century, life insurers forcefully appealed to “family responsibility” to convince the breadwinners that it was their duty to buy life insurance. Life insurance
was presented as “life-saving household cement” that could prevent family dissolution, so it was the moral obligation of the household heads to insure their lives
to protect their families (Zelizer 1979:100–1; Alborn 2009:147–53). Today,
American life insurers still largely mobilize this moral discourse of “family responsibility” to persuade the public of the imperative of buying life insurance. Given
that Chinese societies are traditionally renowned for their family-centered ethos,
with which family continuity has been the principal obligation of individuals
(Fei [1947] 1992) and family interests are placed above individual or societal
interests (Lau 1982), life insurance should have a clear market niche.
In the 1950s and 1960s, various campaigns were launched by the CCP to
shatter the family-centered way of life and replace it with a communal-based
organization. The Maoist state has, to a certain extent, successfully weakened kinbased mutual support for contingencies in urban China through its generous
medical and pension plans for all state employees (Davis 1993). However, some
traditional cultural practices were held in check but not eliminated. Family continued to be central to people’s lives, and membership of a family continued to
define who a person was (Evans 1997; Whyte and Parish 1984; Stacey 1983).
Is China an Inviting Place for Life Insurance?
35
When the state began to retreat from its central role in welfare in the 1980s, a
revival of familialism was noticeable (Davis 1993). As presented earlier, the state
itself also wants to see a return of family-oriented ethos so as to facilitate intergenerational care to reduce the burden of the aging population on the state. Commercial life insurance providers can nicely go hand in hand with the state position
regarding the need for life insurance as a family obligation.
At the same time, the one-child policy has led parents to channel energy and
emotion into bringing up one perfect child, resulting in a child-centered way of
life. The “only child,” or “little queen/king,” has become the commercial target in
urban China, as many advertisements in cities directly target primary-school
students as consumers. In Shanghai, for instance, the child-centered ethos has
been markedly displayed in household budgeting. Davis and Sensenbrenner
(2000) report that Shanghai parents spent more on their only child’s discretionary needs than they did on their own, with at least half of their monthly expenditure going to toys, clothing, entertainment, and educational enrichment activities
for their child. Life insurance, which is often defined as a way of showing love and
care for dependents, especially for the “helpless” children, would be likely to be
well received by the Chinese parents in this child-centered context.
Guanxi, Renqing, and Interpersonal Trust
Since commercial life insurance is an invisible commodity and involves an intertemporal monetary transaction, trust is always an issue (Carruthers 2005). The
problem of trust is especially obvious when life insurance is new to a population.
Zelizer (1979) found that in dealing with the problem of trust, life insurance
companies in the United States put on a benevolent, philanthropic image and
their sales agents presented themselves as clergy and missionaries. In China, a different source of trust is available for the life insurance practitioners to mobilize to
overcome the liability of selling a new and alien commodity.
The pervasiveness and dominance of guanxi in Chinese business world provide a desirable condition for handling the difficulty of trust pertaining to a new
commodity. Chinese guanxi are characterized by the prominent Chinese sociologist Fei Xiaotong ([1947] 1992) as structured like a nested concentric pattern
with the self in the center. Layers of concentric circles extending from the center
represent different categories of relations to the self in a descending order of intimacy. According to David Wank (1996), the degree of intimacy in Chinese
guanxi descends from those that are blood ties to acquired personal relations and
finally to business relations. The degree of trustworthiness, intensity of sentiment, and type of obligation are then specified by the degree of intimacy in the
guanxi hierarchy. The foundation of trust in Chinese society hence is essentially
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MARKETING DEATH
built on interpersonal relationships. Studies based on 1990 and 2000 World
Value Survey data report that China registered an extraordinarily high level of
interpersonal trust and institutional trust compared to other countries, despite its
lack of independent, formal civic associations ( Tang 2005; Yang and Tang 2006).
Probing this unexpected finding that runs against political scientists’ theories of
trust and democracy, Wenfang Tang (2005) argues that institutional trust in
China is embedded in interpersonal trust among the Chinese, which in turn is a
function of informal social interactions (see also Hamilton 1985; Wong 1996).
In other words, informal social interactions and relationships are the source of
trust in China. This particular social organization of trust is likely to benefit the
personal sales approach adopted by the life insurance industry.
In addition, guanxi among the Chinese are largely governed by the etiquette
of renqing that may further facilitate life insurance sales. Renqing as an etiquette
is an enactment of the norm of reciprocity, which is prescribed by a general principle of interpersonal obligations that governs the social relations and interactions in Chinese societies. By definition, renqing involves a giving and a receiving
party such that the receiving party is indebted to the giving party and owes an
obligation. Alvin Gouldner (1960) proposes that indebtedness, created by the
time lag between Ego’s provision of a gratification and Alter’s repayment, is a kind
of “moral cement” that reproduces and stabilizes social relations. The etiquette of
renqing serves the same function as gift giving that cements social relations
through an endless cycle of reciprocity and indebtedness (Mauss [1950] 1990). It
is the asymmetric obligation that makes a relation special and qualified to be what
the Chinese refer to as guanxi (Lin 2001). It stipulates that people with a good
relationship should deliver asymmetric obligations to each other for reproducing
and strengthening that relationship (Hwang 1987; Lin 2001; Peng 2004; Gold,
Guthrie, and Wank 2002). Therefore, it is not uncommon for Chinese to engage
in a small economic transaction with a friend or relative in order to do a favor for
this person to perform the etiquette of renqing, instead of gaining economic benefits from the transaction (Lin 2001; Hwang 1987). Friends and relatives who
observe the etiquette, as most Chinese adults do, may well provide an entry point
for the marketing of a new and alien commodity like life insurance.
Cultural Obstacles
Despite the above favorable cultural elements, some rather entrenched beliefs and
dispositions exist among the Chinese that remain unfavorable to the emergence
of a life insurance market. The most powerful and overarching cultural barrier is
the taboo on thinking and talking about death, especially premature death. This
taboo manifests as an observable avoidance of the topic, particularly unexpected,
Is China an Inviting Place for Life Insurance?
37
accidental, or premature death, among not only the elderly but also the generation in their late 20s to 30s. I discuss how such a cultural taboo is rooted in Chinese concepts of life and death that deserve some elaboration.
Concepts of Life and Death and the
Taboo on Premature Death
Comparative ethics philosophers point out that the topic of death has traditionally
been treated very differently in Western and Chinese philosophies (Hui and Xu
2000). Death has never been a taboo subject in traditional Western literatures and
philosophies. Instead, it has been a central theme of Western philosophies. Historian
Philippe Aries (1974) found that the discussion of death and dying has at times been
extremely popular. It was not until the first half of the twentieth century that death
became a taboo topic in Western contexts, due to changes in religious beliefs, improved
medicine, and increased violent death (Gorer [1965] 1976). Since the 1960s, American social scientists have been bringing death back into the dialogue (Aries 1976).
Chinese philosophies, on the other hand, have always been silent about the
subject of death and dying. A this-worldly orientation toward life has been widely
recognized as part of the Chinese cultural tradition ( Weber 1951). Indeed, death
is rarely discussed or mentioned in the teachings of Confucianism. Confucius
taught his disciples that, because there are too many things a human has to learn
to live a life with propriety, life, not death, is what human beings should care
about. Death is something unknown, and human beings should not spend too
much time and energy speculating and theorizing about death. “Not knowing
about life, how to know about death?” (wei zhi sheng, yan zhi si) is a well-known
Confucian aphorism. Furthermore, the Confucian notion of death does not
imply the possibility of eternity as it does in Christianity. Death is “the end,” and
what follows “the end” is unknowable (Hui and Xu 2000; Hou and Fan 2001).
Death for common people is already a mystery; the avoidance of the topic further
mystifies it. As Geoffrey Gorer ([1965] 1976) maintains, when death is “unmentionable,” it turns to a “horror” subject and produces a general sense of fear.
The sense of fear regarding death among the Chinese intensified when the
“something unknown” began to take on a dreaded and terrifying image under
the influence of folk Buddhism, which has bred the idea of a dark world (yinjian) and a cruel hell (diyue). According to these ideas, the majority of commoners who do not commit serious misdeeds in their lives will go to the dark world
after dying and await reincarnation. The dark world is a damp, cold, miserable,
and dark place with many ghosts around. Hell, which is reserved for those with
bad karma, is described as having 18 levels, where numerous cruel punishments
and tortures are applied.13 These horrifying notions of the dark world and cruel
38
MARKETING DEATH
hell have become a folk belief continuing into the contemporary era (Hou and
Fan 2001).
In the Maoist era, especially during the Cultural Revolution, the state
attempted to eradicate the supernatural meanings of death. It presented death as
nothing to be feared and educated the public that there was no life after death.
However, traditional beliefs about death have never been uprooted, and folklore
about death soon resurfaced in post-Maoist China ( Whyte 1988). Furthermore,
Taoism advances the idea that the degree to which a death is terrifying depends
on when and how the death occurs. Different ways of dying denote different
meanings and are associated with varying degrees of fearfulness. Taoism (and
Confucianism) highlights the idea that life and death are a whole and that dying
when one is aged is part of natural law that should not be feared (Hui and Xu
2000). However, dying early or prematurely, especially if the dying is unexpected,
as when a young person dies suddenly due to an accident or an illness, it is miserable and frightening. In the folk Taoist belief, the person who suffers from an
accidental or a nonlegitimate death is normally not ready and unwilling to die.
This is what the Chinese call “dying without closing the eyes” (sibumingmu). In
this case, the spirit of the dead person might not be at rest and is likely to become
a ghost and wander miserably in the human world. Unexpected premature death
is considered dangerous, as the dead “were cheated out of their lives” and would
therefore turn to “hungry ghosts.”14 In the folk Buddhist belief, an unexpected
early death is taken as a punishment for bad karma. In Arthur Wolf ’s (1974)
studies in Taiwan in the 1960s, an infant’s or a small child’s death was assumed to
prove that the child was an evil spirit. In pre-Mao China, an infant death was
conceived as “someone from a previous life coming back to dun you for a debt”
( Wolf 1974:147, citing Mary Bryson 1900).
The fearsome concept of premature death is further tied to the Chinese social
organization of relations, in which individuals are ordered by seniority and
regarded as a temporal continuity of a lineage (Fei [1947] 1992). The malicious
ghosts are believed to be those discontented souls who have no descendants
because they died childless or as children ( Wolf 1974). The differentiation in the
meanings of death in relation to lineage continuity and seniority is dramatized in
the hierarchy of death rituals and ancestral worship. Martin Whyte (1988) found
that those who had lived full lives and had many descendants received the most
elaborate funerals in pre-1940 China, whereas the death of a child was given very
little ceremony at all. Furthermore, older generations did not don mourning garb
or observe rituals for deceased relatives younger than themselves. The taboo on
having the older generation, the so-called “gray-haired persons,” attend the death
rituals of the younger generation, the so-called “black-haired persons,” was still
commonly observed when I lived in China and Hong Kong during the 1970s and
Is China an Inviting Place for Life Insurance?
39
1990s. Likewise, ancestor worship can appropriately be performed only by a junior for a senior, and not the other way round. Thus, young adults dying before
their parents bear the guilt of not fulfilling the filial duties, as their parents may
not have worshippers, especially if the young adult is the only child. At the same
time, young adults are unlikely to be enshrined as an ancestor on a proper altar if
they do not have their own descendants ( Wolf 1974). Premature death, therefore,
is spiritually dangerous and morally condemned.
The Chinese concepts of death are not one-sidedly negative and terrifying,
however. As mentioned before, in Taoism, dying is viewed as part of natural law,
or a return to nature. In the Buddhist worldview, there is life after death—life and
death form an endless cycle through reincarnations. Thus, parts of the Taoist and
Buddhist notions of death resemble the pre-Christian and Christian notions. Yet,
apart from the contents of the concepts, it was the prolonged “silence” of Chinese
philosophies on the subject that, on the one hand, gave rise to a generalized “horror” feeling toward death and, on the other hand, left the subject to the dramas of
folklore.
Although philosophical, religious, and feudalist traditions give rise to the
taboo on thinking and talking about premature death, today this taboo has an
independent power in shaping human action. In other words, one does not need
to hold beliefs about hell, the dark world, ghosts, evils, and precipitating death in
order to observe the taboo. When something has customarily been a taboo subject, a violation of the taboo is not only socially offensive but out of the conceivable “normality” of being a human being (Durkheim [1915] 1965). Thus, what
matters is that observing the taboo produces collective avoidance of issues related
to premature death. Such avoidance results in “subjective immunity” (Douglas
1985) that puts premature death out of the cognitive and normative schematic
reference frames of most Chinese.15
“Good Life,” “Good Death,” Moral Obligation,
and Risk Perception
The concepts of life and death not only produce a taboo on premature death but
also define a “good life,” a “good death,” and the obligatory relation between the
living and dead members. In both Confucian and Taoist worldviews, a good life
involves improving one’s life quality as one grows older. A person who has a hard
life as a youth but a comfortable life when older is considered by the Chinese as
more fortunate and happier than a person who has a comfortable life early on but
a hard life when old. In other words, to have a truly good life is to have a good life
at the end, which is associated with the accumulation of virtues. A good death,
closely associated with a good life, is dying when one is old and has lived a full life.
40
MARKETING DEATH
A full life refers to having descendants and living a life with dignity toward
the end.
American and British life insurers alike have been promoting the idea of
“economic immortality,” in which a “good death” or a “responsible death”
should involve posthumous financial arrangements for the living dependents
( Zelizer 1979; Alborn 2009).16 This idea is not compatible with the Chinese
definition of a good death as dying in full life, which may only occur when one’s
children are grown and financially independent. Furthermore, the idea of posthumous “economic immortality” is incongruous with the Chinese allocation of
rights and responsibilities between the living and the dead. In Chinese tradition, the intergenerational rights and obligations follow a simple logic and practice: parents are obligated to raise their children, who in turn are obligated to
take care of the aged parents and grandparents. This is seen as natural law and
natural practice. When grandparents and parents pass away, they become ancestors. Ancestors are bestowed with a certain degree of transcendental, sacred
power. They have the obligation to watch over the living members of the family
in a spiritual sense, protect them, and at times exercise their sacred power to
help them resolve their mundane problems ( Wolf 1974). The living members,
in return, extend the obligation of filial piety to the ancestors by providing
them with the food and money that they need in the “other world,” be it hell,
the dark world, or heaven (Stockman 2000). This obligatory relation between
the living and dead members still holds unwaveringly today.17 It is the living
members who are obligated to provide the dead members with financial
resources and material goods, and not the other way round, as advocated by life
insurance companies.
The definition of a good life and a good death as living well toward the end in
part explains why the Chinese place significant emphasis on yanglao. Yang refers
to “raising” or “feeding,” which is the same character for raising children, and lao
refers to “aged.” Yanglao, therefore, can be translated as “support for the elderly,”
which is a delayed reciprocity to the parents by the grown children (Y. Yan
2003:172). In pre-Mao China, for one to be qualified to have a good life, one
must have children to rely on so that the yanglao issue can be taken care of. In
Maoist China, the state’s comprehensive welfare program took care of the yanglao
for urban residents, whereas reciprocity by the children continued to be the
yanglao practice in rural areas. In post-Mao China, however, the dismantling of
state welfare, together with urbanization and the one-child policy, have created a
dire concern regarding the yanglao issue. Urban dwellers have been aware of the
impossibility of relying on their only child to support them in old age. Therefore,
the focus on the quality of life in the end, as prescribed by the concepts of life and
death, coupled with institutional and demographic changes, direct people’s
Is China an Inviting Place for Life Insurance?
41
attention to the risk related to retirement. The most commonly perceived risk by
the Chinese is not having enough resources to live a comfortable life as one gets
older.
This perceived risk, nonetheless, would not have diverted people’s attention away from fatal accidents that might happen during one’s preretirement
age, if there were no taboo surrounding premature death. Thus, it is the collective avoidance of thinking and talking about premature death, along with a
disproportionate attention to the quality of life after retirement, that organizes the Chinese’s selective attention to different kinds of risks. Fatal misfortunes during one’s preretirement age are far from the center of attention. This
selective attention to risks in part constitutes the locals’ product preferences
that go against the profit-oriented operation of life insurance, as I illustrate in
chapter 2.
Existing Risk Management Practices
Another cultural obstacle to the development of life insurance in China is the
persistence of some traditional forms of risk management, namely, personal savings and intergenerational care. Savings have been a long-established risk management practice of the Chinese for centuries and always remain the first priority
for Chinese families despite the emergence of a consumer society (Croll 1999).
In 1995, China’s gross national savings rate and urban household savings rate
reached 40 percent and 21 percent, respectively (Kraay 2000; Horioka and Wan
2007). Economists have actively engaged in debates over the reasons behind China’s high savings compared to both developed and developing countries, but no
consensus has been reached. I contend, however, that rapid economic growth and
the typical economic hypothesis that developing countries have higher savings
rates cannot fully explain China’s extraordinarily high savings. For instance, China’s median gross national savings rate was as high as 25 percent in 1965–1973,
the highest of all developing regions (Loayza, Schmidt-Hebbel, and Serven
2000), when at the same time the country’s economy was suffering miserably
from the political turmoil of the Cultural Revolution. From 1974 to 1984, before
the economy took off, the median national savings rate in China already exceeded
30 percent, far greater than the aggregated median gross national savings rates in
any other region (Loayza et al. 2000). Since 2000, China has had the highest
national savings rate in the world (Horioka and Wan 2007), against the backdrop
of increases in investment and consumption channels. Available data indicate
that the household savings rate in China was also the highest among both developed and developing countries: 25.3 percent in 2001, compared to 9.8 percent in
Mexico in the same year, 7.4 percent in Korea, and 6.4 percent in the United
42
MARKETING DEATH
States in 2002 (Kuijs 2005). China’s net savings surplus, in a survey conducted by
economists in 2005, showed no signs of subsiding in the near future.18 Therefore,
it is fair to say that China persistently and consistently has high savings rates that
cut across different historical moments and different sectors. This persistence and
consistence, I maintain, is because saving is not only an economic behavior but
also a cultural practice.
China’s annual real GDP growth from 1995 to 2004 was consistently in the
range of 7.1–10.5 percent. Annual inflation rates, on the other hand, stayed
under 3 percent, except in 1995 and 1996.19 Nonetheless, the annual household
savings rate throughout this period was on the rise from 16.96 percent in 1995 to
27.86 percent in 2004 (Horioka and Wan 2007). Household savings rise in the
context of a relatively stable and promising economic growth, I argue, because
savings remain the most commonly adopted means of risk management. Elisabeth Croll (1999) observed that there was a reduction of consumer spending in
the 1990s when welfare responsibilities of the state were uncertain. This suggests
that people went back to using personal savings to handle uncertainties. It is
beyond the scope of this book to explain why the Chinese historically love to
save. The agricultural origin of the society, the Confucian teaching that frugality
is a social virtue, and the concern about having a good life at the end all contribute to the emphasis on savings. For our purposes here, I only want to highlight
the fact that saving has long been a habit of the Chinese for managing unexpected
contingencies regardless of whether it is an effective means, and it is unlikely to be
easily replaced by commercial life insurance.
Traditionally, “raising the son for protection against aged life” (yanger fanglao)
was the most reliable “insurance” for the Chinese. Huebner (1930) identified the
informal mutual help among Chinese family and kin members as one of the main
obstacles to the development of life insurance in the 1920s and 1930s. During
Mao’s regime, the CCP attempted to weaken the concentric structure of particularism by substituting family, kin, and friends with small-group communes as
one’s primary groups. Nonetheless, it was not very successful. People still sought
close circles of intimates for defending against the risks and uncertainties of political campaigns as well as for improving their chances in life ( Whyte 1974; Gold
1985). As discussed earlier, kinship and communal mutual help have been declining as a result of urbanization and the one-child policy. However, kinship support has not been annihilated. During my research, I observed that some of the
so-called nuclear families in fact hosted a grandmother or a pair of grandparents
for taking care of the grandchild. In return, the grandparents’ daily expenses were
covered by their child. Therefore, intergenerational care continues to be part of
risk management practices adopted by some households despite its increasing
difficulties.
Is China an Inviting Place for Life Insurance?
43
A Note on the Case of Shanghai
It is important to note the extent to which the favorable and unfavorable societal conditions for the development of life insurance presented above apply to
Shanghai in particular and to urban China in general. I propose that although
the degree of intensity for some of these conditions may vary from city to city,
they are all present to a large extent in Shanghai. For instance, the “stock fever”
culture was prevalent in Shanghai in the late 1990s to the early 2000s, since the
first stock trading floor was inaugurated in this city. Likewise, consumerism and
the cravings for new and foreign commodities were also more conspicuous in
Shanghai. Furthermore, due to Shanghai’s fast-pace urbanization and its widespread high-rise apartment buildings, informal help through kinship and
neighbors was generally more difficult in Shanghai than in the inland cities.
However, Shanghai in the 1990s shared more or less the same institutional
restructuring and the same intensity of the cultural taboo on death and the values on a good life and a good death with the rest of urban China. Taken as a
whole, Shanghai can be considered a forerunner of modern urban China. As
the ethnographic data presented in this book primarily come from Shanghai,
the term “local” in the chapters that follow in most circumstances refers to
Shanghai, though I am confident that it can be largely generalized to the case of
urban China as well.
What Can Be Expected? Several Possibilities
Given the above configuration of economic, institutional, and cultural conditions, does China provide a favorable environment for the emergence of a life
insurance market? The economic and institutional changes brought about by the
economic reforms seem unmistakably favorable to its development. The cultural
elements, on the other hand, are rather mixed. The key questions are whether
culture matters at all in the formation of a life insurance market, and if it does,
how. Let me propose several possibilities, or potential hypotheses.
First, if culture does not matter in the process of market formation, and only
economic and institutional forces matter, we would expect to find a welcoming
reception for the arrival of commercial life insurance as a new risk management
institution. Rapid economic growth, the increasing purchasing power of the population, and the birth of a middle class met the most elementary conditions for
the possibility of a life insurance market. Rapid urbanization, smaller family sizes,
the weakening of mutual help, the aging population, and the decline of the workplace and welfare benefits all required individuals to take on more economic and
social risks. Together with governmental and legal support, urban China in the
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MARKETING DEATH
1990s was economically and institutionally inviting for the arrival of commercial
life insurance.
Second, if culture does matter mainly in a Weberian sense, we would expect the
Chinese concepts of life and death to suppress the emergence of a life insurance
market. On this view, Chinese cultural beliefs and values are incompatible with
the ideological logic of life insurance. Culture as such prescribes and delimits a
range of possibilities and impossibilities of economic action and acts as a conductor to guide, direct, and circumscribe possible action. If culture matters primarily
as a coherent, shared meaning system in making a life insurance market in China,
then the deep-seated cultural taboo on thinking and talking about premature
death and the associated meanings of good life and good death, as well as the
selective attention to risks, should significantly impede the development of a life
insurance market.
Third, if culture matters mainly as a repertoire that provides resources and
capacities for strategies of action, then the concepts of life and death and other
beliefs should not pose an overwhelming problem to the development of a profitable life insurance market for the strategic economic actors. If culture functions
primarily as a tool kit for economic practice, life insurance practitioners would be
expected to aggressively mobilize favorable cultural elements (e.g., the new consumerism, the fondness of things new and foreign, the familial and child-centered ethos, and the norm of reciprocity) to market their products. Through their
strategies of action, insurers and their distributors should be able to get what they
want. Beliefs and values become less directly relevant.
To assess which of these possibilities the data support, I now turn to the key
features of the emergent Chinese life insurance market.
The Emergent Market and the Remaining Puzzles
Until the end of 1991, before AIA had arrived in Shanghai, the total insurance
premium income in China was only 17.8 billion yuan (~ US$2.15 billion), making up 0.85 percent of GDP. Less than one-fourth of this premium income came
from life insurance. By the end of 2002, insurance premium income soared into
305.3 billion yuan (~ US$36.9 billion), comprising 2.98 percent of GDP, and life
insurance accounted for up to three-fourths of this income ( Wu 2004). In Shanghai, life insurance gained popularity in just a decade, after the city was opened to
transnational life insurers. By the end of 2002, the proportion of life insurance
policies in force over the population in Shanghai attained 107 percent. As life
insurance sales became concentrated in urban areas, the figure reached 165 percent when taking only the urban population in the city into account. This means,
on average, each individual held 1.65 life policies.20
Is China an Inviting Place for Life Insurance?
45
At first glance, the impressive growth of the life sector of the insurance industry against the backdrop of its cultural barriers seems to support either the first or
the third hypotheses presented above. In other words, it may appear that either
culture as a whole, or culture in the Weberian sense, does not have an impact on
the life insurance business. This emergent Chinese market, however, displays several intriguing characteristics that merely economic, institutional, and/or cultural tool kit factors cannot explain.
The Growth Pattern
The most common explanation offered by economists for the sudden expansion
of the life insurance business in China is its promising economic environment,
specifically, the economic growth of the country and corresponding economic
wealth of the people.21 However, when we look at the growth pattern of the life
insurance business in its emergent stage, which is neither stable nor linear, it is
at odds with these economic factors. Figure 1.1 indicates that Shanghai took
Real growth
(%)
100
China
80
Shanghai
60
40
20
0
04
Year
20
03
20
20
02
01
20
99
20
00
19
19
98
19
96
19
97
95
19
19
94
-20
Figure 1.1 Real Growth Rate of Life Insurance Premium Income in China and
Shanghai, 1994–2004
Sources: Author’s calculations based on the following data: (1) Wang et al. (2003) for life premium income in China from 1994 to 1996; (2) the marketing and research department of Haier
New York Life Insurance Company, Ltd. in Shanghai for life premium income in Shanghai from
1994 to 1996; (3) Almanac of China’s Insurance 1998–2005 for life premium income in China
and Shanghai from 1997 to 2004; (4) China Statistical Yearbook 2005 for the consumer price
index growth rate in China; and (5) Shanghai Statistical Yearbook 2005 for the consumer price
index growth rate in Shanghai. Note: The negative real growth at the national level in 1994 was
due to the extraordinarily high inflation, 24.1 percent, during that year as a result of currency
devaluation.
46
MARKETING DEATH
Growth (%)
120
100
Life premium income
GDP
80
Per capita disposable income
60
40
20
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
0
Year
Figure 1.2 Life Insurance Growth in Relation to GDP and Per Capita Disposable
Income Growth in Shanghai, 1994–2004
Sources: Author’s calculations based on the following data: (1) same sources as figure 1.1 for
Shanghai’s life premium income; (2) Shanghai Statistical Yearbook 2005 for Shanghai’s GDP and
average per capita disposable income. Note: This graph shows nominal growth instead of real
growth because GDP deflators for Shanghai are not available. The nominal growth pattern, fortunately, closely resembles the real growth pattern shown in figure 1.1.
the lead in the growth of life insurance sales in 1994–1995, before the city
shared the country’s overall pattern of growth from 1996 to 2004. The market
in Shanghai experienced its first sharp growth in 1995–1997, and this impressive growth followed in China more generally in 1996–1997. Both markets
experienced a setback in 1998–2000, before they reached another peak of
growth in 2001–2002. Growth began to decline in Shanghai in 2002 and
nationally in 2003. How can we explain this pattern, particularly the two waves
of sharp growth?
While economic growth is a necessary condition for the development of
insurance in general and life insurance in particular, it is definitely not a sufficient
condition. Focusing on the case of Shanghai, figure 1.2 demonstrates that the
growth pattern of life insurance sales has no observable, direct correlation with
the growth of GDP or with the growth of per capita disposable income in the
city. Market booms took place during 1995–1997 and 2001 when the growth of
GDP and per capita disposable income either slowed or flattened. The growing
wealth of the citizens is insufficient to explain the ups and downs of life insurance
sales. While the large gains in life premium income during 1995–1997 were due
in part to its low original starting point, it is puzzling that this growth rate suddenly dropped in 1998, it climbed again in 2001, and it slid continuously
afterward.
Is China an Inviting Place for Life Insurance?
47
The Dominance of Domestic Players
Another feature of the emergent Chinese market is the dominance of domestic
insurers, in contrast to the insurance market in nineteenth century China, which
was controlled by foreign players. In Shanghai, for example, where foreign life insurance companies were the most active, domestic insurers consistently captured more
than three-quarters of the market from 1997 through 2004. Even more puzzling
was that Ping An, as a new and inexperienced domestic private insurer, captured the
largest market share during the market boom. Soon after Ping An entered Shanghai,
its market share in the life insurance sector rose dramatically to 33 percent in 1996
and went further up to 42 percent in 1999. In 2001, this newly founded domestic
insurer captured half of the life insurance business in Shanghai. Ping An’s triumph
was not restricted to Shanghai. In Beijing, it held as much as 48 percent of the market share in 2001. In less than a decade, Ping An forged a reputation with international appeal. Its general manager, Mr. Ma Mingzhe, was appointed by the U.S.-based
Life Insurance and Market Research Association (now known as LIMRA International, Inc.) as a member of the association’s board of directors in December 2001.22
When Ping An (Group) was listed on the Shanghai Stock Exchange in March 2007,
its price was the highest among the financial stocks in China, resulting in the world’s
largest initial public offering by an insurance company.23
When explaining the success of Ping An, journalists too often attribute the business growth of domestic companies to state policies that favor domestic players. However, this account oversimplifies the situation. In the 1990s, the state did impose two
major restrictions on foreign insurers: (1) limiting their operation to a few designated
cities and (2) restricting their business to individual life, so as to leave group business
to domestic firms. However, these restrictions alone cannot explain domestic insurers’
dominance. This study is confined to a single city, and group business is excluded,
which means the above two variables for foreign and domestic insurers are held constant. Yet, experienced foreign insurers still lost more than 80 percent of the individual life business to their domestic competitors, as shown in figure 1.3. Furthermore,
state favoritism fails to explain why the predominantly government-owned China
Life, which was supposed to receive the same, if not more, favorable treatment from
the state, lost market share to the newly established private insurer Ping An. Figure 1.3
indicates that Ping An captured at least 40 percent of the individual life business from
1998 to 2002, when China Life secured only around 30 percent on average.
Money Management Market
Another intriguing feature of the Chinese life insurance market that cannot be
fully explained by economic and institutional factors is that it emerged as a
money management, rather than a risk management, market. Products with
48
MARKETING DEATH
Market share (%)
90
Domestic Insurers
80
70
60
50
Ping An
40
China Life
30
20
Foreign Insurers
10
04
Year
20
03
20
02
20
01
20
00
20
99
19
98
19
19
97
0
Figure 1.3 Insurers’ Market Shares of the Individual Life Insurance Business in
Shanghai, 1997–2004
Sources: Author’s calculations based on the following data: (1) Almanac of China’s Insurance
1998–2000 for data from 1997 to 1999; (2) Almanac of Shanghai Insurance 2001–2005 for data
from 2000 to 2004. Note: “Domestic Insurers” include all locally founded companies, including
Ping An and China Life, though these two companies’ businesses are also shown separately for
comparison.
investment connotations, which were introduced only in late 1999, accounted
for more than 38 percent of total life premium income by 2001, with their share
rising to 58 percent in 2003. These products include dividend insurance (also
called participating insurance on which policyholder is entitled to share in the
surplus earnings of the company through dividends) and unit linked insurance
(a British variant of variable life with an insured amount dependent on the
investment returns of the premium). On the other hand, products primarily for
risk management have had a consistently low share. For example, personal accident insurance accounted for only around 2 percent of the total life premium
income throughout.24 As the premiums for accident insurance are much lower
than that of unit linked or dividend policies, a more valid comparison is the
number of policies sold in each category. While those figures are not available, I
estimate the number of policies based on the mean premium rate of each category of products purchased by the clients in my studies.25 Figure 1.4 is derived
from these calculations. It shows that sales of unit linked and dividend policies
were consistently much higher than sales of personal accident policies. For
example, I estimate that more than 3 million unit linked and dividend policies,
Is China an Inviting Place for Life Insurance?
49
Estimated no.
of policies
3,500,000
Unit linked & dividend policies
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
Personal accident policies
500,000
0
2001
2002
2003
2004
Year
Figure 1.4 Estimated Numbers of Personal Accident and Investment Policies Sold in
Shanghai, 2001–2004
Sources: Author’s calculations based on premium income from each of these policies available in
Almanac of Shanghai Insurance 2002–2005 and the mean annual premium rate of each of these
policies purchased by the clients in author’s surveys and interviews.
compared to fewer than 700,000 personal accident policies, were sold in 2003.
The popularity of money management products was not confined to Shanghai.
At the national level, unit linked and dividend insurance accounted for up to
65.2 percent of total life premium income in 2003, compared to personal accident insurance’s 2.5 percent.
Why were risk management products far less popular than money management products? One possible hypothesis is that effective risk management tools,
but not money management instruments, were already in place at the time life
insurance was introduced. However, the institutional factors I have presented
indicate otherwise. First, a new money management instrument, the stock
exchange, was introduced in the early 1990s and met a feverish reception, particularly in Shanghai. Moreover, the unwavering habit of saving among the Chinese continued to render savings banks a central money management tool. On
the other hand, the institutional shift from a planned to a market economy
exposed the Chinese population to higher economic and social risks. Although
some traditional forms of risk management, such as savings and intergenerational
care, were still common, extensive kinship support or communal forms of mutual
help declined due to urbanization, the one-child policy, and changes in neighborhoods. This decline was not compensated for by any new means of risk
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MARKETING DEATH
management, except that commercial life insurance was supposed to provide an
alternative. Therefore, it remains a puzzle why the emergent life insurance market
did not turn out to be a risk management market.
Another hypothesis is that it is in the best interest of the insurance companies
to sell money management rather than risk management products in the Chinese
context, so the life insurance practitioners deliberately created a money management market. However, as I discuss in chapter 2, selling risk management products is more profitable to insurance companies when the market is still emerging.
It goes against the profit-making interest of the insurers when products are sold
predominantly for money management purposes.
Hence, neither of the above three hypotheses (i.e., culture does not matter;
culture matters primarily in a Weberian sense; culture matters primarily as a tool
kit) can satisfactorily explain the growth and characteristics of the Chinese life
insurance market. I maintain that how culture matters is more complicated than
simply prohibiting or facilitating a market’s emergence. A more satisfactory
answer for these remaining puzzles is pursued in the rest of the book. The empirical findings presented in the chapters that follow unravel why neither culture as
a shared meaning system nor culture as a repertoire is alone sufficient to explain
the rapid growth of the market and its characteristics. These chapters unfold the
story of how these two forms of culture and institutional conditions interplay in
constituting and shaping the way the market is formed.
2
Defining Life Insurance
and Product Development
Divergent Institutional Logics
Zheng Yingyun, an insurance agent for AIA, frowning anxiously, was walking in and out of
her office area. She had just finished a long conversation with a prospect over the phone.
Obviously, her sale did not go through. “This damn Ping An,” she cursed. “They just talk
about huibao (returns), huibao, and huibao! We know that buying insurance is buying
protection. The damn Ping An agents always talk about returns and profits to the
prospects. They have misled our prospects! They should go to hell!” Zheng was angry, as
she just lost a sale to a Ping An agent who had successfully convinced the prospect that
Ping An products are hesuan (better deals).
—Participant observation at an agency office of AIA, Shanghai, January 2002
The agents of Ping An were furious and upset when they learned that a local paper
published an article criticizing their investment product, unit linked. They believed that
the article was written by someone tied to AIA. They were already angry with the AIA
agents who distributed another press article reporting the investment losses of unit linked
to their prospects. “This AIA doesn’t observe business ethics. They are jealous of our
sales volume and have been attacking us with every means at their disposal,” Dai Hong,
an insurance agent of Ping An, complained about AIA.
—Participant observation at an agency office of Ping An, Shanghai, March 2002
demonstrate the routine conflicts between
American International Assurance Company, Ltd. (AIA) and Ping An Insurance
Company of China, Ltd. (Ping An), the largest foreign and the largest domestic
insurers in Shanghai, during my research period. When producers venture to
create a market for an entirely new commodity, it is a matter of managing uncertainty, gaining control, and establishing order (Fligstein 2001; White 2002;
Beckert 2002; Guseva 2008; Bandelj 2008). The largest firms at the outset are
THE
ABOVE
OBSERVATIONS
52
MARKETING DEATH
most likely to define the new commodity and control the competition when a
market order is not yet formed (Fligstein 2001). The conflicts between AIA and
Ping An, as the story unfolds, demonstrate not only a commercial battle but also
a cultural war between foreign and domestic firms. Through a chronology of the
ebbs and flows of the market’s formation, this chapter examines the divergent
ways of handling uncertainty and gaining control between foreign and domestic
insurers.
This chapter is about the production market. Harrison White’s (1981,
2002) role structure model of a production market hypothesizes that firms seek
niches in a market based on the positions of all other producers. In this hypothesis, what a firm does when facing uncertainty is watch the competition in
terms of observables and decide on its role in relation to other producers in the
market. Buyers’ tastes and demands, in White’s model, have little impact on
firms’ strategic decisions; as he boldly puts it, “markets are not defined by a set
of buyers” ( White 1981:518). The ethnographic data presented in this chapter,
however, only partially supports White’s hypothesis. We will see that, yes,
insurance firms closely watched what other insurers did when planning their
product development. Nonetheless, some firms were more responsive than others to buyers’ tastes and preferences. In fact, there was a clear pattern of divergence between the foreign and domestic firms in their response to buyers’
demand. While the foreign insurers, as White predicts, were rather insensitive
to buyers’ preferences when locating their niches, the Chinese insurers, on the
other hand, eagerly catered to local buyers’ preferences, even at the expense of
profit. The Chinese insurers’ responsiveness to buyers’ demands cannot be
explained simply by their choice of roles in the market structure ( White 2002).
The Chinese insurers in Taiwan and Hong Kong, in the absence of foreign
insurers, were similarly responsive to buyers’ preferences in their product development (Chan 2012). How can the marked disparity between foreign and
domestic insurers in their choice of roles in relation to buyers’ demand be
explained?
The answer, I suggest, lies in the divergent institutional logics of foreign
and domestic insurers’ operations. The foreign insurers’ model was grounded
in a rather rigorous profit-oriented institutional logic, whereas the domestic
insurers’ model was based on a market-share institutional logic. This disparity, I argue, represents their divergent ways of managing local cultural obstacles. The taboo on premature death, the notion of a good life and a good
death, and the perception of risk shared by the local people together constitute a set of local preferences and dispositions that are incompatible with the
profit-oriented institutional logic of life insurance. This incompatibility puts
profit and market share in tension with each other. The battle between AIA
Defining Life Insurance and Product Development
53
and Ping An is, in fact, a battle over the extent to which insurers as capitalist
corporations could possibly yield to local cultural forces. Why, then, did they
exhibit such differences? My explanation is that foreign insurers’ maturity in
the insurance business and their naturalized convention of rationality precluded them from pursuing a daring and risky approach over a profit-oriented
one. On the other hand, it was precisely the Chinese insurers’ inexperience in
the insurance business that gave them the option of violating the conventional profit-oriented model to embrace an alternative approach. Their novice status put them in a vulnerable position, and instead of focusing on profit
maximization, they struggled for survival. Their struggle prompted them to
be much more willing to accommodate potential buyers’ preferences in order
to capture the market share. Consequently, they produced a dynamic of market formation that is more vibrant than conventional market theories would
predict.
Conflict between Profits and Local Preferences
In Britain and the United States, the popularity of life insurance began with policies insuring against death, specifically premature death, before it moved into
money management policies.1 Nowadays life insurers in the United States and
Europe carry a wide range of risk and money management products, though risk
management remains the primary function that defines life insurance. In the
United States, traditional whole life and term life remained the most widely sold
products even at the end of the twentieth century.2 Thus, the life insurance markets in Euro-American contexts emerged as risk management markets and have
been moving toward risk-cum-money management markets. This market trajectory and its characteristics have their root in the rather unique feature of insurance as a commodity.
The Profitability of Life Insurance
The operation of commercial life insurance follows the central institutional
logic of capitalism, namely, “accumulation and the commodification of human
activity” (Friedland and Alford 1991:248). However, insurance belongs to a
category of commodities requiring a specific logic of operation to make profit
and capital accumulation possible. Producers of insurance face a higher degree
of uncertainty than do producers of most other commodities, because their
products are based on assumptions about the future that are difficult to calibrate, despite advanced technologies (Ericson, Doyle, and Barry 2003). As
insurance is an exchange of money now for money payable contingent on the
54
MARKETING DEATH
occurrence of certain events in the future (Arrow 1971), the setting of prices
and conditions under which money is payable cannot be based on a logic of
making the products attractive to buyers (Ericson and Doyle 2004). The basic
principle on which insurance operates is a probabilistic calculation of risk.
Ironically, insurance should ideally be sold to those who need it the least, or
those with the lowest risk profiles. The calculation of a profit margin requires
actuarial training because it is a rather complicated task. For traditional risk
management insurance products (typically term life, whole life, accident insurance, health insurance, and critical disease insurance), profits mainly derive
from the profit margins that are calculated upon death and casualty rates. For
money management products (typically products with savings and investment
functions, such as endowment or annuity insurance, participating policy, and
variable life), profits principally come from the investment returns of premiums. The profitability of money management products thus relies more on the
investment environment, which is often less predictable. Moreover, defining
life insurance as primarily a money management instrument undermines
insurance’s unique function of managing casualties that other financial institutions cannot provide. It has to compete with the existing money management
establishments such as savings banks, government bonds, and the stock markets (Post 1976). To compete with these institutions, insurers would have to
offer products that have relatively low profit margins. Therefore, according to
the profit-oriented principle, it is in the best interest of insurers to define life
insurance primarily as risk management for a specific market niche, and secondarily as money management for diversification purposes.
In China, it was even more important from the insurance providers’ perspective to define life insurance as a risk management tool, because the local regulatory and investment conditions were unfavorable to the development of money
management insurance products. As commercial life insurance was new to the
People’s Republic of China, the state imposed a number of restrictions on the
investment options of life insurers. To begin with, life insurers in China could not
invest their premium income overseas, and they had to reinsure 20 percent of
their business. The rest of the premium income could be invested in bank
accounts, interbank lending, government bonds, or treasury bonds. However,
poor loan performance of the banks and continual interest rate cuts were likely to
bring insurers to insolvency. In response to this problem, the China Insurance
Regulatory Commission (CIRC) allowed insurers to invest in certain state-level
corporate bonds. Since October 1999, insurers were allowed to invest 5 percent
of their premium income in security or mutual funds. The percentage was later
raised to a maximum of 15 percent. However, the proportion that each insurer
could invest in the stock market was set by the CIRC. For example, by March
Defining Life Insurance and Product Development
55
2001, AIA and Ping An were allowed to invest 15 percent of their premium
income in stock, but China Life Insurance Company, Ltd. (China Life) and
Manulife-Sinochem Life Insurance Company, Ltd. (Manulife-Sinochem) were
allowed to invest only 5 percent (Xu 2002). Despite this opening up of the stock
market for insurers, the investment channels were still very limited. The largest
proportion of insurers’ premium income was still held in banks. In 2002, for
instance, 58.1 percent of Ping An’s premium income was put in fixed deposits and
21.5 percent in government bonds.3 Consequently, insurers’ investment returns
were largely dependent on the interest rates of savings deposits. Under these institutional constraints, a risk management product, with an insured amount payable
only when the specified circumstance(s) occurred, such as death, injuries, or
critical diseases, was more profit guaranteed than were money management
products.
The Local Preferences
The Chinese cultural logics that define death, good life, and risk, as discussed in
chapter 1, are not at all compatible with the profit-oriented institutional logic of
life insurance. This incompatibility was observable in the general public’s preferences with respect to life insurance products. Regardless of the specific details of
an insurance policy, the crux of the matter for the informants was whether the
insured would get the money back when they were alive. To quote one client:
Whether the products belong to the returning principal type or not is
crucial. All the people I know, including myself, will buy only those with
returning principal. The accident insurance doesn’t have any market. . . .
Why? Accident insurance means the insurance company will pay only
when you die or become severely handicapped or paralyzed, or are in a
condition where you are almost dying. Otherwise you’ll get nothing in
return.4
The terms “returning principal” (huanben) and “nonreturning principal” (bu
huanben) were often mentioned by the informants to distinguish money management and risk management products. The former refers to an insurance policy
that makes a payment to the living insured at maturity (or to the beneficiary when
the insured dies prior to policy maturity). The latter refers to the kinds of insurance that pay out only if the stated circumstances occur within the stated period.
Almost all of the informants expressed an explicit preference for “returning principal” policies, but specifically only for the kind that makes payment to the living
insured. They called the kind that makes payment to the beneficiary “death
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MARKETING DEATH
insurance,” which was not what they wanted. Using the term “principal” to refer
to premium is telling. It suggests that life insurance as a category and as a practice
has been interpreted, understood, and treated as money management.
The cultural logics of the Chinese preferences for money management products are further discussed in chapter 5. For our purposes here, we see that there
was observable local resistance to risk management products. The battle between
AIA and Ping An, indeed, was a battle over the legitimate means to overcome this
resistance.
Divergent Institutional Logics
Insurance companies, be they foreign or domestic, are supposed to hold the same
economic interests, namely, profit making and capital accumulation. Normally,
market share yields profits. However, when the kinds of products the local people
want are generally unprofitable, a large share in the market does not necessarily
result in large profits. In China, the obvious conflict between local preferences
and insurers’ profitability confronted life insurance providers with a tough choice
between market share and profits. Yet foreign and domestic insurers displayed a
clear pattern of differences in their choices. Foreign insurers gave priority to profits, whereas domestic insurers focused on market share. This disparity, I argue,
was grounded in the divergent institutional logics under which they operated.
Institutional logic, as defined by Roger Friedland and Robert R. Alford, is a set of
“material practices and symbolic constructions” that constitutes an institution’s
“organizing principles” (1991:248). Like cultural logic, institutional logic
embraces certain things and excludes others. It sets the limits on the very nature
of rationality and legitimacy, and it organizes routines and choices (Douglas
1986; Biggart and Guillen 1999). When applied to organizational practices,
institutional logic constitutes a set of assumptions and values, usually implicit,
about how to interpret organizational reality. It is like a lens that filters, focuses,
and directs the attention of an organization’s decision makers ( Thornton and
Ocasio 1999; Quinn 2008). Adhering to a profit-driven institutional logic, therefore, likely results in significantly different organizational and marketing strategies than does adhering to a market-share institutional logic.
Foreign Insurers’ Profit-Oriented Operation
Given AIA’s and other foreign insurers’ experience in Asian markets, especially
in Hong Kong and Taiwan, they were certainly not ignorant about Chinese culture and local people’s preferences. However, they refused to adopt the local
Defining Life Insurance and Product Development
57
definition of life insurance and resisted fully localizing their products according
to local preferences. An actuary of Pacific-Aetna Life Insurance Company, Ltd.
(Pacific-Aetna) explained why his company had been insisting on promoting risk
management products:
The most profitable product for an insurance company is the traditional
type that reflects closely the meaning of insurance, mainly, risk management. For this kind of product, insurers can calculate the risks involved
and set reasonable profit margins. Normally, protective products have
higher profit margins than savings or investment products. To accommodate the prospects’ preference, we have added an endowment element
into most products. However, the protective element should be the main
feature. The endowment should be the secondary and at best be the
rider.5
This actuary’s statement should be read in a context where the Chinese life insurance market was still brand new and underdeveloped.6 Traditional risk management products could yield good profits, because the actuaries in China usually
used a mortality table more conservative than one based on actual mortality
rates. In other words, the products were overpriced and the profit margins were
high. In addition, although the average premiums for traditional risk management products were lower than those for money management products, selling a
large quantity of risk management products with low premiums but high profit
margins could actually guarantee more profits than selling money management
products with high premiums but low profit margins. This was especially the case
in a new market that was not yet saturated and with limited investment outlets
for insurers’ premiums.
Thus, foreign players in China attempted to accommodate local preferences,
but only up to the point where the profit margin of each product was not compromised. When there was a conflict between profit and market share, they
chose the former. Their product development was indeed not defined by buyers’
preferences.
Domestic Insurers’ Market-Share Operation
Facing the same resistance, the novice Chinese insurers simply offered what the
majority preferred. Ping An was among all most responsive to local demand and
preference. It played a leading role for domestic insurers in shaping the definition
and product development of life insurance. Instead of taking the trouble to introduce a new concept of risk management, the Chinese insurers defined life insurance
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MARKETING DEATH
in a way that accorded with the local means of risk management, namely, savings.
They also capitalized on the locals’ concern about retirement and their child-centered ethos when designing their products. One of the vice directors of product
development at Ping An recalled the company’s rationale for launching yanglao
(retirement) and child policies in its early phase:
The Chinese don’t like to hear about misfortunes. They don’t like to think
about those things. They don’t like to talk about those things. What should
we do? We have to offer products that they like. The Chinese like savings.
They are most concerned about their yanglao issue. . . . Now parents treat their
only child as the king . . . or the queen. We knew that the child policy would
be well received. . . . Any products that have a good market are good products.7
Ping An’s high sensitivity to buyers’ tastes and preferences goes beyond locating a
market niche as White (1981, 2002) hypothesizes. Their aggressive and risk-taking
product development revealed an ambition to rapidly expand and replace AIA as
the industry leader. Ping An’s strategies can only be explained by a market share
institutional logic that, as we will see, legitimized initial financial losses.
The Battle between Foreign and Domestic Camps
Beginning with the arrival of AIA in 1992 up to 2004 when I left the field, the
development of the life insurance business in Shanghai can be divided into six
phases, with a unique feature standing out in each. (1) From late 1992 to the
middle of 1995, AIA endeavored to import a new concept of risk management
and a series of new practices to kick off the emergence of a life insurance market.
(2) With the arrival of three domestic life insurers into the market in 1994–
1995, AIA began to lose control over the definition of life insurance. The newly
established Ping An led other domestic companies to redefine this new commodity as money management, and offer savings and child products. A sudden
boom in the market was evident, particularly in 1997. (3) More joint ventures
entered the market during 1998–1999 and sided with AIA to battle with
domestic insurers over the concept of life insurance. But the market experienced
its first setback in 1998–2000, when savings and child policies began to lose
their appeal. (4) Ping An created a second boom in life insurance sales by launching an investment product called unit linked. A “unit linked fad” was observed
in 2000–2001. (5) The downturn of the stock market in the middle of 2001
resulted in a “unit linked crisis” and shut off the growth of the life insurance
market. (6) After 2002, Ping An and China Life went public to raise funds and,
at the same time, started following more closely the product development of
Defining Life Insurance and Product Development
59
their foreign counterparts. More joint ventures and domestic insurers arrived,
but the market was stagnant.
AIA’s Pioneer Role and the Introduction of a New
Concept of Risk Management (1992–1995)
Prior to the entry of AIA, the state-owned People’s Insurance Company of China
(PICC) concentrated its business on group life. The product design of the tiny
amount of individual life policies that PICC sold was not based on a commercialoriented calculation. For example, the premium and insured amount of their
Simple Life policy were chosen for convenience: clients paid one yuan a month in
return for one yuan a day at the end of a term of 20 years. Their products were
distributed by staff who received salaries rather than commissions.8
As the first commercial life insurer, AIA faced no competitors upon its
entry. However, it faced a population with basically no idea of what life insurance was. This foreign insurer carried the mission of “educating the public about
the concept of life insurance.” It defined life insurance as a new, modern, and
effective risk management instrument, as a protection against misfortunes. The
first two products AIA offered were personal accident policies. These policies
covered death, dismemberment, and medical and hospital fees incurred by an
accident. Neither of these policies carried a cash value, and therefore, payments
would be made only upon the occurrence of the stated circumstances. To sell
these products, AIA underscored the protective function of life insurance and
trained their sales agents to go door to door, telling people stories of misfortunes that happened to families without insurance. However, the agents faced
not only rejections but contempt, suspicion, and even hostility. Huang Lei, who
worked for AIA in 1993 but quit two years later, recounted how people
responded:
Most people were hearing the term baoxian (insurance) for the first time.
They didn’t understand what it was. Although we used stories to tell them
about the concept, we couldn’t be too explicit. You know, we Chinese
don’t want to talk about death or misfortunes. . . . But some people mistook the meaning of life insurance. As you know in Chinese, bao has double meanings as “to protect” or “to ensure.” When they heard baoxian,
some mistook it and yelled at me, “What? You are selling a curse on me?”9
Baoxian, the Chinese words for “insurance,” indeed carries contradictory double
meanings. Xian refers to danger, dangerous, risk, or risky. Bao has two different
meanings: to protect or to ensure. Therefore, bao-xian together can be interpreted
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MARKETING DEATH
as “to protect (against) dangers or dangerous events” or “to ensure dangers or
dangerous events (happen).”
AIA soon offered two other products: a term life and a whole life policy.
Knowing that the Chinese would like to see a return on their money, AIA modified the typical feature of term life by adding a cash value to be paid to an insured
who survived the term. However, because the cash value for both policies was
calibrated upon an interest rate much lower than that offered by savings banks,
neither of these policies was appealing to the public. In response to the difficulties
of selling any of these products, AIA then introduced a new whole life policy
called LES that proved popular in Hong Kong. This policy served mainly a protective function for the beneficiary, because the insured amount was paid only
upon the death of the insured. Surprisingly, quite a few of these policies were sold
from 1993 to 1995. Shen Hingfu, a senior agent of AIA, explained why the policy was popular:
The LES carries an incremental dividend. . . . It offers a guaranteed minimum dividend rate of 3 percent. . . . When we sold this product, we first
talked to the prospects about the importance of protection and risk management. When we found that the prospects didn’t like to listen to what
we said, then we talked about dividends. Very often, when they heard of
dividends, they just liked it. They bought it as a kind of investment. They
didn’t care about its risk management function. They simply liked the dividends. It was very popular even for children. The parents thought this
product was a good deal.10
LES was the first life insurance product that brought AIA to the public’s attention. The dividend feature of this product gave the agents an inviting topic to
broach with their prospects, allowing them to use specific framing language that
better fit the prospects’ preferences. Framing as a linguistic strategy is often used
to convince others who do not necessarily share common interests that what will
occur is in their interest (Fligstein 1997). By highlighting the dividend feature of
the policy, the sales agents were invoking a money management genre to legitimize this new commodity. This linguistic framing, which is quite commonly
adopted by business organizations for legitimacy when introducing something
new (Hirsch 1986; Fiss and Zajac 2006), contributed to a gradual growth of
AIA’s business between 1993 and 1995.
Thus, AIA played a leading role in initiating the emergence of an individual
life insurance market. It secured 91 percent of the total 770,000 individual life
policies sold in Shanghai in 1995 (Sun 2001). On the other hand, PICC monopolized the group life business. These two companies, one American and one Chinese
Defining Life Insurance and Product Development
61
state owned, each took on a unique role and had a clear niche. Nonetheless, AIA’s
business growth was brought by the popularity of a product that was received by
the buyers as “a kind of investment.” Its mission of educating the public about the
risk management concept of life insurance had not been achieved. This unfinished
mission in part doomed AIA to lose market share to the newly emerged Ping An
in 1996 and after.
Domestic Insurers’ Entrance and a Local
Interpretation of Life Insurance (1995–1997)
In 1996–1997, AIA was shocked by an unexpected, sudden explosion in life
insurance sales. Even more surprising to this experienced American insurer was
that this sudden change was brought by a new domestic insurer, Ping An.
Ping An started its business by selling property insurance. The general manager, Mr. Ma, had no prior experience in running a commercial insurance business. In 1993, he visited several well-established domestic insurance companies
in Taiwan and was impressed by the success of the domestic life insurance industry there. Upon his return, he decided to switch the business priority of Ping An
to life insurance.11 In July 1994, Ping An introduced its first life insurance product. In just two years, it had already seized a substantial portion of market share
in Shanghai, measured by the share of the total premium income in the city.
Figure 2.1 shows that by the time Ping An entered the life insurance business,
market share for PICC stood at 78 percent, AIA’s at 12 percent, and that of
China Pacific Insurance Company, Ltd. (China Pacific) at 9 percent. By the end
of 1995, however, PICC had lost a substantial share to AIA and Ping An. Both
AIA and Ping An experienced considerable sales growth in 1995, when AIA
owned 23 percent of total life premium income. Nonetheless, this was AIA’s
greatest market share ever. Subsequently, its share dropped to 13 percent in 1996
and fell further to 8 percent in 1997. One reason for this decline was that PICC,
which used to sell group life only, was then restructured into China Life and
began to promote individual life. But, the real competitor of AIA was Ping An,
whose market share rose remarkably from 1 percent in 1994 to 14 percent in
1995. It jumped to a staggering 33 percent in 1996 and increased to more than
40 percent in 1999. In 2001, Ping An captured up to half of the life insurance
market share in Shanghai. The strong sales of Ping An upon its entry surprised all
of its competitors.
According to figure 2.1, 1996 was the critical moment for reversing the fortunes of Ping An and AIA in the market. What happened then? First, an incident
in late 1995 hurt the reputation of AIA. A senior citizen in Shanghai, holding an
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MARKETING DEATH
Market share
(%)
AIA
90
Ping An
80
China Life (PICC)
70
China Pacific
60
Other 14 insurers
50
40
30
20
10
04
Year
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
19
94
0
Figure 2.1 Insurers’ Market Shares of the Life Insurance Business in Shanghai,
1994–2004
Sources: (1) Ershiyi Shiji Jing ji Baodao (Twenty-first Century Economic News) January 7, 2002,
for data from 1994 to 1999; (2) data from 2000 to 2004 are author’s calculations based on the
premium income of each company available in Almanac of Shanghai Insurance 2001–2005.
AIA insurance policy purchased before AIA withdrew from China in 1949,
demanded that the insurer fulfill the terms stated in the policy. AIA refused to do
so, maintaining that the present company was legally and financially independent
of the earlier one. The old client was not convinced. He reported this incident to
the local media. The media was sympathetic to this elderly resident and questioned the credibility of AIA. AIA defended its position by using a legal justification. Nonetheless, it failed to understand that the locals were, in fact, demanding
a moral, humanistic obligation. What this American insurer failed to understand
was that the Chinese notion of justice could be different from the Western one
(von Senger 2000; Chen 2000; Stockman 2000).12 Its lack of sensitivity to the
local concepts of justice, integrity, and morality caused severe damage to its reputation in 1996 and 1997.
At the same time, Ping An proved its sensitivity and responsiveness to local
demand and preferences. At the time Ping An joined the life insurance market
in 1994, it did not have an actuary or a trained underwriter. This inexperienced
domestic insurer modeled its first product on that of AIA. It presented a personal accident policy but set a much lower premium for coverage similar to
AIA’s. Nonetheless, the accident policy was not very well received by the public. Soon after Ping An found that the product was not exactly what ordinary
Defining Life Insurance and Product Development
63
citizens wanted, it launched three policies that served primarily a savings function. They included a whole life endowment policy called Ping An Longevity
Insurance, a whole life annuity policy named Hundred-Year-Old Retirement
Annuity Insurance, and a child endowment-annuity policy named Child Lifelong Happiness Insurance. The first two policies, called yanglao xian (retirement insurance), were designed to appeal to the local penchant for savings and
the concerns about life during retirement. A Longevity policyholder would
receive an installment of “living funds” every three years starting from the
insured date until death, and the beneficiary would receive the insured amount
when the insured died. A Hundred-Year-Old policyholder would receive an
annuity with an annual increment of 5 percent, starting from age of 55 for
males and 50 for females until death. The beneficiary would receive the insured
amount if the insured died before the designated age. The child policy, on the
other hand, was offered to capitalize on the emerging child-centered way of life.
The premium of this policy was fixed at 360 yuan (~ US$44), or one yuan a day,
for any healthy child age 1 month to 15 years. The coverage included compensation for the child’s death and a number of benefits for the insured child: a
living endowment, high school education funds, college education funds, a
wedding endowment, and monthly pension funds until the insured passed
away. This child policy was sold as a savings plan for the child. In fact, when
selling either yanglao or child insurance, the sales agents did not have to touch
on the troublesome topic of premature death or other misfortunes. However,
they were left with a problem: to be appealing savings plans, the insurance
products had to be economically competitive.
Indeed, none of the three savings policies Ping An introduced was competitive. The amount payable to the insured was based on an interest rate of 7.8 percent, which was lower than the 10.98 percent interest rate offered by savings
banks at the time. As the agents highlighted the savings function of the products
over their protective function, it was difficult to convince the “shrewd Shanghainese” that it was a good deal. Nonetheless, figure 2.1 indicates that Ping An’s
sales volume in 1995 increased to 13 percent of the total sales in Shanghai. How
did Ping An compete for its share?
Ping An deployed a marketing strategy called renhai zhanshu (human-sea
strategy). This strategy came from Mao Zedong’s military tactics in the Korean
War. When confronted with the technologically advanced U.S. force, Mao
deployed a vast number of ordinary people to meet the U.S. army. Interestingly,
Ping An used this strategy to compete with the U.S.-based AIA. It recruited a
large number of insurance agents, mostly women in their 30s and 40s, to reach
out to as many people as possible through their guanxi, or interpersonal relationship, networks. The agents aggressively but tactfully approached their friends
and relatives to sell them insurance. As I detail in chapter 4, it was quite common
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MARKETING DEATH
for these friends and relatives to buy an insurance policy from the agents in order
to fulfill the etiquette of renqing (interpersonal obligation) that constitutes the
Chinese norm of reciprocity. This marketing strategy proved to be effective. Ping
An surprised AIA with its dramatic growth in 1995. It was nonetheless only a
prelude of more surprises to come.
When selling the child policy, the sales agents of Ping An did not have to rely
much on the etiquette of renqing. Taking advantage of prevailing child-centered
sentiments, they used a slogan of “saving one yuan a day for your child” and presented child insurance as a fashionable savings plan for children. Despite its lower
interest rate, the child policy was well received by the public. Many parents
bought one or several child policies as a gift for their only child, which I further
describe in chapter 5.
Understanding life insurance as an alternative money management instrument was further reinforced when the insurance policies became appealing savings plans. Beginning in the second half of 1996, the interest rate in China
dropped consecutively a few times. Two significant interest rate cutbacks took
place in August 1996 and June 1997. However, Ping An did not immediately
adjust the interest rates for its products. As a result, it created an astounding scene
in Shanghai in 1996–1997. People actually queued up for life insurance! Shi Jin,
an insurance agent who worked for Ping An during that period, described this
historical moment:
It was a peculiar phenomenon. . . . Every time the bank announced that
the interest rate was going to fall, people lined up outside the headquarters
of Ping An. . . . Some of them bought the yanglao policy, but the majority
wanted the child policy. They all wanted to give the best for their only
child. They formed a very long queue outside the building. The staff at the
headquarters couldn’t manage so many buyers, and therefore, they called
us. A bunch of agents went there. It was very funny. There were two queues
lining up outside the headquarters, one for buyers and one for agents. The
agents stood next to the buyers, filling out the application forms for them
and collecting cash from them. Many agents of Ping An made a fortune at
that time.13
People flocked to Ping An for these insurance policies, fearing that the interest
rates for the policies would soon be adjusted. As the insurance policies guaranteed fixed interest rates higher than those offered by banks for the entire covered
period (which could be 20, 30, or even 40 years), these policies were indeed “great
deals.” Thus, the popularity of Ping An’s Longevity, Hundred-Year-Old, and
Child Lifelong Happiness policies marked the first miracle of Ping An.
Defining Life Insurance and Product Development
65
Witnessing the dramatic increase in Ping An’s sales volume, China Life began
offering a child policy with a high fixed interest rate. However, the features of that
policy were not as innovative and attractive as the one offered by Ping An. No
education funds or wedding endowment was listed for the child’s benefits. Nevertheless, it was the child policy that made China Life experience their first
increase in market share in 1997 after AIA’s and the other insurers’ arrival in
Shanghai (see figure 2.1). Ping An and China Life, though competing against
each other, simultaneously united to render life insurance a money management
concept, in contrast to the foreign camp’s risk management concept.
Intensified Battle over the Concept of Life
Insurance and a Market Setback (1998–2000)
AIA lost a significant market share to Ping An and China Life in 1996–1997.
Why did AIA not offer something similar? An senior agent of AIA had the
following comment on the difference between AIA and Ping An in responding
to buyers’ preferences: “Ping An was more sensitive to the locals. Whatever the
locals wanted, Ping An offered it. . . . AIA insisted that insurance was not for
children. It was not the right concept to put a child as the insured. However,
Ping An didn’t care. It just offered whatever the prospects liked.”14Another senior agent described how AIA responded to the sudden expansion of their local
competitors: “When Ping An, China Life and China Pacific joined the market,
they offered products that pleased the potential buyers. . . . We, AIA, insisted
on the original meaning of insurance. . . . So, we put our efforts toward selling
personal accident insurance and educating our prospects on the right concept
of insurance.”15 Not until 1998 did AIA offer its first yanglao policy. It took
AIA two years to respond to the popularity of yanglao insurance, because this
foreign company was cautious about offering products that might induce
losses. With its experience, AIA foresaw that the interest rate in China would
drop, so it waited until the interest rate seemed low enough to offer savings
products.
More foreign players arrived between 1996 and 1999. Four Sino-foreign joint
ventures were formed: Manulife-Sinochem in November 1996, Pacific-Aetna in
October 1998, Allianz-Dazhong Life Insurance Company, Ltd. (AllianzDazhong) in January 1999, and AXA-Minmetals Assurance Company, Ltd. in
June 1999. Upon their entry, they all sided with AIA to defend a risk management definition of life insurance. The battle between domestic and foreign players intensified over the concept of life insurance. The foreign camp insisted on a
risk management definition, because their products were not competitive when
insurance was framed as money management. Their reluctance to offer competitive
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MARKETING DEATH
savings products made them lose market share to domestic players but saved them
from financial losses.
The high-interest-rate products that domestic firms sold the most in 1996–
1997 induced severe losses for them. Starting in the mid-1996, there were a
series of substantial interest rate reductions in China. Although the domestic
insurers did adjust their interest rates and the features of their products accordingly, they did so slowly in order to boost their sales. For instance, when the
official interest rate was dropped to 2.25 percent in June 1999, the interest rate
for a number of Ping An’s products stood at 5 percent. The same applied to
China Life and China Pacific. AIA and the joint ventures drew the regulatory
body’s attention to the problem. Worrying that the loss-inducing products
would lead to insolvency of the domestic companies, the CIRC, in the second
half of 1999, ordered the domestic insurers to stop selling high-interest-rate
policies and set an upper and a lower limit on interest rates (2.5–4 percent) for
all insurance products. Nevertheless, Ping An and other domestic insurers had
already sold a substantial amount of unprofitable policies. By June 2000, the
losses Ping An incurred from those sales reached 10 billion yuan (~ US$1.2 billion). And Ping An was not alone. China Life and China Pacific suffered from
the same problem. China Life’s losses were even bigger because of the nationwide scale of its sales. Its deficit mounted to 20 billion yuan (~ US$2.4 billion)
by June 2000.16
In response to the new regulation imposed by the CIRC, Ping An came up
with a new idea to get around the restriction. It offered a product with a guaranteed minimum interest rate of 2.5 percent plus a “return of difference.” This
“return of difference” stipulated that if savings banks offered an interest rate of
higher than 2.5 percent anytime in the future, Ping An would pay the difference,
up to 7 percent. Nonetheless, it failed to attract a large crowd of buyers. Because
the rapid growth of life insurance sales was driven by high-interest-rate products,
their absence significantly slowed the growth of the market, especially in 1999–
2000 (see chapter 1, figure 1.1).
The Unit Linked Fad: Ping An’s Miracle and an
Innovative Definition of Life Insurance (2000–2001)
Throughout its infancy as an insurer, Ping An had identified itself as an innovative, responsive, and ambitious company. In response to the interest rate restriction imposed by the CIRC, Ping An launched an entirely new product called
unit linked (toulian) in October 1999. For this product, each unit of the premium paid is linked to an investment return. Like variable life insurance in the
Defining Life Insurance and Product Development
67
United States, it is investment insurance in which the amount payable may fluctuate during the term of the policy. In China, the variable is tied to an index of
mutual funds, corporate bonds, financial bonds, and savings interest. Because
the amount of return (or the so-called insured amount) is linked to the investment performance of the premium, this product is not one with a high profit
margin. Nevertheless, its advantage for insurance providers is that the investment risk has been shifted to the clients. Ping An launched this product with
the inventive idea that, on the one hand, the product might relieve part of its
financial burden, and on the other hand, it could continue to present life insurance as money management and even capitalize on the “stock fever” culture in
Shanghai.
In 2000–2001, the Shanghai integrated stock index hit its highest point since
its inauguration. This produced not only an optimistic investment atmosphere in
Shanghai but also “stock fever,” a phenomenon captured in the early 1990s by
anthropologist Ellen Hertz (1998), as summarized in chapter 1. Stock fever
intensified during my research period of 2000–2002—buying and trading stocks
were enormously popular, and most of my informants held some stocks. Capitalizing on stock performance and the popularity of stock exchanges, Ping An presented unit linked as a profitable investment, like a variant of stock. This new
concept of insurance as a modern, fashionable means of investment received a
feverish response from the public. An agent of Ping An recounted how she sold
unit linked in 2000–2001:
It was not difficult at all. Most of our prospects first learned about the unit
linked through their friends and colleagues. These friends and colleagues
liked this product so much that they helped to spread the word to our
prospects. When people saw that their colleagues and friends all bought
this product, they thought it must be good. They didn’t want to lag behind
and miss out on the opportunity [to make profits]. Many of my clients
were referred by their friends or colleagues to come to me specifically for
this product.17
By characterizing insurance as investment, Ping An was able to beat all its competitors. Unit linked brought another surge in Ping An’s sales, and its market
share rose to a peak of 49 percent at the end of 2001. Among its premium income
from individual life insurance policies, 45.4 percent came from this single product. It brought dramatic growth to Ping An not just in Shanghai but nationwide.
By the end of 2001, Ping An’s total life premium income at the national level had
increased 78 percent compared to the year before. In Beijing, Ping An held as
much as 48 percent of the market share.18
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MARKETING DEATH
In response to the unit linked fad, China Pacific followed Ping An’s lead and
offered an investment product called All-Powerful Life in August 2000. This
product was similar to variable universal life in the United States. A distinctive
attraction of the All-Powerful Life was a guaranteed minimum return rate equivalent to the savings interest rate. It was an investment product, and yet, the risk
was lower than for unit linked. This product, according to an agency manager of
China Pacific, was well received by the public and brought some of China Pacific’s declining market share back in 2000–2001 (see figure 2.1).
While frustrated by the unit linked fad, the foreign insurers pushed even
harder on the traditional idea of insurance. They underscored the risk management function of life insurance in their agency training, blaming Ping An for
misleading the public and distorting the concept of insurance. The managers of
these foreign insurers repeatedly commented that the life insurance market in
mainland China was too “immature” for investment insurance. AIA was the most
vocal in attacking unit linked. Whenever the press reported the fall of the stock
market index and possible losses for unit linked clients, its agents clipped the
newspaper stories, duplicated them, and sent them to their prospects and clients.
They presented the news clips to their prospects as evidence that unit linked was
not only an unprofitable product but also a risky product. The vulnerability of
unit linked gave foreign insurers an opportunity to restate the “right” concept of
insurance. “Insurance is supposed to reduce risk, not to add risk to our clients,”
the general managers of the foreign insurers reiterated.19
Nonetheless, under the pressure of competition, these foreign insurers introduced
a new category of products that sounded like investments. Manulife-Sinochem first
offered a participating policy in March 2000, with a dividend rate dependent on the
profitability of the insurer’s investment. Participating policy differed from Ping An’s
unit linked policy in guaranteeing an insured amount and differed from AIA’s LES of
the past in not guaranteeing the dividend rate. However, when Manulife-Sinochem
launched its first participating policy, it offered a guaranteed dividend rate plus a nonguaranteed one to make it appealing. The local people called this type of product
“dividend insurance” (fenhong xian).
AIA responded quickly to this new product line. By the summer of 2000, it
carried two dividend policies. One was called Higher and Higher and the other
Dividend Every Year. Both were whole-life policies with an endowment component. Because the profit margins of dividend products were relatively low, AIA
was not very enthusiastic in promoting these products. Nevertheless, the agents
found it easier to sell the Dividend Every Year policy when they could talk
about dividends, so they concentrated on selling this product. Allianz-Dazhong
also followed the trend and provided two dividend products similar to AIA’s.
These two products, one called Full of Gold and Jade and the other Fortune
Defining Life Insurance and Product Development
69
God Looking After, became the primary products that the agents of this SinoGerman insurer sold in 2001–2002. Pacific-Aetna was the least interested in
offering dividend policies, though it finally did, given the keen competition. In
November 2000, it offered two products with dividends, one called 333 Incremental and Returning Principal and the other 888 Returning Principal. Like
AIA, Pacific-Aetna did not promote these products. The profit margins on
these products were so low that the sales and marketing manager of PacificAetna discouraged agents from selling them. He explained to the agents why
the dividend products were not beneficial to the insurance companies and why
they should make an effort to sell traditional life policies.20
Thus, foreign insurers’ responses to the unit linked fad were rather ambivalent. While they continued to defend the traditional risk management definition
of life insurance, they also offered parainvestment products to compete with Ping
An (although they discouraged their agents from selling them). Because dividend
policies were presented as a money management instrument that met the local
concept of insurance, it was rather well received by the public. In the first three
quarters of 2001, more than 70 percent of the policies sold in Shanghai were in
the dividend category.21 Together with unit linked, dividend insurance brought
another surge of market growth in real terms to 52.3 percent in Shanghai and
41.8 percent in China overall in 2001 (see chapter 1, figure 1.1). However, an
undesirable consequence was that the definition of insurance further veered from
the concept of risk management.
The Unit Linked Crisis and Ping An’s Lessons (2001–2002)
The unit linked fad lasted for about a year and a half. It came to a halt in the last
quarter of 2001 as a consequence of the downturn in the stock market and an
“awakening” about what investment insurance meant.
In the last quarter of 2001, the stock index in Shanghai started to decline. The
fall was dramatic in 2002, when the index slumped to 1748.89, down more than
22 percent from the previous year.22 On December 6, 2001, an article titled “0.67
Percent of the Customers Gained, 99 Percent of Them Lost Up to Now: Ping An
‘Unit linked’—The Concealed Fact of Loss” appeared in a national newspaper,
Nanfang Zhoumo (Southern Weekly).23 This article explained that although the
stock index rose in 2000–2001, the majority of the unit linked clients suffered
losses because none of their first-year premium was invested in the stock market.
The first-year premium was in fact a payment for the risk management function
of the policy. When part of the second-year premium went to the investment
account toward the end of 2001, the stock index started falling. The majority of
clients did not realize that part of their premium was used for a risk management
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MARKETING DEATH
function, what they called a “nonreturnable” component. On December 30,
2001, three policyholders of unit linked in Fuzhou, a city between Guangzhou
and Shanghai, collectively filed a complaint with the CIRC accusing Ping An of
cheating them. They alleged that the sales agents of Ping An misled them to
believe that unit linked would bring them a profit rate of at least 18 percent.
However, by December 2001, they found that their accounts actually suffered
losses.24 The appearance of the Nanfang Zhoumo article and the disclosure of the
Fuzhou incident resulted in a “unit linked crisis.” Following the lead of the three
clients in Fuzhou, a number of unit linked clients in different cities complained
that Ping An sales agents had also misled them by exaggerating the possible
returns of the product. Ms. Xu was a typical unit linked buyer who complained
that her agent cheated her: “Oh, don’t mention the unit linked! It’s a trick. The
agent told me that my principal could have doubled in 10 years, and tripled in 15
years. Who doesn’t want to make profits?. . . . It was not until I read the Nanfang
Zhoumo that I found out that I was actually losing. All of the people in my work
unit are facing the same fate. We were all cheated!”25
Although buying the unit linked policy, by definition, is a risk-taking behavior, the Chinese clients bought this product not because they were ready to take
risk. While insurance agents in the United States in 2002–2003 reported that
only corporate or wealthy clients bought variable life for investment purposes
because these clients were able to bear the risk,26 the situation in China was different. The buyers of unit linked came from all different economic backgrounds
and age groups. They wanted to make profits but were generally not prepared to
take the risk. During the two months from December 2001 to January 2002, a
number of newspaper articles appeared to explain to the public what unit linked
was and what insurance should be. Just to cite a few examples, articles such as
“Educating Insurance Consumers to be ‘Understanding Persons’,” “Don’t Get
into the Misleading Area of Unit Linked,” “Paying Attention to Risk, Focusing
on the Long Run,” and “Buying Insurance Requires a Change in the Concept of
Consumption” appeared in Zhongguo Baoxian Bao (China Insurance News) and
Jingrong Shibao (Financial News). They all attempted to “correct” the “misunderstanding” of insurance.
The unit linked crisis marked the end of the unit linked fad. While Ping An
had been popular since its emergence thanks to its highly localized products, its
reputation was hurt by unit linked. Since early 2002, Ping An had been suffering
from a severe setback. This new rising star stood at a crossroads for repositioning
itself in the insurance industry. There were disagreements in the top managerial
body. Some, mostly the local Chinese, wanted to continue the innovative, aggressive, and daring model in its product development so as to continue to make Ping
An “big.” Others, mostly the Taiwanese and other expatriates, wanted to adopt a
Defining Life Insurance and Product Development
71
more conventional model of operation that focused on profits rather than market
share.27 Nonetheless, as the CIRC further tightened control over the industry,
for example, setting a ceiling interest rate for all life insurance products and placing a cap on commission rates, there was not much room for Ping An to be innovative and daring.
Converging Product Lines but Continued Negotiations
over the Concept of Life Insurance (2002–2004)
Ping An’s innovative, daring, and opportunistic strategies were prevailing only in
an environment that was relatively unregulated and volatile (Axelrod 1984).
Increasing regulations imposed by the CIRC and the unit linked crisis left Ping
An with little leeway but to join its foreign counterparts to develop risk management products. In the second half of 2002, Ping An and AIA both concentrated
on promoting critical disease insurance.
The critical disease insurance appeared as a response to the privatization of
medical care in China. This kind served mainly a risk management function,
though it carried a cash value. The first critical disease policy, named Protective
God, was offered by AIA. It covered 20 critical diseases. If an insured was diagnosed as suffering from any of the covered diseases, she or he would receive 50
percent of the insured amount. The other 50 percent would be given to the
insured in five years, or to the beneficiary if the insured died. If the insured lived
to the age of 88 without suffering from any diseases, she or he would get the
insured amount, or else the amount would be paid to the beneficiary. In other
words, this policy was like a whole life policy but with a focus on managing the
financial burden brought about by critical diseases. Similarly, Ping An offered
two critical disease policies: Carnation for females and Evergreen for males. These
two products served the same function as the Protective God of AIA, yet they
covered a few more serious diseases and carried a dividend component. This dividend component seemed insignificant because there was no guaranteed rate.
Nevertheless, as described in chapter 4, it was this dividend component that facilitated the agents’ sales talks. As a result, Carnation and Evergreen were slightly
better received by the public compared to the Protective God policy. However,
the purchase of any of these products required a certain sense of risk that critical
diseases might occur to the buyers. This insurance failed to stimulate another
surge of market growth because the prospects’ sense of risk, as described in chapter 1, was different from the one called for by these products.
Although Ping An suffered a setback with the unit linked crisis, its extraordinary growth within a short period of time attracted investors who were optimistic about this Chinese insurer’s future development. In October 2002, the
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MARKETING DEATH
London-based HSBC Group bought 10 percent of Ping An’s shares. To rescue its
reputation from the unit linked crisis, Ping An launched a “caring project” from
the late 2003 to March 2004. Their sales agents were asked to visit all of their
existing clients of unit linked, to explain to them the contents of their policies,
and to offer them two alternatives if they did not like their policies. One option
was to convert all their original accounts, whatever they might be, into a “guaranteed account” so that their principal would be guaranteed. The clients might not
make profits, but they would not suffer losses. Another option was to surrender
the unit linked in exchange for one of the two whole life endowment policies,
with an administrative fee equivalent to 12 percent of the amount of premium
they already paid for the unit linked. In addition, the “caring project” offered to
give 3 percent of the profits that Ping An yielded from the unit linked to the clients who opted to keep the policy.28 This “caring project” again demonstrated the
flexibility of Ping An’s organizational strategies in dealing with the locals’ complaints and accommodating their preferences. It did seem to have a remedial
impact on Ping An’s reputation.
Ping An’s initial public offering in Hong Kong on June 24, 2004, was fervently received. The subscription for its initial offering was more than 50 times
the number of shares it issued.29 Ping An raised HK$14.3 billion (~ US$1.73
billion) with this exercise.30 In May 2005, the HSBC Group took over another
9.91 percent share of Ping An that originally belonged to Morgan Stanley and
Goldman Sachs. Then, on March 1, 2007, Ping An was listed on the Shanghai
Stock Exchange, where its price jumped 38 percent on the first day of trading.
Ping An raised 38.9 billion yuan (~ US$4.7 billion) from this exercise.31 In addition to Ping An, China Life also went public. In fact, it did so right before Ping
An did and was similarly positively received by the public. The subscription for its
initial offering in Hong Kong was more than 20 times of the number of shares it
issued. It raised HK$27.86 billion (~ 3.37 billion) from its listing in Hong Kong
on December 18, 2003, and its price jumped 26 percent on the first day of trading.32 When it was listed in Shanghai on January 9, 2007, it raised 28.32 billion
yuan (~ US$3.42 billion), and its price jumped more than 100 percent on the
first day of trading.33
While Ping An’s share prices in Hong Kong and Shanghai appeared promising, its market share dropped significantly starting in 2002. During 1998–2001,
the average annual growth of Ping An’s life business in Shanghai was 36.8 percent.
The figure dramatically sank to zero (or, more precisely, negative 0.1 percent) during 2002–2004. Its market share fell from 49 percent in 2001 to 30 percent in
2004 (see figure 2.1). The plunge of Ping An’s growth and market share was not
confined to Shanghai. Its market share at the national level dropped from almost
28 percent in 2001 to 17 percent in 2004. Ping An’s growth in sales reached an
Defining Life Insurance and Product Development
73
acute impasse when it finally stopped offering products that were tailored to local
preferences. At the same time, the real growth of the life insurance business in
Shanghai markedly declined from more than 52.3 percent in 2001 to only about
20.2 percent in 2003. Although more domestic and joint-venture insurers were
formed between 2002 and 2004, and more than 100 life insurance policies were
available in the market, the Shanghai life insurance market in 2004 experienced
negative growth in real terms (negative 2.6 percent) for the first time since its
emergence (see chapter 1, figure 1.1).
The decline in market growth since 2002, I argue, was due to the conflict
between the profit-oriented institutional logic of life insurance and the local cultural logics rooted in the Chinese concepts of life and death. The more insurers
indigenized their products according to the local cultures, the more the market
expanded, and vice versa. I further analyze the relation between market growth
and the extent of indigenizing the product development of life insurance in
Chinese contexts in chapter 6, with Hong Kong and Taiwan included for
comparison (see also Chan 2012).
Explaining the Pattern of Divergence
The ethnographic details presented above demonstrate not only the competition
among different producers but also the negotiation between producers and
potential buyers over the definition of the new commodity. Instead of allying
with the experienced foreign insurers to negotiate with potential buyers, the
domestic insurers sided with the latter to battle with their foreign counterparts.
Their unreserved accommodation with buyers’ demand was based on an institutional logic of market share, which stands in contrast to foreign insurers’ profitoriented institutional logic. This divergence, I argue, manifests foreign and
domestic insurers’ different ways of managing the local cultural resistance to the
new concept of risk management.
What is left unanswered is why foreign and domestic insurers chose the kind
of logic they did. Why didn’t foreign insurers adopt a market-share model in the
first place? Likewise, why didn’t domestic insurers follow a profit-oriented institutional logic to avoid losses?
It is likely that AIA and other foreign insurers’ lengthy experience in the
insurance industry, mostly in developed economies, deterred them from taking
the daring and risky strategy favored by the novice Chinese insurers. These longestablished insurers had too much at stake, and such an alternative model was out
of the realm of rationality in their naturalized convention. Their “common
knowledge” led them “to coordinate on one outcome, rather than another.” (Hall
and Soskice 2001:13). On the other hand, the inexperienced, or even ignorant,
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MARKETING DEATH
position of the domestic insurers gave them the very possibility of violating the
conventional model. Put differently, the Chinese insurers, due to their lack of
expertise, were unaccustomed to the peculiar profit-making logic of commercial
life insurance. They were unfamiliar with the very idea that profits were possible
only through an uncompromising violation of buyers’ preferences and demand. I
report elsewhere that the domestic life insurers in Hong Kong and Taiwan similarly accommodated local preferences for money management products despite
low profit margins (Chan 2012). This suggests that a profit-and-capital accumulation model of business operation is never adopted as naturally as economists
assume. Although a profit-oriented logic is becoming more prevalent and dominant worldwide, it was not and is still not a universal logic for all business models
(Fligstein 2001; Thornton and Ocasio 1999). Because institutional logics are
embedded in local contexts, and local rules and meanings produce particular
variations in interest and action (Fligstein and Mara-Drita 1996; Binder 2002,
2007; Go 2008; Hallett and Ventresca 2006), it is not surprising that Chinese
insurance firms defined their organizational interests differently than their foreign counterparts. This sets them apart from the foreign players in responding to
local demand and cultural obstacles and explains why they adopted a market
share approach in the first place.
Furthermore, their difference can be explained by Daniel Kahneman and
Amos Tversky’s (1979) classic hypothesis of decision making under different risk
scenarios: people in a gaining situation tend to take a risk-averse stance for a sure
gain over a probable larger gain, whereas people in a losing situation tend to be
risk seeking for a probable larger loss over a sure loss. This hypothesis was supported by institutional economist Douglass North’s documentation of the life
insurance development in America in the second half of the nineteenth century.
According to North (1952), the relatively small life insurers were daring enough
to launch innovative but controversial products (including tontine policy and
industrial insurance) to compete with the established big insurers, which insisted
on offering traditional policies that were actuarially more certain. While the “old
big three” adopted a conservative strategy to maintain family protection as the
primary function of life insurance, the smaller insurers ventured to swing the
meaning of life insurance to be associated with profit making. Therefore, established big firms are less likely to take risk than newly emerged smaller firms (see
also Murphy 2010). This hypothesis can be applied to explain the divergence
between transnational and domestic insurance firms in China as well. Neil Fligstein (2001) argues that actors in firms are not always profit maximizers and
their strategies are often oriented toward enhancing their firms’ survival instead.
Facing the advent of the experienced transnational corporations, the Chinese
insurers’ primary concern was indeed survival rather than profit maximization.
Defining Life Insurance and Product Development
75
None of the domestic insurers, in my observation, placed profit making as their
priority over market share when they began. But Ping An stood out because,
ironically, it was the most vulnerable and faced the most uncertainties about its
survival. Unlike China Life, which had the support of the state, and China
Pacific, which was originally a division of a state bank before becoming independent, Ping An was formed as a brand-new private company. Struggling for
survival, no doubt, was this new insurer’s foremost mission. Meanwhile, the
stake of this brand-new private insurer was low compared to others. It had no
historical burden and did not have much to lose. Thus, Ping An’s inexperience
and dire need for survival, paradoxically, gave it the initial leeway and flexibility
to venture into some unprecedented daring strategies.
Foreign and domestic insurers fighting against each other over the concept
and product development of life insurance manifests only one of the many contested scenes of the formation of a Chinese life insurance market. The competition between individual life insurance providers and variations in managing their
sales agents and forging their organizational cultures are the focus of chapter 3.
3
Manufacturing Sales Agents
Cultural Capital and Management
Strategies
IN OCTOBER
1 9 9 8 , the Hartford–based American insurer Aetna, Inc. offi-
cially launched a joint venture with China Pacific Insurance Company in Shanghai: Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna). Three months
later, in January 1999, the Munich-based German insurer Allianz AG and
Dazhong Insurance Company inaugurated their joint venture in the same city:
Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong). Although
these two joint ventures commenced their operations at about the same time,
their paths quickly diverged. At the end of 2001, Pacific-Aetna reported a premium income of 210 million yuan (~ US$25.4 million); while Allianz-Dazhong
reported an income of only 55.3 million yuan (~ US$6.7 million). By the end of
2004, the sales volume at Pacific-Aetna reached 607.4 million yuan (~ US$73.4
million), capturing 3.5 percent of the individual life business in Shanghai, the
largest share among the joint ventures. In contrast, Allianz-Dazhong’s sales were
merely 188.3 million yuan (~ US$22.8 million), which constituted about 1 percent of the market.
Divergent product development between domestic and foreign companies, as
detailed in chapter 2, accounts for the disproportionate market share of the domestic companies. However, it does not explain the differences in business growth
within each camp, particularly among the foreign firms. Given that these firms all
attempted to sell risk management products, why did some outperform others? In
fact, as mentioned in chapter 2, Pacific-Aetna was most reluctant to localize its products, since it was the last joint venture to respond to the local preferences for dividend insurance. Why, then, did Pacific-Aetna’s growth exceed that of other joint
ventures?
A possible answer has to do with the size of its sales force and the sales agents’
commitment and morale. In 2001, Pacific-Aetna had the largest sales force of all
Manufacturing Sales Agents
77
the joint ventures, with more than 5,000 agents. Allianz-Dazhong had a sales
force of less than one-fifth of the size of Pacific-Aetna. Because life insurance carries a peculiar logic of pricing human life and often faces public resistance, life
insurance companies everywhere heavily rely on active solicitations by their sales
agents (Zelizer 1979; Oakes 1990; O’Malley 2002). The life insurance sales
agents have long been described as being “as necessary to the business of life insurance as fuel is to the locomotive” (Zelizer 1979:121, citing John Dryden 1909).
Maintaining a large productive sales force, therefore, is no less important than
product development. Recruiting, organizing, and socializing insurance sales
agents is always a key aspect of “institutional work” (DiMaggio 1988) for life
insurance firms.
This chapter focuses on the management of sales agents by various life insurance companies in Shanghai and takes a comparative approach to analyze their
variations. Although all life insurance firms in Shanghai struggle to socialize their
sales agents to take on a specific psychological attitude conducive to their sales
performance, some have been more successful than others. In my observations, the
agents from Pacific-Aetna displayed the highest level of commitment and spirit,
followed by those from Ping An Insurance Company of China, Ltd. (Ping An)
and American International Assurance Company, Ltd. (AIA), while the agents
from Allianz-Dazhong appeared most demoralized. To explain this pattern of differences, I compare the strategic management of sales forces in these companies. I
grouped them into two pairs for a systematic comparison: AIA and Ping An representing foreign versus domestic firms, and Pacific-Aetna and Allianz-Dazhong
representing highly localized versus less localized joint ventures.
As Neil Fligstein (1997) puts it, the possibilities for strategic action are the
greatest when an organizational field has no structure. A preinstitutionalized
organizational field permits the greatest variation among firms’ organizational
practices (DiMaggio and Powell 1983). It is where top executives take on the role
of “institutional entrepreneurs” (DiMaggio 1988) to exercise their greatest
degree of agency. This chapter focuses on this agency, relating the top managers’
agency to their cultural backgrounds and investigating why some were more successful than others. The importance of culture and ideas in constituting decision
making is now recognized by institutional economists. Arthur Denzau and
Douglass North (1994) argue that, under conditions of uncertainty, shared mentalities and ideologies guide choices, not instrumental rational calculations. Likewise, Mauro Guillen (1994, 1998) argues that people make choices about how to
organize by attending not only to instrumental reasons but also to moral and
even aesthetic considerations. His cross-national comparative studies confirm
that intellectual dispositions, or the mentalities of managers, in different countries affect their choice of organizational practice. According to Fligstein (1996),
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top managers’ conception of control—a general organizing logic that offers an
interpretation of a context and implies a course of action—both enables and constrains firms’ strategic choices and actions. Based on these insights, I propose that
the cultural capital of the top managers in Shanghai affected their labor management approaches and the effectiveness of their management in this specific local
context.
My use of the concept of cultural capital is faithful to Pierre Bourdieu’s (1984,
1986) definition in which “capital” takes time to accumulate and the embodied
form of culture (or the habitus) is of paramount importance in constituting one’s
action. The embodied form of cultural capital refers not only to mentalities,
knowledge, and sense of morality but also to bodily know-how, skills, and manners. These cultural properties are inscribed in the body and mind of individuals so
that change, though not impossible, is difficult and takes time. In examining how
the top executives’ cultural capital affected their institutional work, I go a step
further to ask where their cultural capital comes from and why some cultural properties are more effective than others. While Bourdieu (1984) maps individuals’
cultural capital in relation to their class positions, I attempt to map transnational
executives’ cultural capital in relation to their home countries’ institutional and
cultural affinities with the host country.
My argument is that the divergent strategic management of the sales agents of
different life insurers can be attributed to their different compositions of top
managers and the resultant different pools of cultural capital. Whether a pool of
cultural capital is effective in organizing a productive local sales force depends
heavily on where the top executives come from. My findings illustrate that those
coming from Taiwan bore the cultural capital most instrumental in orchestrating
a high-spirited sales force, whereas those from Germany carried the least useful
cultural capital. Therefore, the cultural capital cultivated from an institutional
and cultural context sharing affinities with the local context is, in general, more
instrumental than that cultivated from a very different environment.
Dirty Work and the Necessary Evil
Insurance agents often bear the stigma of “dirty work” as they actively seek out
prospective buyers by talking about death and misfortunes ( Zelizer 1979; Drew,
Mills, and Gassaway 2007). They go door to door to sell something people generally do not want. They face not only rejection but also contempt, disrespect, frustration, and uncertain income. Given the stigmatized nature of being a life
insurance sales agent, insurers use various social psychological techniques to
mold agents’ attitudes and ways of thinking (Oakes 1990; Leidner 1993). Nevertheless, the dropout rate of insurance sales agents is high everywhere. For
Manufacturing Sales Agents
79
example, Robin Leidner (1993) reports that the average five-year retention rate
of insurance sales agents in the United States is only 18 percent.
In China, the deeply rooted cultural taboo on the topic of death and misfortunes poses an even greater challenge for insurance companies when recruiting
and maintaining a productive and spirited sales force. Furthermore, sales jobs
have not traditionally been considered a respectable occupation in Chinese
society, and making a living based on direct commissions is generally new to the
Chinese labor force. Selling an unwanted product for commissions is regarded
as socially disgraceful. Not surprisingly, the cultural stigma, coupled with
income uncertainty, made insurance sales jobs unattractive to the local labor
force. Although there was no official record of the agents’ annual turnover rate,
many managers and senior agents I interviewed reported a rather consistent
estimate of about 80 percent in Shanghai. Recruiting and retaining sales agents
have always been difficult tasks.
Given this state of affairs, who would be drawn to this occupation? Leidner
(1993) finds that more young men than women are insurance sales agents in the
United States, because the job requires an aggressive, competitive, and “gotta
win” attitude. In contrast, in Shanghai, more women than men were involved in
insurance sales on average, though there was variation across insurers. Ping An
and Pacific-Aetna had more women, whereas Allianz-Dazhong had more men.
AIA had a relatively balanced ratio of both. Most agents were high school graduates, and most had worked for state-owned enterprises (SOEs) before joining the
industry. Although some people voluntarily left SOEs to venture into the private
sector as sales agents, a fair amount of people were involuntarily laid off by their
work units and therefore had little choice but to join the sales force. Because the
proportion of women in the laid-off pool was higher nationally, particularly in
Shanghai, this in part explains why more women than men became insurance
agents (for more details about why people joined the insurance sales force, see
Chan 2007).
Because selling life insurance requires individuals to be proactive, aggressive,
and competitive, it stands in opposition to a socialist workplace. How did the
Chinese sales agents adapt themselves to the new workplace? The answer, which I
often heard in everyday conversations between managers and their sales agents,
was xintai, or psychological attitude. Holding a hao de xintai, or a desired psychological attitude, was believed to be the key to success. A desired psychological
attitude embodies a range of subjective and practical cultural elements: a belief in
the good of life insurance, an indomitable work ethic, a proactive character, a
habit of reaching out, a desire to win, and an ability to maintain positive thoughts
in the face of rejection and meager income.1 This desired psychological attitude
contains a set of specific framing and feeling rules (Hochschild 1979) comparable
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to the positive mental attitude and the self-transformation agenda that scholars
describe for the American case (Biggart 1989; Oakes 1990; Leidner 1993). The
self-transformation agenda, in Nicole Biggart’s (1989) findings from direct selling
organizations, aims to align sales agents’ self-control with organizational interests.
If successful, the agents would exercise self-control and yet not feel the organization’s control over them.
Thus, all insurers in Shanghai were determined to mold their agents into having the
desired psychological attitude, but some were more successful than others. The studies
of American insurance sales agents by Leidner (1993) and by Guy Oakes (1990) have
contributed to our understanding of the mechanism by which the agents are socialized
and managed, but neither of them examines variations in the effectiveness of molding
sales agents into the ideal type. They both hint at the importance of ideology in the
making of salespersons but fall short of explaining why the ideological works of some
insurers produce more committed and motivated sales agents than do those of others.
Divergent Images of Insurance Sales
Agents in China
The contrast in the public images of AIA and Ping An’s sales agents is perhaps
best described through the agents’ own words. A 24-year-old man, who was carefully making a choice between working for one of these two companies, made the
following comment on the difference between AIA and Ping An:
These two companies have very different corporate cultures. Look at it
here. Look at this [AIA] office. It’s bright. The desks are orderly. The floor
is clean. No one is smoking in the office. This is AIA. The agents here wear
Western suits and behave themselves. Well, the agents of Ping An also
wear Western suits. But they wear a Chinese style of Western suits. If you
go to their office, you’ll see people there gathering in groups. They smoke,
chat, play cards, and sometimes quarrel. You know, there are some plants
outside the door of the agency office [of Ping An]. If you take a close look
at the plant pots, you’ll see ashes and cigarette butts.2
Although this prospective sales agent seemed to disapprove of the agents from
Ping An, he finally decided to join this domestic company. The reason, he professed, was because “the atmosphere there [in Ping An] is more relaxing, and
Ping An already has a large market share and is a brand name in Shanghai.”
Another agent, Han Xiewei (about 40 years of age), who joined AIA in 1998,
also made a choice between the two: “I observed each of these companies carefully. I compared their systems and products. . . . I finally decided to join AIA
Manufacturing Sales Agents
81
mainly because of its system. Its system was better developed. It’s a more civilized
institution. . . . Ping An still bore the culture of an SOE.”3 These two informants’
consistent narration of the difference between AIA and Ping An is interesting,
given that AIA made a conscious effort to localize itself and Ping An was striving
to modernize itself. When AIA started its business in 1992, this American firm
highlighted its origin in Shanghai and proclaimed that its arrival was a “return to
home” (hui laojia). Ping An, on the other hand, aggressively recruited overseas
expatriates to advise its organizational operation, so as to shake off its Chinese
character. Nevertheless, the difference between AIA and Ping An was still obvious, as summarized by the young man who finally joined Ping An: “AIA is a
Western model and Ping An is still very Chinese.”
On the other hand, any observer who visited the agency offices of PacificAetna and Allianz-Dazhong during 2001–2002 would have been surprised by
the contrast in their sales agents’ morale. I visited two of the agency offices of each
insurer on a regular basis during this period. The sales agents of Pacific-Aetna, at
both offices, all greeted me with enthusiasm and curiosity. They eagerly told me
what brought them to the insurance industry, why they joined this particular
company, how great their upline agents were, how life insurance benefited society, and how life insurance imbued their work with meaning. Mr. Chao, a sales
team manager for more than 100 sales agents, enthusiastically welcomed my
studies and proudly told me: “I had worked for AIA before I joined PacificAetna. . . . My experience at Pacific-Aetna has been so different! I think it’s really
the place for me. Many people here feel the same way as I do.”4 Chao’s downline
agents, whom he called his “children,” usually looked energetic, passionate and
committed. They hugged, appreciated, and encouraged each other in the hallways. They gathered in groups to honor each other’s achievements and to boost
each other’s spirits. They expressed gratitude to the company for giving them a
platform for career advancement. I did not see such an upbeat morale in any
other insurers’ sales agents. Of the 18 agents I met with or interviewed during
2000–2002, 13 were still with the company when I returned in the winter of
2004.
Distinctively different from the sales agents for Pacific-Aetna, the agents for
Allianz-Dazhong did not seem to care much about my visits and studies. They
worked individually at their own desks rather than gathering in groups. When
asked why they joined the insurance industry, the young agents said the insurance
business had a lot of growth potential in China and that it could provide them
with a path for building a career. The middle-age agents said they were laid off by
the SOEs and had no other options. When asked why they joined this particular
company, many of them said because this transnational corporation was new to
Shanghai and might provide more opportunities for career development. They
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did not seem to care about the particular meanings of life insurance, nor did they
show a particular commitment to the company. Of the 17 agents I met with during 2000–2002, only three were still there during my visit in 2004.
How can we explain these contrasting images between AIA and Ping An and
between Pacific-Aetna and Allianz-Dazhong? Although organizational structures
can be a profound shaping force for organizational cultures, the fact that the organizational structures of the insurance companies in Shanghai are rather isomorphic
suggests that we need to go beyond the organizational structure hypothesis.5 As I
detail the organizational cultures of various companies in the following sections,
we will see that they are largely correlated to the managerial composition of these
companies. I show that the top managers’ home countries and their cultural backgrounds were important factors shaping the variation of the organizational cultures. I list the major differences in organizational features and management
strategies between the four insurers in table 3.1.
AIA as a Proud Big Brother
With its China branch headquarters in a historic, neo-Renaissance-style structure
called the AIA Building that faces the Huangpu River, AIA enjoyed enviable privileges that no other foreign insurers could even begin to match. While one can
only speculate as to the reasons behind AIA’s special privileges in China, its origins
in Shanghai is likely to be a key factor. In 1919, Cornelius Vander Starr, a young
American entrepreneur, opened American Asiatic Underwriters (AAU), offering
fire and marine insurance in Shanghai. Around the same time, Starr founded Asia
Life Insurance Company in Shanghai to market life insurance. AAU occupied
many floors of the historic building (named the North China Daily News Building then) since 1927.6 In 1931, Starr established AIA, with its regional headquarters in Shanghai, to target specifically Southeast Asian markets. He moved the
headquarters of AIA to Hong Kong after the People’s Republic of China (PRC)
took over China. In 1967, the American International Group, Inc. (AIG) was
formed to hold the shares of Starr’s domestic companies in the United States, and
AIA became its subsidiary in 1970. Being the first and only wholly foreign-owned
and literally the first commercial life insurer in the PRC, AIA was recognized as a
lao dage (senior big brother) in the life insurance industry. 7Although it carried the
slogan of “a return to home” to emphasize its bond with China in general and
Shanghai in particular, it maintained a foreign image and took pride in being an
American company. It introduced a legal-rational, profit-driven organizational
model that was fundamentally different from the SOE model of the People’s
Insurance Company of China (PICC). It implemented a series of organizational
practices that were appearing in China for the first time: from company structures
Table 3.1 Summary of Differences among Insurers Studied
AIA
Ping An
Pacific-Aetna
Allianz-Dazhong
Year of establishment in
Shanghai
November 1992
November 1993
October 1998
January 1999
Top managerial composition
Hongkongese and
Taiwanese
Local Chinese and
Taiwanese
Taiwanese
German and local
Chinese
Public image of the
company
Western, American,
market leader
Local, Chinese
Highly localized
Western
Management style
Mostly legal-rational
Paternalistic,
punishment-oriented
Relational, familial,
and emotional
Highly legal-rational
Profiles of sales agents
Early on, educated
young adults; later,
young and middle-aged with various
educational levels;
relatively balanced
ratio between men
and women
Various educational
levels and backgrounds;
mostly middle-aged;
more women than
men
Various educational
levels and backgrounds; mostly
middle-aged; more
women than men
Elite group, educated
young adults; majority,
mostly middle-aged
with various
educational levels;
more men than
women
No. of sales agents in 2001
4,850
17,670
5,168
934
(continued)
AIA
Ping An
Pacific-Aetna
Allianz-Dazhong
Primary occupational
rhetoric
Professional, benevolent, and missionary
Money and career
Family, business, and
philanthropy
Professional
Training focus
Risk management
concept of insurance;
philanthropic meaning
of insurance; appearance and manner
Money management
concept of insurance;
specific product features;
networking with clients
Risk management
concept of insurance;
philanthropic
meaning of insurance
Risk management concept
of insurance; appearance
and manner
Agent ethos
Individualistic; low
morale
Collective and hierarchical; high morale
Collective and
sharing; very high
morale
Individualistic; very low
morale
Relation between management and sales agents
Hierarchical but
tension filled; “superior” management and
“inferior” agents
Hierarchical but taken for
granted;
authoritative management
and submissive agents
Harmonious;
mutually flattering
Tension filled; mutually
frustrated
Manufacturing Sales Agents
85
and actuarial knowledge to new labor management techniques and a proactive
door-to-door marketing approach. For the newly established domestic companies,
AIA provided a prototype of a commercial life insurance company. For the joint
ventures that subsequently entered the market, AIA became a reference for how to
set up a profitable business in the Chinese context.
The Hongkong and Taiwanese Management Teams
AIA’s localization manifested through its managerial composition, which was
almost entirely Chinese. Taiwanese and Hongkongese managers sat at the top
level, and mainland Chinese, mostly local Shanghainese, occupied the middle
and lower levels. “The management strategy of AIA is ‘using the Chinese to manage the Chinese’ (yi hua zhi hua),” a senior sales agent of AIA said.
The management of AIA (and all life insurance firms in China) is divided into
internal and external affairs, or the so-called in-house management and the sales
department, respectively. In-house management is in charge of everything from
product development and investment strategies to advertising and information
technology. It typically has quite a bit of power and control over various aspects of
the company’s management. Only sales, which includes recruitment and management of sales agents and selling of the products, belongs to external affairs. At AIA
during the time of my observation, the general manager (Mr. Hsu, a Taiwanese),8
held the highest executive position and was in charge of external affairs. He headed
the Taiwanese managerial team for sales activities. The in-house management,
which consisted of more than a dozen highly specialized departments, was in the
hands of a Hongkong team headed by a deputy general manager from Hong Kong.
Why did AIA divide the managerial body into Hongkong and Taiwanese
teams? Furthermore, why was the general manager in charge of the sales department instead of the in-house management? A senior agent of AIA explained:
The deputy general manager from Hong Kong is responsible for the inhouse management, because the headquarters in Hong Kong didn’t trust
the management approaches of the locals or the Taiwanese. So, they sent a
Hongkong manager to take care of the internal management. . . . The
headquarters in Hong Kong imposed a very strict control on the general
manager.9
Another agent added:
This division makes sense. Taiwanese know the local cultures better and so
they are better at sales and marketing. . . . Hongkongese are very rule-abiding
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and, so, they are good at setting up the administrative body of the company.
But their rule-abiding attitude does not work well for sales and marketing.
The Hongkong managers like to follow rules and observe every single step in
the procedures; whereas the Taiwanese know how to take advantage of
loopholes and jump from step one to step ten. . . .10
I was convinced by these two agents’ accounts of the rationale behind AIA’s
managerial divide. Indeed, the Taiwanese-led sales forces proved to be more productive and aggressive than those led by Hongkong managers. Pacific-Aetna,
which was entirely headed by a group of Taiwanese, had higher sales volume than
did the Hongkong–managed Manulife-Sinochem Life Insurance Company,
Ltd., a Sino-Canadian life insurer that ventured into Shanghai two years earlier
than Pacific-Aetna. Likewise, the sales growth of a Sino-French joint venture,
AXA-Minmetals Assurance Company, Ltd., headed by Hongkong managers,
also lagged far behind Pacific-Aetna. Hongkong managers were not as adept at
sales and marketing in China as were their Taiwanese counterparts, because, as I
analyze in the last section of this chapter, they came from a cultural and institutional environment that was quite different from the local context.
Sales Agents as Independent Professionals
and Missionaries
Following its practice in Hong Kong, AIA was the first to establish a professional
image of the company and their agents. It targeted university degree holders to be
their in-house staff and sales agents. Many educated young adults were drawn to
AIA because it was one of the very few internationally known foreign enterprises
in Shanghai in the early 1990s. Those who wanted to learn foreign skills and
knowledge were enthusiastic about being part of this foreign insurer’s in-house
staff. On the other hand, not many people wanted to be sales agents. In the face
of contrasting responses to the two different lines of recruitment, AIA tried to
persuade some of the people who applied for in-house staff to become sales
agents. Yin Wan was one of those. He recalled the moment when he was recruited
by AIA in 1992:
Actually I wanted to be a staff member in the training department. I was a
teacher before . . . .but I didn’t know what insurance was. The general manager asked how I could be a trainer if I didn’t have any front-line experience. I thought he was right. So, I took the job of being an agent (laughs
ironically). . . . Sometimes we joke that we were cheated into joining AIA
(laughs). . . .
Manufacturing Sales Agents
87
Yin Wan sounded regretful, though in a jokey way. He continued:
[AIA] sent out 36 employment letters to the candidates but only 23
showed up. I was one of those. I think some of them decided not to come
after they had found out what insurance was really about (laughs). . . . I
didn’t know well enough what insurance was (laughs).11
Indeed, most of the senior agents of AIA I interviewed had similarly joking but
regretful responses to the questions of how they became insurance sales agents
and why they chose AIA.
The 23 educated young adults mentioned above, mostly males, accepted sales
jobs without any idea of what insurance or life insurance was. As AIA tried to
make sales agents look professional, they were among the tiny number of local
Chinese who put on “Western suits and ties” at that time. AIA’s first agency office
was located in the Portman building, an expensive, upscale office building in the
hub of Shanghai city. Working in this office in the early 1990s was enviable. Nevertheless, when these nicely dressed sales agents were going door to door to sell
people insurance, they were seen as “aliens.” The public labeled them derogatorily
as “Mr. Running on the Street” and “Miss Running on the Street.”12
Constructing a professional image for the sales agents proved to be unrealistic.
First, the concept of “professional” was itself new to the local public, so its meanings were fuzzy (Michelson 2007a, 2007b). Second, although the “Western suits
and ties” made the agents appear well bred, their unstable income and job nature
were far from any definition of “professional.” AIA was aware of the inadequacy
of using the rhetoric of professionalism to motivate the agents. It supplemented
this occupational rhetoric with a missionary, benevolent meaning. Similar to
what Viviana Zelizer (1979) documents about the presentation of sales agents in
the emergent market in the United States, selling life insurance was described as
being a job of love and humanity. AIA attempted to convince the sales agents that
they carried an altruistic, philanthropic mission. To constantly remind the agents
of their missionary role and to boost their ego to take up such an important mission, the agents were required to attend morning assemblies, the so-called
morning calls. Because cheering and chanting slogans were common practice in
the life insurance industry in Taiwan, the Taiwanese managers brought this practice to AIA in Shanghai. In 1993–1994, their agents cheered and chanted upbeat
slogans every morning to psych themselves up in the collective assemblies before
going out.
AIA pioneered a commission-based income system and a proactive agency sales
method to replace the salary-based and passive selling approach adopted by PICC.
Commission rates varied among products and payment durations. Typically, an
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agent received a first-year commission of 20–35 percent of the first-year premium
for most of the whole life policies sold, and the commission rates for these policies
descended annually in proportion until the sixth year, when typically no commission was given. For those policies renewed yearly, such as accident insurance and
term life, the commission rates ranged between 15 and 20 percent per annum. At
the same time, the agents who had downline agents were entitled to an overriding
commission, with the rates depending on the generation to which the downline
agents belonged in that sales group’s family tree and the sales volume of these
agents. This pyramid structure is similar to that of a direct selling organization
(Biggart 1989). AIA’s commission structure was basically adopted by all other life
insurance providers in China, though slight adjustments and modifications were
made.
While the management of the sales agents was headed by Taiwanese managers, the training for the new agents belonged to internal affairs and, hence, fell
into the hands of the Hongkong team. According to the senior agents who joined
AIA in 1992, the first trainer was Chinese British, named David, who had lived
in England for a long time and then worked for AIA in Taiwan and Hong Kong.
Being considered a training expert for the AIG, David was sent from AIA headquarters in Hong Kong to set up the training program in Shanghai. He brought
the training materials from Hong Kong and taught the new agents about the risk
management concept of insurance and related sales talks. Presenting life insurance as a savior for families and a means by which widows and orphans could live
with dignity and self-respect, he bestowed a benevolent mission on the sales
agents along with an emphasis on dressing and acting professionally.
AIA’s ambition to recruit highly educated young people to be sales agents has
faced an even greater challenge since 1995. Apart from the fact that the nature of
the job was generally unattractive to highly qualified people, AIA was under pressure to expand its sales force rapidly when Ping An aggressively expanded theirs.
Thus, it had no other option but to lower its recruitment criteria. Nonetheless,
AIA never gave up the ideal of training a “professional” sales force. It implemented
a more comprehensive training program for the new recruits and a number of onthe-job training sessions. I attended one of the training series for the new agents
in January and February 2002. The more than 40 hours of training began with
education on the basic risk management concept of life insurance and the imperative role of sales agents. It was followed by an introduction to various products
and training on a series of sales techniques, which included how to dress, how to
smile, how to shake hands, and, most important, how to talk and deal with resistant prospects. The agents were taught to believe that they were like missionaries
on the one hand, and professionals on the other. In reality, nevertheless, they were
far from being recognized as missionaries or professionals by the public.
Manufacturing Sales Agents
89
The morale of AIA agents was in general downbeat, largely due to two structural factors. First, as described in chapter 2, AIA’s products were not as competitive as Ping An’s, especially in 1996–1997. Many agents either left for Ping
An or left the industry. Second, the structure of AIA’s bonuses provided a disincentive for working as a team and resulted in an individualistic ethos among the
agents. In my observation, the majority of AIA agents worked independently
and rarely interacted with their fellow agents, largely because yearly and quarterly bonuses were given to encourage sales incentives other than organizing and
training downline agents. Therefore, AIA agents preferred to work on their own.
The individualistic ethos of the AIA agents was expressed not only in their apathetic attitude toward each other but also in their low attendance at the morning
assembly. In the agency office that I visited regularly, the morning assembly was
held every Monday at 9:15 a.m. Yet, normally less than half of the agents
attended, among which one-fourth were late. Even those who showed up were
not particularly engaged. For instance, during the assembly some agents were
filling out forms, talking on the phone, chatting with each other, or reading
newspapers. This atmosphere was in sharp contrast to that found at Ping An and
Pacific-Aetna.
To motivate their agents, AIA began to organize sales contests, offer free trips
to the winners, and propose a series of symbolic awards, such as club memberships, reward certificates, and annual meeting admissions, for those whose sales
volumes reached their targets. These ritualistic activities, to some extent, achieved
normative control in the high-performing agents, boosting their loyalty and identification with AIA.
Tensions between In-house Management
and Sales Agents
The AIA agents as a whole suffered low status, but this problem came not only from
societal value and public opinion. AIA itself did not treat their sales agents with
respect. First, it was the only company that stated in (the front page of ) the agency
contract that the sales agents were not employees of AIA. This statement clearly
excluded the agents from any employee benefits. Second, it did not allow the agents
to freely enter its headquarters (the AIA Building) in Shanghai. Entering the headquarters was regarded as an exclusive privilege for the in-house staff. The agents had
to sign in and out at the reception desk and to give a reason for entering the building.13 AIA’s attempts to maintain a distance from the sales agents were obvious.
In 2001, AIA had 637 in-house staff and 4,850 sales agents, but the staff held
disproportionate power, status, and benefits over the agents. Apart from the fact
that the sales agents were not entitled to employee benefits, such as health insurance
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and pensions, they were in a very weak position in the symbolic power field
(Bourdieu 1993). An incident related to my presence in the training sessions unmistakably displayed this point. I was introduced by a sales agent to Shen Hingfu, the
sales team manager of the agency office where I conducted my observation on a
regular basis. Shen joined AIA in 1994 and was one of the few senior agents who
were degree holders. He was heading one of the largest sales teams, with more than
150 sales agents. When I learned that a training series was to be held for his new
agents, I got his permission to attend the training. When the trainer, who was an
in-house staff member, saw me, he asked who had given me permission. He was not
satisfied when I told him that it was the sales team manager who granted me permission. He insisted that the training was exclusive for AIA’s agents and that I needed
to obtain a formal permission from the headquarters. However, when I named a
low-ranked in-house staff member at AIA whom I knew as a friend but had nothing
to do with the training, the trainer immediately changed his attitude to me. He
graciously welcomed me and eventually became very helpful. I wondered if there
were any personal conflicts between Shen and the trainer, but there were none to my
knowledge. The incident simply dramatized the feeble position of AIA sales agents,
regardless of their rank, seniority, and sales performance.
Tensions between the managerial body and the sales agents were commonly
attested, as I often heard complaints from both camps. The sales agents complained that AIA’s commissions were unattractive, that the products were not
competitive, that the system was unfair to more senior-ranking agents, and that
the attitude of the in-house staff was arrogant. The staff, on the other hand, complained that the agents were spoiled, not very self-disciplined, and “low quality”
(suzhidi).14 Not surprisingly, the annual turnover rate of AIA’s sales force, according to some senior agents, has been as high as 80–90 percent since the late 1990s.
Ping An as an Authoritative Parent
We have seen that Ping An as a novice company refused to closely follow the
product development of foreign insurers. In terms of organization, nevertheless,
Ping An was the most proactive in imitating the modern, Western foreign model.
Moreover, it has been the most progressive in internationalizing its managerial
personnel and the most ambitious in entering into the global arena. As early as
1991, three years after Ping An was founded, it hired the then internationally
prominent consulting firm Arthur Andersen to be its accounting consultant. The
following year, Ping An set up its first overseas branch in the United States in
Delaware. This American branch was opened even earlier than the one in the
Chinese capital of Beijing, which was opened in May 1994. In 1993, two of the
largest U.S.-based financial corporations, Morgan Stanley and Goldman Sachs,
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became shareholders of Ping An. However, since the composition of the top
managers of this domestic insurer was substantially different from that of AIA or
any other foreign firm, the cultural capital embodied in these managers for
accomplishing the institutional work was different. Despite Ping An’s effort to
establish itself according to the legal-rational template, it was, after all, a corporation with “Chinese characteristics.”
Local Chinese and Taiwanese in Management
Ping An was set up in Shenzhen in 1988, with capital collected from a number of
SOEs that then became its shareholders. A local Chinese, Ma Mingzhe, was
appointed as the general manager. Lacking any experience in the life insurance
industry, Ma hired a number of experienced life insurance managers from Taiwan
between 1994 and 1996. They included actuaries, underwriters, sales and marketing experts, and agency development managers. Upon their arrival, they were
surprised to find that Ping An was practically ignorant of how to run an insurance business. They advised Ma on how to restructure the organization and specialize the functions of various organizational units, guiding Ping An to establish
various departments.
The organizational practices of Ping An, nonetheless, still appeared to be less
institutionalized and systematic than those of AIA. It was seen as bearing “SOE
characteristics,” “SOE culture,” or “Chinese characteristics.” What are the meanings of all these terms? Intriguingly, my informants were more capable of saying
what they were not than what they were. The SOE characteristics were said to be
the opposite of what might be found in an orderly, clean, and smoke-free working
environment with a disciplined, well-mannered, and neatly dressed staff. Furthermore, an organization with “Chinese characteristics” was said to refer to one with
a highly centralized and paternalistic operation, with the division of labor among
different organizational units unclear and underdeveloped.
Ping An was aware of its “Chineseness.” In 1997, it consulted the global business consulting firm McKinsey & Company on how to reform its organization.
Based on their advice, Ping An rebuilt its organizational structure according to a
more specialized, finely structured, and systematic model. Since then, it has been
making tremendous efforts to be a modern corporation. In 1999, it hired the
former vice president of Lincoln National (UK) PLC, Stephen Meldrum, to be its
chief actuary and serve as a member of the investment management committee
and a senior consultant to the general manager. Between 1999 and 2001, Ping An
sought expatriates, both Caucasian and overseas Chinese, from the United States,
Britain, Australia, Singapore, Taiwan, and Hong Kong. These expatriates headed
various divisions, such as strategic development, human resources, advertising, and
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technological development. By the end of 2001, 27 expatriates occupied half of the
top managerial positions at Ping An. A local magazine amusingly and ironically
described the managerial body of Ping An as “Eight-Power Allied Armies” (Baguo
Lianjun).15 Nevertheless, the deputy general managers and half of the top managers at Ping An were still local Chinese, and the majority of the expatriates came
from Taiwan. Therefore, the top managerial body of Ping An was composed of
mainly local Chinese and some Taiwanese expatriates.
Sales Agents as Money-Making Crowds
Although Ping An initially mimicked AIA in recruiting degree holders to be
their sales agents, it soon gave up the “professional” model and instead aimed at
being “big.” With its market-share institutional logic, as described in chapter 2,
Ping An quickly expanded its sales team by recruiting a large number of people of
various educational levels and backgrounds to be their sales agents, including
those who were laid off by the SOEs. These former SOE workers were not as educated as the young agents of AIA, but they had more elaborated guanxi (interpersonal relationship) networks. As I present in chapter 4, Ping An agents took the
lead in aggressively exploiting the Chinese etiquette of renqing (interpersonal
obligation) that defines the Chinese norm of reciprocity to sell insurance.
Some educated young people were also drawn to Ping An at the beginning,
as its commission rates were, on average, 5 percent higher than those offered by
AIA.16 Subsequently, when its yanglao (retirement) and child insurance policies became popular, Ping An had no difficulty recruiting agents. Despite its
less “modernized” public image compared to AIA’s, quite a number of agents
left AIA for Ping An during 1996–1997. This is a story told by a senior agent
at AIA:
There were two brothers who both worked as insurance agents. It was the
older brother who first started working for AIA. He made a fair amount
of money. It was not especially high or especially low. It was just average.
The younger brother followed his older brother to work as a sales agent.
But he chose to join Ping An. In just a year . . . .[t]he younger brother
earned three to four times what [the older brother] did! The older brother
was shocked. . . . How could his brother have made so much money?. . . .
Ping An really dealt AIA a blow.17
When Ping An’s products were popular, there was no need to confer a sacred role
on sales agents. Instead of imbuing sales work with the symbols of benevolence
and philanthropy, Ping An stressed the promising incomes that sales work could
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offer. Interestingly, Ping An was most explicit about the capitalist nature of the
life insurance business, while AIA attempted to downplay it. The statement,
“This is a capitalist game and so we should follow the capitalist rules,” was heard
several times in Ping An’s training sessions but never appeared in any of the transnational insurers’ training. Money was used as the main motivator for the agents
to work hard. Ping An did not offer symbolic awards like club memberships or
certificates, nor did it offer free trips for the top agents, yet the agents were upbeat.
They were more than satisfied with their jobs, as many of them sold more than
100 policies per month and received impressive commissions. According to an
agent who worked for Ping An before 2000, the monthly income of Ping An
agents in 1996–1998 was 10 times the average income in Shanghai. Naturally,
the number of Ping An sales agents multiplied during this period. In 2001, Ping
An in Shanghai had 853 in-house staff members and 17,670 sales agents. The size
of its sales force was more than three times that of AIA’s.
Thus, the dominant occupational rhetoric that Ping An used to manage its
sales agents focused on money and career. Selling life insurance was portrayed
as establishing one’s career through making a promising income. However, the
agents identified themselves according to this occupational rhetoric only
when their sales went well. Their morale suffered a setback in 1998–1999 due
to the lack of competitive products. To motivate the agents, Ping An began to
launch sales contests and award the winners free trips. At the same time, it
began to bestow nonmonetary meaning, namely, a benevolent mission, on the
work of selling life insurance. Therefore, the level of monetary rewards and
the need for symbolic rewards and missionary meanings of life insurance seem
negatively correlated. When the sales agents received less monetary benefits,
the insurers offered more symbolic rewards in an attempt to cultivate nonmonetary incentives.
As Ping An’s products were predominately for money management, the content of their training for the sales agents was also distinct from that of AIA.
While AIA’s training taught its agents the concept of risk management and
played up the missionary role of the agents, Ping An’s training did not elaborate
much on the concept of life insurance. Instead, the trainers spent most of their
time detailing the features of each product and explaining how their products
were similar to and different from savings, bonds, and stocks. The agents were
trained to compare the pros and cons of putting money in Ping An versus putting
money in savings banks. They were taught to put the household’s only child and
family savings at the center of their sales talks. Furthermore, instead of teaching
the agents how to dress and behave professionally, Ping An’s training taught the
agents how to offer face and favors to their prospects and existing clients in order
to mobilize the etiquette of renqing to induce purchase and invite referrals.18
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Ping An agents all worked in groups. The group culture was forged by the
agency structure and facilitated by the physical setting of the agency offices. Normally, an agency office hosted a sales team with a team manager. The sales team
was composed of several subteams, and each subteam contained a number of
groups. The agents in each group were the downline members of the group leader.
The group leaders were the downline agents of the subteam managers, who were
the downline agents of the team managers. The hierarchy was organized in a very
systematic way, and the structure was like a family tree.19 The agency office was
partitioned into rooms, and each room accommodated a subteam. In the agency
office where I conducted my regular observation, the average size of a subteam
was more than 100 agents, and the average size of a group was a little more a
dozen agents.
The equipment and facilities at Ping An’s agency offices were the shabbiest
among the companies studied. The room given to the over one hundred agents of
each subteam was about 800 square feet. Each group of the subteam was given a
rectangular table, measuring about 3 × 5 feet. Only the subteam manager had an
office desk and a telephone. All the members of a group sat around their table
every morning for the morning assembly. Very often, the agents had to pull their
seats away from the table to squeeze each other in. Having 100 agents in a small
room resulted in a very noisy environment. On the other hand, it created a somewhat intimate, warm, and casual atmosphere.
The headquarters required all of its agents to attend the assembly at 8:30
every morning Monday to Friday. The morning assembly began with singing
the Ping An song and chanting some Ping An slogans. During 2001–2002, the
subteam managers were given the discretion to decide what they would like to
do after the slogans.20 After the morning assembly, the leader of each group
usually held his or her own group meeting. The leaders and their downline
agents shared with each other both their successes and failures and, at times,
complained and voiced their grievances about their prospects and about the
toughness of the job.
Authoritative In-house Management and
Submissive Sales Agents
Ping An’s management of its sales agents was, in general, paternalistic and authoritative. It was based on an assumption that the sales agents could not behave
themselves without discipline from above. First, all the sales agents had to give
Ping An 1,000 yuan (~ US$121) as a security deposit for protecting the company’s property. It would be returned to the agents when they left the company
without violating any company rules. The paternalistic management style of Ping
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An was further displayed by its punishment-oriented system. It adopted a “pointdeduction system” (koufen zhi) to control and regulate the agents’ behaviors. In
its agency system handbook, it listed 45 incidents for which the agents could be
punished through point deduction. For example, 1–5 points were deducted for
not attending trainings, meetings, or the morning assemblies without a valid
excuse; 2–5 points for printing business cards without or prior to the company’s
authorization, or for making a mistake on the policy number of a receipt; and
5–20 points for not obeying management, quarreling or fighting in the agency
offices, insulting others, or other disruptive behaviors. The paternalistic control
was further fortified by a rule that the supervisors of agents who received point
deductions could themselves receive reductions, too. For instance, a group leader
would be deducted 2 points if his or her group had an aggregated deduction of 10
points. Likewise, a subteam manager would receive a 1-point deduction if his or
her team had an aggregated deduction of 10 points. This overriding punishment
scheme was based on the assumption that an upline agent, who was like a “parent” of a downline agent, should be responsible for the misdeeds of his or her
“offspring.” This scheme not only was blatantly paternalistic and hierarchical but
also was based on the logic of collective responsibility and the legacy of family
shame. An agent would be disqualified for any honor or award if he or she was
deducted 5 points in a year, a 10-point deduction would take away any chance of
promotion that year, a 15-point deduction would bring a demotion to the agent,
and a 20-point deduction meant the agent would be fired.
At the same time, the in-house staff of Ping An communicated with the sales
agents in a rather authoritative manner. A training manager from the headquarters
was placed in each agency office. At the agency office where I conducted studies,
the sales agents all seemed intimidated whenever the training manager, a man in
his late 40s, walked by.21 Occasionally, some in-house officers visited the agency
office unannounced to check on the attendance of the morning assemblies. An inhouse officer once came to the subteam where I attended assemblies on a regular
basis. The following extract from my ethnographic field note records his interaction with the agents:
An in-house officer suddenly appeared today during the morning assembly. He walked to each table to take attendance. When he walked close
to ours, Dai Hong (the group leader) seemed nervous. The officer found
that only 6 [out of 14] downline agents of Dai’s were present. He questioned Dai in an accusatory tone, “Why only 6? Where are the others?”
Dai replied, in a very low voice without making any eye contact, “Two of
them are on a trip the company awarded them, and another three have
applied for a day off.” The officer wrote down what she said and asked her
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to sign. With some reluctance, Dai signed. No one knew the name of this
officer or his rank. They only knew that he was from the agency management unit. Dai looked both worried and upset. She murmured to her
group members that she was having sheer bad luck, as it just happened
that the attendance rate was low today. . . . This was true. Normally, about
10–11 of her agents attended the assemblies.22
Surprisingly, the agents of Ping An seemed rather submissive. It looked as if they
took for granted that the in-house staff were in a position of higher authority, and
the in-house staff ’s authoritative communication with them was also somewhat
taken for granted.
Pacific-Aetna as a Warm Family
Using a logo of a baby angel to symbolize its mission, Pacific-Aetna presented
itself as a caring and compassionate institution not only to its clients but also to
its sales agents. Headed by a group of Taiwanese managers, Pacific-Aetna adopted
a full Taiwanese model. It represented another form of organizational culture
with “Chinese characteristics.” Instead of applying an authoritative and paternalistic management model, the managerial body at Pacific-Aetna applied a familial,
relational, and emotionally based model. The top managers endeavored to create
a family atmosphere in order to cultivate a sense of belonging and loyalty. At the
same time, they attempted to make the agents believe that they were their own
“bosses” to boost their motivation and commitment.
The Taiwanese-Headed Management
The managerial composition of Pacific-Aetna was the simplest among the four
companies. The general manager, Mr. Chang, and the two deputy general managers were all Taiwanese. They brought a managerial team with them and came
directly from Taiwan. One of the deputy general managers was in charge of the
in-house management, and the other headed the sales and marketing department.
Other Taiwanese managers headed the training, actuarial, investment, and information technology departments. Beneath the Taiwanese managers were all
locally hired Chinese.
Although Pacific-Aetna’s organizational structure was not significantly different from that of AIA or Allianz-Dazhong, it did display an organizational culture
that was distinct from all other joint ventures in Shanghai. Its unique culture was
brought from Aetna in Taiwan. The Taiwan Branch of Aetna Life Insurance
Company of America was established in 1988, the year after Taiwan opened its
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life insurance market to American companies. In 10 years, Aetna strove to be the
second largest foreign life insurer in Taiwan, next to AIA’s Nan Shan Life Insurance Company, Ltd. (Nan Shan). Strictly speaking, Aetna grew the fastest among
all foreign insurers, because Nan Shan was originally a domestic insurer bought
by AIA in the 1970s (Chan 2012). Aetna’s success in Taiwan explained why the
headquarters in Hartford, Connecticut, deployed a full Taiwanese team to
Shanghai. The key to its success, Aetna Taiwan Branch proclaimed, was its corporate culture that “put human beings and human souls the center of the corporate
management.”23 It presented itself as a warm family and strove to empower the
sales agents by rhetorically treating them as “bosses” or “business partners.” This
managerial strategy was brought to Pacific-Aetna in Shanghai by the Taiwanese
managers, who, in my observation, were most skillful in marshaling their sales
agents to take on the desired psychological attitude.
Sales Agents as Family Members and Bosses
When Pacific-Aetna was founded in Shanghai, it recruited a large number of
agents from AIA and Ping An. Unlike AIA, Pacific-Aetna did not place much
importance on the agents’ educational level and cared less about teaching the
agents how to dress in a professional way. It hired more middle-age female agents
than did any other joint venture. The socioeconomic backgrounds of their sales
agents were more like the agents from Ping An than those from other transnational insurers. Its agency system operated like a direct selling organization in
encouraging the agents to recruit downline members. Many high-performing
agents were promoted to managerial sales positions within three years. Instead of
using a punishment-oriented model, it deployed a reward-oriented approach to
encourage agents to recruit and train their downline agents. When an agent got
a promotion, his or her upline agent would be awarded a bonus, in an amount
commensurate with the duration of his or her service in the company. Therefore,
the reward system of Pacific-Aetna was structured to encourage agents to recruit
and organize their downline agents and to work with them as a collective unit. It
also encouraged long-term commitment to the company. The agents who had
worked for the company for up to eight years would receive additional bonus,
again, in an amount determined by their length of service. Compared to AIA,
Pacific-Aetna was more generous in offering fringe benefits. It entitled all of its
agents, after a three-month probation period, to pension insurance, medical
insurance, and festival bonuses. The festival bonuses were obviously a localized
strategy that served more a symbolic purpose. For example, a 100 yuan bonus was
distributed to each agent during the Lunar New Year, on Labor Day, and on
National Day.
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Following Aetna in Taiwan, Pacific-Aetna in Shanghai held its morning
assembly in a lively, fun, and dramatic way. Like AIA, Pacific-Aetna let the
sales team manager of each agency office determine the frequency of the morning assembly. The format of the assembly, nevertheless, was designed by the
head of the sales and marketing department, whom the agents called Manager
Ge. Manager Ge brought Aetna’s morning assembly from Taiwan to Shanghai.
A typical morning assembly went as follows: At 9:00 a.m., loud and upbeat
music was played, signaling that the assembly was to start. The sales agents
then rushed to the sides of four long tables, each measuring about 24 feet × 4
feet, in the meeting hall. One of the sales team managers would lead the agents
in a “morning drill.” The drill was an eclectic mix of a bit of stretching, dancing, and aerobic exercises that as a whole looked quite funny. After the morning drill, the rest of the assembly was not much different from those at Ping
An. Senior agents and guest speakers shared personal stories about their selling experiences, particularly about their difficulties and the ways they overcome them.
The commission rates that Pacific-Aetna offered their agents, however, were
more or less the same as those offered by AIA and Allianz-Dazhong. Compared
to Ping An’s products, Pacific-Aetna’s were not as popular. Thus, the monetary
rewards the sales agents of Pacific-Aetna received were not particularly high. To
motivate the agents and to keep up their morale, Pacific-Aetna provided better
office facilities and applied various relational and emotional strategies. Two distinctive strategies were observed. First, it created a familial atmosphere in the
company and the agency offices. The entire corporation was described as a “big
family” (dajiating). The sales teams, subteams, and groups were called “clans”
(jiazu). The heads of the sales teams and subteams and the leaders of the sales
groups were called “parents” (jiazhang). As all the agents were recruited by other
agents, everyone had a parent and everyone belonged to a clan. When agents
recruited their own downline members, they extended the clan vertically. If one
of the downline agents was promoted to the managerial sales position with his or
her own sales group, the clan was extended horizontally. Once a sales agent was
promoted to a managerial sales position, this agent was given a small partitioned
room of about 70 square feet with an office desk, a telephone, a few chairs, and a
couple of file cabinets. Each partitioned room held one clan. Usually, each clan
held its own group meeting every day after the morning assembly. Sometimes two
to three clans under the same parent together held parties, celebrations, and
training sessions. Hugs, verbal support, and mutual help were the norms that
characterized the interactions among the agents from a clan.
Another strategy that the Taiwanese managers deployed was the rhetoric of
business designed to make the agents feel like they were “bosses.” The Taiwanese
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managers strove to downplay their status and privileges in front of the agents.
They encouraged the in-house staff to address the sales agents as “partners”
(huoban) in their daily routine. The top managers themselves, including the general manager, whom the agents called Manager Chang, also addressed the agents
as “partners.” In ceremonial activities, these managers called the agents “my
bosses” and, at times, explicitly said their own incomes depended on their sales.
At its annual awards presentation ceremony in May 2002, the managers invited
a famous Taiwanese singer, Zhou Huajian, to entertain the sales agents. They
told the agents that they had spent a hundred thousand U.S. dollars to invite
Zhou for a single reason—in order to make the agents happy.24 To further entertain the agents, the top managers wore heavy make-up to appear as women at the
ceremony. Manager Chang dressed as Snow White and Manager Ge wore a miniskirt and danced the hula. All these efforts succeeded not only in amusing the
agents and eliciting joyful screams and laughter but also in making the agents feel
important and flattered.25
Manager Ge, the sales and marketing manager, was particularly adored by the
agents. He was said to be qinmin, or close to the commoners, a term used to
describe an emperor who cared about his subjects in imperial China. He often
visited the agency offices, did the morning drills with the sales agents, and at times
invited senior agents to lunch. During my research at an agency office of PacificAetna, Manager Ge came to visit twice. On both occasions, he delivered emotionally charged speeches at the morning assemblies. To reinforce the image that the
sales agents were the “business partners” and to convince them that they were on
an equal footing with the managers, Manager Ge claimed that none of the top
managers were provided with a private car by Aetna as the top managers of the
other insurers were. He claimed that they were not given any special privileges and
that they rode in a van to work every day. To assure the sales agents that they were
not the only ones who were sacrificing their family time by working seven days a
week, Manager Ge delivered the following speech:
Fifteen years ago I was like one of you sitting here. I wore a Western suit
every day and rode my 20-year-old motorcycle around Taipei, sweating all
summer. Why did I work so hard? I was working for the welfare of thousands of families! My job was important. It was so important that I could
not let myself to stop even for one minute. . . . I left my wife and my twoyear daughter, who was just able to call me “pa pa,” back in Taiwan and
came alone to Shanghai. My wife begged me not to go. She said, “How
could you leave us alone?” (Manager Ge pauses for a while to invite sympathies for his wife). . . . Why did I come here? It’s not only about money.
It’s about the meaning, the value of this job.26
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Like AIA, Pacific-Aetna underlined the philanthropic function of life insurance
and the missionary role of the sales agents. The personal and emotional approach
that Manager Ge exercised seemed working well. Among all the sales agents,
those of Pacific-Aetna were the most ideologically committed to the benevolent
meanings of life insurance.
Many of the senior agents of Pacific-Aetna I interviewed not only felt that
they were “bosses” but also felt like they were “saved” by Pacific-Aetna. At one
clan’s celebration party, the following scene transpired:
Wei Pingzhi, the parent of this clan, made some opening remarks to the
party. . . . “Our sales volume from the last contest has reached 3.7 million
FYP [first-year premium]. We’ve broken the sales record of this agency
office!” The agents applauded and cheered. . . . Wei continued, “Our Wan
Ganxie . . . .led her agents . . . .to visit prospects day and night. They left in
each home visit their sweat and footprints. . . . Our Zhang Yanqing was
sick during the contest. . . . But he insisted on approaching strangers. He
has finally achieved good results. And our Wu Yunan, although she has
been suffering from high blood pressure, she still keeps going. When she
falls, she stands up and continues. . . . And . . . .all of you have worked very
hard. You have overcome your family obstacles and health problems. You
put our collectivity as your top priority. . . . Sisters! Let’s unite and work
together for the betterment of the world!” The agents applauded. Two of
them wept. . . . Wei Pingjiing wept and said, “I really appreciate Aetna for
giving me the chance to be my own boss.” Wu Yunan said the same and
wept, “Aetna has helped me to find the real meaning of life. Aetna has
given me a new life and a new spirit! I have to work hard to repay what
Aetna has given me.”27
This emotional scene did not occur at every collective gathering at PacificAetna. Nevertheless, it only occurred at this company. Wu Yunan, about 50
years of age, was a medical doctor before she joined Pacific-Aetna. She was
always grateful to the company for giving her the opportunity to do something
“meaningful.” A year later I saw her wearing a wool hat in the office. She said
she had been suffering from a chronic headache because she had been working
extremely hard recently in order to obtain a promotion. No doubt PacificAetna had been most successful in orchestrating the desired psychological attitude. It did so by blending the rhetoric of business with a familial atmosphere
to channel the agents’ framing and feeling rules (Hochschild 1979). Forging an
identity as a “boss” facilitated the generation of a capitalist spirit with relentless pursuit for material and symbolic success. At the same time, the familial
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atmosphere gave the agents emotional strength and resources to surmount
their daily difficulties.
To present itself as a “humanized” institution to the public, Pacific-Aetna set up
a team called “caring angels” with the mission of visiting the clients who were hospitalized. The team consisted of a number of in-house staff members, mostly young
women. The sales agents welcomed this unique service provided by the in-house
management to please their clients. Furthermore, the agents were thankful that
their company packaged its products according to the local cultural frame that
made their sales talks to the local prospects easier. Although the products PacificAetna offered were mainly for risk management and secondarily for money management, this insurer framed its products in the vocabulary of local preferences. For
instance, it framed part of the insured amount as “repayment of principal” to make
the products sound like savings or investments. Knowing that retirement is a major
concern of the local people, it called the annuity products “retirement insurance.” In
publicizing its products, Pacific-Aetna used lively cartoons and colloquial wordings
to explain and simplify the terms of the products. Thus, by combining its experience
in the insurance industry with its local cultural knowledge, Pacific-Aetna strategically localized the packaging of products without compromising profit margins.
Mutual Flattering between In-house
Managers and Sales Agents
The sales agents of Pacific-Aetna were most committed to their company. All of
the sales agents I met with or interviewed in 2000 still worked for this company
in 2002. In 2001, Pacific-Aetna had 5,168 sales agents, which was the highest
number among all transnational insurers.
The interactions between the in-house staff members and the sales agents at
Pacific-Aetna seemed quite harmonious compared to other companies. At times,
staff members and sales agents flattered each other. As we have seen, the top managers flattered the sales agents by downplaying their status, calling them “bosses,”
and entertaining them. However, a hierarchy of status and privileges that marked
the boundary between the top managers and the sales agents undoubtedly
existed. While the sales agents at times believed that they were the “bosses,” they
had no authority or power to connect me to any of their in-house managers for
interview (see appendix A for my entrance to this insurer). The agents obviously
treated the top managers as their bosses, and their feeling of inferiority to these
managers, for example, was expressed by their excitement, thankfulness, and
being flattered by having Manager Ge come over for a visit or having a lunch with
him. These thankful and flattered feelings, nonetheless, reinforced their identification with the company, which ultimately translated into hard work.
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Allianz-Dazhong as a Foreign Masculine Man
In contrast to Pacific-Aetna’s soft and emotionally charged image, AllianzDazhong represented itself as a sturdy, macho man to the public and as a modern,
Western organization to its sales agents. Dark blue was the color this SinoGerman joint venture consistently used as the background for all of its publications. Its mission was symbolized by a picture of the world’s sixth largest suspension
bridge, the Tsing Ma Bridge in Hong Kong, with strong currents underneath and
the word “risk” on the top. Allianz-Dazhong was the most aggressive among the
transnational insurers in advocating a “Western” managerial model when it
started its operation in Shanghai. It later made an attempt to localize its organizational practices and company image. Nonetheless, given that Allianz AG had no
prior experience operating in China, Taiwan, or Hong Kong and that the top
managers were Germans, the localization remained superficial and ineffective.
The German-Headed Management
Allianz-Dazhong was one of the only two life insurers in China headed by a nonChinese during my research period.28 It had the highest proportion of Caucasian
expatriates in the top managerial body. Most of them came from Germany. The
operation of the company was headed by a board of management, which consisted
of two Germans and two Chinese. One of the Germans served as the general manager, and the other as deputy general manager. The two Chinese served as deputy
general manager and assistant general manager, respectively. Therefore, the two
Germans together assumed higher power than the two Chinese. Moreover,
because the two Chinese managers had no experience in the life insurance industry, the Germans were in charge of the operation.
Allianz-Dazhong had the highest proportion of top managers holding a Ph.D.
degree, including the general manager, Dr. von Canstein. Dr. von Canstein had
worked for Allianz AG for more than 20 years, but he had never visited China
before heading this joint venture in Shanghai. In setting up Allianz-Dazhong, he
endeavored to establish an organizational culture that was comparable to the
German ideal. He used a Chinese word, kai, which means “open,” to describe his
management theory. With the ambition of establishing a democratic management model, he invited his staff from different levels to open their minds to think
for the benefit of the company.29 He wanted to set up a corporate culture in which
employees were accountable, responsible, independent, proactive, task oriented,
open, and democratic and separated their work lives from their private lives and
personal feelings. In a 45-minute interview in the summer of 2000, Dr. von Canstein repeated five times that the Chinese needed to learn to be “accountable.”
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The major challenge for the in-house management here is to get people to
be accountable, to get them to be responsible. . . . In other cultures, people
understand better what their tasks are. People in other cultures see that
“Ok, this is my task. So, I need to finish it. . . .” We need to enhance communication. And we need to enhance the “mistake culture.” When you
make a mistake, just say, “Sorry, I made a mistake. I will do it right next
time.” We want to establish openness and trust. . . . So, there is a lot of
training we have to do. . . . We want them to be proactive, responsible, and
accountable. We are using a practical approach of management. We have
to keep on controlling, pushing, and initiating . . . . Irresponsible means
you expect things to be taken care of by somebody else. They have this
attitude that if I do nothing, then I commit no mistake. Then they are
inactive.30
While stating what his managerial team had to do, Dr. von Canstein was indeed
complaining of what the local employees were lacking. Some of the work ethic he
was advocating, such as daring to make mistakes and a democratic ethos, was
quite alien to the work attitude and habits of the local people at that time.
Dr. von Canstein was praised by his Chinese staff as nice, friendly, humble, and
approachable. He was indeed the most approachable general manager among all of
the four companies studied. Unfortunately, Dr. von Canstein’s German management model did not seem to work well. The premium incomes of Allianz-Dazhong
in 2000 and 2001 were the lowest among all joint ventures. This Sino-German
company began to localize its managerial body in 2002. It reduced the number of
Caucasian expatriates from the initial 10 down to 3. It replaced the British actuarial head with a Taiwanese. It appointed a Hongkongese from Allianz’s branch in
Singapore to be the head of the sales and marketing department and a Singaporean
to be the sales and marketing operating manager. However, the Singaporean
approach to managing the sales agents did not seem to work well either. It was still
too “foreign” from the local sales agents’ perspective.
Sales Agents as Elites and Commoners
When I first visited the agency office of Allianz-Dazhong referred by the company’s public relations assistant, I was surprised to see how spacious, neat, and
tidy the office was. The furniture was not only brand new but also of better quality than that of other companies. The office, which was about 1,500 square feet
in size, was located on the 33rd floor of a commercial high rise in downtown
Shanghai. It was airy and bright, with lots of windows. Unlike other agency
offices, where lots of posters and slogans were hung on the walls or the ceilings,
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there was only one slogan in this office. It said, “Doing what unsuccessful people
will not do, you will succeed!” A warning sign, “Smoking is prohibited anytime;
violators will be fined 50 yuan,” was posted on the wall. There were about two
dozen desks divided by glass partitions along the windows, and another half a
dozen long tables with seats located in the middle of the office. Some of the
partitioned desks were still empty, awaiting future senior agents to take over.
The sales team in this office, composed of about 40 active agents, was called
“Venus Team” (Jinxing Tuandui).31 Most of the agents were young, and at least
70 percent of them were under 30. There were more male than female agents,
but all of them were degree holders. The males wore suits and ties; the females
wore skirts and jackets. The colors were quite monochrome, mostly black, gray,
or white, but these young agents spoke confidently and regarded their job as a
professional career.
Just one level down from the Venus Team, on the 32nd floor of the same building, another three sales teams shared an office space about the same size as the
Venus Team’s. I visited one of them, named the “Aries Team” (Baiyang Tuandui).
The office setting of the Aries Team was conspicuously different from that of the
Venus Team. It had about the same number of sales agents but had very limited
office space. Except for the team manager, there were no partitions for any of the
agents. The room had fewer windows and so was darker than the one upstairs.
There were more slogans hanging on the ceilings and the walls. One of them said,
“Have more courage and fewer complaints.” Another said, “Have more action and
fewer grievances.” These slogans seemed to suggest that the agents had quite a few
complaints and grievances. The agents on the 32nd floor were relatively older,
about 60 percent of them between 30 and 50 years of age. But again, there were
more males than females. These agents also wore suitlike outfits but were less formal and in different colors. Their demeanor varied. Some of them looked upbeat
and confident, but most seemed loosely motivated.
Therefore, there was a clear stratification of the sales force in Allianz-Dazhong.
The Venus Team was an elite team developed according to Dr. von Canstein’s
ideal model. Its average rate of productivity was highest in Shanghai, and the
company had invested more in its office facilities and training to make its agents
feel important and respected.32 However, this team constituted less than onetenth of Allianz-Dazhong’s sales force. All other sales teams of this company were
more or less like the Aries Team, a disappointment to Dr. von Canstein.
When Allianz-Dazhong set up its sales force at the beginning, it recruited
only fresh university graduates who had not previously worked for any other
insurers. This Sino-German company did not like the way the sales agents in
Shanghai were selling and therefore preferred to recruit those without any prior
experience in insurance sales. Dr. von Canstein also expressed his disapproval of
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the pyramid, family-tree-like structure of the agency system that created the family group culture. The recruitment of sales agents therefore followed the German
model at first. Sales agents were recruited by the company’s human resources
department, and they were all subject to the supervision of the head of sales. The
agents initially all worked independently and individually. Those who had outstanding sales records were then promoted to become sales team managers. The
human resources department assigned new recruits to be their downline agents.
These managers’ incomes were then linked to the sales performances of their
downline agents. However, as selling life insurance was never too appealing to the
general public, it was extremely difficult for Allianz-Dazhong to expand its sales
force without mobilizing the sales agents themselves to recruit downline agents.
As a result, Allianz-Dazhong had to adopt the pyramid system to encourage
agents to recruit downline members.
Allianz-Dazhong had the ambition of introducing a strictly professional way
of selling. It wanted to distinguish their agents from the others. Instead of encouraging their agents to go door to door to approach strangers, Allianz-Dazhong
initially did not allow the agents to knock on someone’s door without first making an appointment. It taught the agents that making appointments was a sign of
respect. Nonetheless, the salient discrepancy between an ideal professional image
and the realities of facing countless rejections day by day inevitably demoralized
the agents. During my observation in 2002, the sales agents not only went door
to door but also disguised themselves as survey conductors from Allianz-Dazhong
to approach potential prospects and to obtain their personal information. This
tactic was first used by Ping An’s sales agents and was later adopted by some others. Thus, while the in-house managerial body was implementing a particular
model of practice, the sales agents were exercising another according to practical
imperatives. What I observed at Allianz-Dazhong’s agency offices was quite far
from the German managers’ ideal.
As there was no practice of holding weekly or daily morning assembly for the
sales agents in Germany, the German managers at first did not like the idea of
holding morning assemblies. They simply did not see a need for it. Nevertheless,
their insurance sales management consultancy, Insurance Marketing Magazine
International, a Taiwanese consultancy, successfully persuaded the German managers to adopt the morning assembly practice. Thus, morning assembly was
required, and, as at AIA and Pacific-Aetna, the frequency and format were left to
the team managers’ decisions. I attended the morning assemblies for both the
Venus Team and the Aries Team. The formats at both places were about the same,
but their atmospheres were very different. In both offices, the team managers hit
a drum to signal that it was time for the assemblies. The agents took their seats
and listened to the managers’ and the guest speakers’ speeches. While the agents
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at the Venus Team were quite attentive, the agents at the Aries Team seemed
poorly disciplined. At times the agents of the Aries Team were even rude to the
speakers:
When the agents heard the drum, some of them frowned and appeared
annoyed. . . . Some agents were chatting with each other while the team
manager was speaking. The manager asked if any agents would volunteer
to share their stories of successful sales. However, no one responded.
Seemingly a bit embarrassed, the team manager suggested to a female
agent who just sold a policy this week to share her successful story with
others. However, the agent was reluctant to do so, saying “There is nothing
to share.” The dead air lasted for a minute or two until a male agent volunteered to take her place. . . . The team manager led the audience to applaud
his generosity, but only half of them did. When the agent was about to
start his story, another female agent shouted at the team manager, saying
something like the assembly was useless for their sales.33
I was surprised to see such aloof and even rude attitude of the sales agents in a
morning assembly. Although the agents of AIA were also unenthusiastic during
the assembly, they never behaved rudely to each other or to the team manager. I
wondered if it was because this team manager was unpopular. I later found that
the agents’ poor attitude actually came from their overall dissatisfaction with the
company’s management.
Frustrations of In-house Managers and Sales Agents
The agency system of Allianz-Dazhong was indeed the most organized and elaborated of all the companies I observed. Its agency system handbook contained 45
pages, with systematic and detailed explanations of various awarding schemes and
promotion standards. The various bonuses, altogether 18 kinds, were as attractive
as those offered by Pacific-Aetna. The overall fringe benefits provided by AllianzDazhong were better than those of AIA and Ping An. But why did the agents
seem so dissatisfied with the company?
When I approached the agents of the Aries Team, the majority of them simply ignored me. They were reluctant to talk, and some of them looked at me
suspiciously. The few who were willing to talk to me all expressed their grievances about the company. “It is difficult to sell Allianz’s products. Ping An’s
products are more popular. China Life’s products are easiest to sell,” Zong Bai, a
man in his 50s, said. It was curious to me why Zong did not simply join Ping An.
He said:
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I chose Allianz because it was a foreign company. I thought the quality [of
the company’s system and products] would be higher. It looked like a
high-end company at the beginning. But now it’s in terrible shape. The
training here is useless. Allianz keeps changing people and management. It
keeps changing the rules. Today they have this set of rules, tomorrow they
have another. . . . It’s terrible! Yes, I’m going to go to another company.34
Quite obviously, the German managers, who lacked local knowledge, could only
run the company with a trial-and-error method. This frustrated the sales agents.
Not only did the agents of the Aries Team complain, but the agents of the Venus
Team complained as well. The team manager of the Venus Team, Elisa Zhou,
spelled out her dissatisfaction:
This company doesn’t know how to do business in China. . . . When I
joined this company in 1999, the training it offered was useless. The
trainer was a German. He only had theories. . . . He didn’t know how to
sell in a Chinese market. . . . The current [sales and marketing manager]
came from Singapore. I don’t like her. . . . [S]he made jokes that nobody
laughs at.35
Despite the excellent office facilities, the Venus Team had difficulty expanding.
Three months after my field research with the Venus Team, Elisa Zhou took one
of the most productive senior sales agents with her and left for another joint venture. The dropout rate of Allianz-Dazhong’s sales agents seemed to be the highest
among the insurers studied. While it was established at about the same time as
Pacific-Aetna, it had only 934 sales agents in 2001.
Allianz-Dazhong was indeed at a loss for how to manage the local sales force.
It started off with a German model and had increasingly adopted a Taiwanese
approach. Yet it failed to synchronize the two very different models. The general
manager admitted that he had encountered countless culture shocks. In particular, he had difficulty with the local culture of mixing work with personal life.
“There was no such challenge in Germany. . . . People there separate their business
and private lives. Here, people have more of a family-like feeling. They behave
differently if ‘I like you,’ or if ‘I don’t like you.’ Their personal feelings and relations
affect their work. There’s just too much personal distraction here.”36 Here, the
general manager’s conception of control, which is an “interpretive frame” used to
interpret and justify certain actions vis-à-vis others, is obviously part of his cultural capital acquired outside the local context. As we have seen, the managers at
Pacific-Aetna deliberately created a family atmosphere to channel the agents to
mobilize their (positive) personal feelings and emotions to buttress their work
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lives, while the managers at Allianz-Dazhong did the opposite. The German managers wanted a perfectly instrumental rational workplace but failed to understand
that sterilizing a Chinese workplace by trying to eliminate guanxi was not only
unintelligent but also infeasible. Their lack of local cultural knowledge and practical skills was bluntly revealed by a senior agent at Allianz-Dazhong:
The German managers are too simple and straightforward. They are ignorant of the complications of the Chinese politics. . . . They don’t know any
Chinese [language], and they don’t have close Chinese friends. Sometimes they are fooled by their Chinese staff, simply because they don’t
understand any Chinese. Nor can they read the cues of some Chinese
behaviors. . . . They are nice but too ignorant!37
The agent did not disclose how the managers were fooled by their staff. Nonetheless, it is not difficult to imagine how helpless the German managers could be in
managing and controlling the local staff when they were illiterate to the local
language and culture.
Managers’ Cultural Capital and
Agency Management
In explaining the variations of firms’ microlevel strategic choices, particularly the
styles of top management, comparative institutional analyses convincingly argue
that macrolevel institutional factors, such as locational institutional resources
and the legal frameworks in which firms are embedded, are crucial (Lehrman
1994; Fligstein 2001; Lehrer 2001; Casper 2001). This chapter compares various
life insurance companies’ microlevel strategic management of their sales agents
under the same macrolevel institutional context. Not only did the insurance firms
operate in the same institutional environment, but also they were all newly established and shared very similar organizational structures. The striking differences
across the organizational cultures of AIA and Ping An and of Pacific-Aetna and
Allianz-Dazhong call for explanations.
To explain their variations in outcomes, I suggest that the answer lies in the
composition of the “institutional entrepreneurs” of various companies. The variation in agency management across the insurers displays a systemic pattern based
on the identity of the top managers. The local-Chinese-headed Ping An followed
an authoritative approach and operated under an SOE shadow, despite its bold
effort to westernize its organizational structure. The Taiwanese-headed PacificAetna adopted a familial, relational, and emotional approach in its agency management, and its corporate culture resembled a direct selling organization. Both
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the Hongkong-cum-Taiwanese-headed AIA and the German-headed AllianzDazhong strove to craft independent, professional sales agents and to create a
modern, rational corporate culture, though Allianz-Dazhong’s attempts thus far
have failed. We have seen that when the transnational insurers were confronted
with local cultural constraints, the managers from Taiwan were most effective in
reconciling the tension, whereas the managers from Germany were least capable
of doing so. While Fligstein and Peter Brantley (1992) find that a CEO’s background does affect a firm’s financial performance, this study finds that top managers’ cultural backgrounds, to a large extent, affect transnational firms’ performances
in a specific locality. Who the top managers are and where they come from result
in quite different outcomes because, I argue, the cultural capital they bear largely
shapes their managerial strategies.
My proposal is in line with Fligstein’s argument (1990, 1996) that top managers’ cultural bearings, through their conception of control, can serve as valuable
resources. Yet simultaneously, they impose cognitive and habitual constraints on
the managers as well. Building on this argument, I go a step further to ask why
some top managers’ cultural bearings serve more as resources (as for PacificAetna’s managers), while others’ cultural bearings become constraints (as for
Allianz-Dazhong’s managers). My argument is that the cultural capital of the
Taiwanese managers was acquired in an institutional and cultural context that
shares more affinities with the institutional and cultural context in Shanghai,
whereas the cultural capital of the German managers was acquired in a fundamentally different institutional and cultural environment.
To apply the above argument to understanding the different outcomes in
agency management, a comparison of Pacific-Aetna and Allianz-Dazhong is
most illustrative. First, the local sales agents bore a cultural imprint that influenced not only their subjective values, ideas, and beliefs but also their practical
skills, habits, appearances, and demeanor when they joined the insurance industry. Some of these preexisting cultural bearings were useful for insurance sales,
but some were a hindrance. The managerial bodies of the insurers all attempted
to eliminate or suppress the agents’ cultural bearings that could hinder effective
sales, to reinforce those that could be productive, and to cultivate new cultural
bearings in them. However, their selections of desirable and undesirable cultural
bearings differed. While the German general manager complained about his local
employees’ blurring the boundary between personal and work relationships, the
Taiwanese managers purposefully blurred this boundary by creating a familial
atmosphere in the workplace. The latter proved to be more effective in orchestrating
the desired psychological attitude, because the Taiwanese came from an institutional and cultural background that shared similar worldviews with the local people. The shared worldviews define which actions are legitimate and which
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outcomes are most desired. These common templates suffused the Taiwanese
managers with cognitive and normative abilities to understand the interests of
the locals and to mold a collective identity that more or less met the locally constituted interests of the sales agents.
Another institutional task of the top executives was to change some of the
agents’ preexisting attitudes and to create new cognitive and emotional resources.
To accomplish this, the trainers and marketing managers needed to have the
“social skills” (Fligstein 1997) to mobilize existing local cultural tool kits to achieve
their purpose. The managers from Pacific-Aetna used affective discourse to draw
out the agents’ emotions. They mobilized familial cultural symbols to integrate
the agents into harmonious collectivities. Applying a familial rhetoric to guide the
agents to regard the company as a big family facilitated mutual help among the
agents and reinforced commitment to the company (Biggart 1989; Kunda 1992).
To cultivate a strong work ethic and a habit of reaching out, the Taiwanese managers deployed a business rhetoric to address and communicate with the agents.
Because only meanings that can be naturalized are effective (Carruthers and Babb
1996), and because rhetoric has to interact with reality (Zbaracki 1998), the Taiwanese managers were fully aware that using a professional rhetoric would not
work well in the Chinese context for insurance sales jobs. The discrepancy between
the definition of a professional and the actual sales work is too salient, making the
use of such rhetoric too artificial. Instead, the rhetoric of business works well in a
sociocultural context like Shanghai, where being a capitalist and getting rich are
glorified. Being a “boss” is certainly associated with profits and money making.
But it is more than that. In his study of a Taoist temple in Shanghai, Der-Ruey
Yang (2005) found that it became fashionable even among young priests to address
each other as “boss” (laoban). Being a “boss” embraces a respectable social status
and a good sense of the self. The Taiwanese managers proved to be most sensitive
to such a longing among the local people. At the same time, they artfully presented
a denial of the hierarchical system of privileges not only by addressing the agents
as “bosses” but also by making fun of themselves to entertain the agents. With
their local knowledge, they understood that pre-1949 China was still a traditional
society in which hierarchies of classes, social status, and privileges were conspicuous. They knew that these hierarchies have been rebuilding themselves in post1979 China, making the symbolic and practical relations between bosses and
workers, and between those on the top and those on the bottom, extremely hierarchical. Furthermore, the hierarchies in the insurance firms in China gave inhouse managers, let alone the top managers, much higher organizational privileges
and power than the sales agents. It is in this context that the dramaturgical performances of Pacific-Aetna’s managers to negate such hierarchies were especially
appealing. Thus, the “institutional entrepreneurs” who had better knowledge of
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the social psychology of the mainland Chinese and maintained a demeanor appreciated by these locals proved to be more successful in molding the local agents’
psychological attitudes.
On the other hand, the cultural and institutional baggage borne by the
German managers was least relevant to the cultural and institutional environment in Shanghai. The German managerial body came with an ideal of building
a sales force that could work independently with task-oriented habitus and
democratic spirit. This ideal was quite alienating to the local labor force.
Although Allianz-Dazhong was later willing to localize, the cultural and institutional distinction between Germany and Shanghai made this insurer’s localization rather superficial. The hiring of a Singaporean to handle the agency
management as a sign of localization was just one of the examples demonstrating
the German managers’ lack of local knowledge. The case of Allianz-Dazhong
illustrates how the incompatibility between the top managers’ cultural capital
and the local cultural context could result in unproductive organizational strategies and ineffective localization. Because culture is not transportable from one
institution to another (Swidler 2001), the German managers who came from an
institutional setting very different from that in Shanghai found themselves most
frustrated in implementing their ideal model, despite their experience in the life
insurance industry.
Yet, if the compatibility between the top managers’ cultural capital and the
local institutional and cultural conditions was a pivotal factor, why didn’t Ping
An’s agency management seem more effective than Pacific-Aetna’s? To address
this question, I propose a rudimentary theoretical model, as illustrated in figure
3.1. This model explores where the top managers’ cultural capital comes from,
apart from class background as hypothesized by Bourdieu (1984, 1986).
The four insurance firms I studied all operated in the same location and hired
from the same pool of local Chinese to staff its middle and lower levels of management. However, they differed in two crucial aspects. One is the backgrounds of
their top executives; the other is the corporate characteristics of their parent firms.
As I elaborated above, the institutional and cultural environments in which the top
executives worked previously contribute significantly to constitute their cultural
capital (figure 3.1, arrow A). The corporate characteristics of the parent firms also
play a role in shaping the local management strategies. For example, given that AIG
has a long history on Chinese soil and its subsidiary AIA has its headquarters in
Hong Kong, it is likely to have a corporate culture and strategy different from that
of Allianz AG, which originated in Berlin and had no experience in China. Their
divergent corporate traditions are passed down not only through systems and structures but also through socialization of the firms’ leaders. Thus, part of the disparity
among the top managers’ cultural capital comes from the parent firms’ corporate
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cultures and strategies (figure 3.1, arrow B). This cultural capital informs and organizes the top managers’ management strategies (figure 3.1, arrow C). Nonetheless,
because a firm’s microlevel strategies are largely shaped by macrolevel institutional
environments in different locations, the same insurer may develop different corporate cultures in different locations. For example, I observed that Aetna in Hong
Kong shared more similarities with AIA in Hong Kong than with Aetna in Taiwan.
The variation in Aetna’s branches in Hong Kong and Taiwan can be attributed to
the top managers’ different styles, which in part are a function of these managers’
interactions with the immediate institutional and cultural environments. Therefore, managers’ cultural capital also interacts with the local practitioners and exercises its power under the local institutional and cultural conditions to produce
variations in management strategies in a specific locale (figure 3.1, arrow D).
Figure 3.1 is instrumental in elucidating why the cultural capital of Ping An’s
managers could be less valuable than that of Pacific-Aetna’s managers. Although
Ping An’s local managers came from the same institutional and cultural environment where the firm was building, so their cultural capital should have been most
useful in the local context (i.e., thick arrow A), this newly emerged private insurer
did not have a parent firm that could pass on effective corporate strategic skills to
the top managers (i.e., thin arrow B). Instead, their local managers acquired part
of their cultural capital from their former workplaces, mainly the SOEs. The local
executives managed their sales agents in line with this past experience, where
decision making was highly centralized and hierarchical. Note that the authoritative and paternalistic agency management model was not unique to Ping An. In
my observations, the other large domestic insurer, China Life Insurance Company, Ltd., shared the same management style. Moreover, Hongmei Li (2006), in
a study of foreign and domestic advertising firms in China, reports a parallel finding that the Chinese firms displayed a patriarchic management approach, in
which the boss, who was regarded as a “father,” commanded absolute authority
over his employees. With their past socialization, it is difficult to imagine that the
middle-aged local Chinese executives could break their cognitive and habitual
limits to descend in status to flatter or even to entertain the sales agents, as the
Taiwanese managers did at Pacific-Aetna. Nonetheless, their authoritative and
paternalistic approach worked only when the agents could make good money
with their popular products. When their products were no longer competitive
and the agents’ morale was going downhill, a paternalistic approach could hardly
boost their spirit.
Furthermore, another question is why Pacific-Aetna outperformed AIA in
motivating the sales agents. Why did Hongkong managers display rather different cultural bearings from Taiwanese managers? I argue that the difference
between the Hongkong and Taiwanese managers is rooted in the institutional
Manufacturing Sales Agents
institutional and
cultural environments
in managers’ home
regions
A
interaction
top managers’
cultural capital
C
113
institutional and
cultural environment
in the locality
D
B
parent firms’
corporate
characteristics
management strategies
in a locality
Extralocal context
Local context
Figure 3.1 Sources of Top Managers’ Cultural Capital and Its Impacts on Management Strategies
environments where they came from (arrow A). Although Hong Kong has been
under China’s sovereignty since 1997, its institutional setting was largely under
British influence, being highly governed by law and instrumental rationality. The
Hongkongese’s rational, rule-abiding style had given them less flexibility and
creativity in managing the sales agents in Shanghai. Furthermore, the British education in Hong Kong severely deprived the Hongkongese of Chinese cultural
knowledge and skills. For example, many Hongkong Chinese could not speak
Mandarin in the early 1990s. As shared language facilitates communications that
foster shared mental models (Denzau and North 1994), the Hongkong managers’ lack of a common language with the local Chinese not only constrained their
strategic choices but also prevented them from sharing the locals’ subjectivities.
On the other hand, despite Taiwan’s struggling for political independence from
China, its cultural and institutional arrangements shared more affinities with
mainland China’s. Its economy closely resembled the pre-1949 Chinese economy
that was dominated by small family firms (Biggart and Guillen 1999). Interpersonal relations and networks played a crucial role in such a small-firm economy
(Hamilton 1996b, 1998). Although the institutional arrangements in post-1979
China were substantially distinct from the pre-1949, there was evidence of some
resemblance (Hamilton 1996a). With the relative institutional proximity
between mainland China and Taiwan, the Taiwanese managers were equipped
with cultural capital more instrumental for dealing with mainland Chinese labor
under local institutional constraints.
In short, I argue that the composition of the top executive bodies and the cultural capital embodied by these executives are the critical factors that shape the
strategic labor management of these firms. This study expands the application of
the concept of cultural capital to a transnational context. I propose that the top
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executives’ cultural capital comes from two major sources: the institutional and
cultural environments of these executives’ home regions and the corporate characteristics of their former workplaces. The managers who come from a more proximate institutional and cultural environment bear cultural capital more useful and
relevant to the local context. Among the three extralocal contexts the top executives came from, Taiwan, Hong Kong, and Germany, Taiwan shares the most
institutional and cultural specificities with China, and Germany the least. This
explains why the Taiwanese-headed Pacific-Aetna outperformed the Hongkongcum-Taiwanese-headed AIA, which still outperformed the German-headed Allianz-Dazhong. At the same time, part of the managers’ cultural capital is passed
down from their former workplaces, which are normally the insurers’ parent firms.
This explains why the Taiwanese managers of Pacific-Aetna adopted a familial and
emotional approach analogous to a direct selling organization model, whereas the
local Chinese managers exercised a paternalistic approach analogous to an SOE
model.
Through the cultural capital of the “institutional entrepreneurs,” this chapter
describes how local and extralocal sources of cultural and institutional properties
interplay. It maps out a pattern of variations among individual insurance firms’
strategic management of their sales agents and differences in outcomes. Chapter
4 describes how the local sales agents selectively mobilized properties from the
local cultural repertoire to “force” their products upon an unwilling clientele.
4
Making Transactions
Selling Strategies and Sales Discourses
In the case of life insurance the trick was to sell futures—pessimistic futures.
— VIVIANA ZELIZER, Morals and Markets, 1979
Selling life insurance is all about being a likeable person. The trick is to sell yourself and
to have the prospects like you as a person.
— A senior life insurance sales agent and trainer in Shanghai, 2002
A P A R T F R O M R E C R U I T I N G and organizing a sales force, life insurers have two
major institutional tasks when commercial life insurance is new to a population.
First, they have to overcome the problem of trust; second, they have to create a
sense of need for this new commodity. This chapter asks both how and why. How
do insurance sales agents in Shanghai sell life insurance? Why do they sell the way
they do? How do cultures of different forms, in relation to institutional arrangements, shape the way the agents sell their products? To address these questions, I
focus on the microprocesses that make transactions possible, asking how life
insurers, through their sales agents, deal with the issue of trust and create a sense
of need for their products. I begin by detailing the two very different marketing
models deployed by American International Assurance Company, Ltd. (AIA)
and Ping An Insurance Company of China, Ltd. (Ping An) when they first
arrived in Shanghai and explain why neither of these models was sustained for
long. I explore why sales agents from all insurers subsequently shifted to marketing the “self ” to earn trust and compliance. I analyze how their strategic interactions with prospects capitalized on the local cultural repertoire, particularly the
principle of reciprocity that lays the foundation of the Chinese guanxi. In doing
so, I highlight the general pattern of, and variation among, individual sales agents
in mobilizing cultural resources. Next, I describe how the agents from domestic
and foreign insurers used subtly different sales discourses to create a sense of need
for their products, and why the one used by domestic insurers was more effective.
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I examine how this effectiveness relies on the appropriate mobilization of local
cultural symbols in relation to the cultural taboo on death and the prevailing
institutional conditions.
How to Get Started?
Viviana Zelizer (1979) describes that life insurance sales agents in the emerging
stages of the American market presented themselves as priests and missionaries in
order to earn trust and compliance. To convince the public of the necessity of life
insurance, they used death as their “solicitor” to invoke a sense of fear and presented life insurance as a “protective shield” over the dying. The subject of “death”
was not taboo but instead was stated explicitly in all insurers’ advertisements (see
also Murphy 2010). In dealing with the cultural resistance to pricing human life,
they imbued this new commodity with quasi-religious and philanthropic meanings, adopting a discourse of moral obligation to persuade prospects that they
needed funeral or other protective types of life insurance. Likewise, Timothy
Alborn (2009) documents that insurance sales agents in nineteenth-century Britain endeavored to sanctify life insurance by capitalizing on evangelical Christianity and the Victorian novel’s obsession with the concern about death in order to
raise the unpleasant topic of premature death, to scare individuals with miserable
stories of unanticipated death, and to shame uninsured men for failing to fulfill
their inherent marital responsibility. Today, life insurance agents in Europe and
America still face a population that is generally not interested in buying their
products (Oakes 1990; O’Malley 2002). To deal with this lack of interest, sales
agents present themselves as professionals and closely follow routinized scripts to
induce desirable responses from prospects (Leidner 1993; Oakes 1990).
When AIA arrived in Shanghai in 1992, it faced a population with no idea
what life insurance was. How did they sell their products?
The AIA Model: Professionals and Standardized Scripts
Previous chapters describe how AIA, upon its arrival in Shanghai, attempted to
implement an American model by offering risk management products and creating a professional image for their sales agents. Likewise, its primary marketing
strategy resembled in every respect the one in contemporary American society.
AIA brought in a standardized sales process that included seven steps: recruiting and qualifying prospects, preparing for interviews, contacting prospects,
interviewing prospects, dealing with rejections, closing sales, and servicing clients. This multiphased sales process was almost exactly the same as what Guy
Oakes (1990) and Robin Leidner (1993) found in the sale of life insurance in the
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United States. AIA’s sales manuals contained detailed instructions teaching the
agents what to do at each step, including how to dress, how to shake hands, how
to hand over business cards, how to debate with prospects, what to say and what
not to say, and how to catch prospects’ impulses to close a sale. These instructions
provided scripts for each phase of a sale for different categories of prospects and
for handling prospects’ different responses and rejections .
The scripts about creating a sense of need for life insurance and handling rejections were comparable to those in the United States. They attempted to imbue the
meanings of life insurance with moral obligations for the family, emphasizing “protection,” “love,” “respect,” “self-reliance,” “family responsibility,” and “human value.”
While premature death is a taboo subject in China, the agents were taught to tell
stories about misfortunes happening to others to make such misfortunes seem distant and yet real. They were taught to approach “strangers” to prospect for buyers, a
method called mosheng baifang fa (“visiting strangers method,” similar to a cold-call
method). The young and educated agents AIA recruited from 1992 through 1994
were receptive to their training and closely followed the sales scripts. They went
door to door to tell “strangers” stories about misfortunes that happened to families
without life insurance. Yin Wan, an agent who joined AIA in 1992, recounted how
he sold life insurance at that time and the responses of the prospects:
Well, it was very difficult! It was very difficult to convince them that accidents could happen to them. People saw accidents happen, but they insisted
that that kind of misfortune would not happen to them. Our job as an
agent was to teach them that accidents were neutral, that accidents could
happen to everyone. We told them that buying life insurance was a way to
show love and care for their family. You know, the Chinese do everything
for the benefit of their family. . . . But it was difficult. They didn’t want to
hear about misfortunes. . . . [T]hey didn’t want to think about that. They
simply said they were not interested, or they didn’t need any.1
Obviously, AIA attempted to raise people’s sense of risk and to impose on them a
new form of risk management. However, when the topic of “death” cannot be
discussed and people share a disposition to avoid thinking about fatal misfortunes, it is especially difficult to make them feel that they need insurance.
There were many examples showing that AIA’s scripts failed to create a sense
of need for this new commodity because they were irrelevant to local situations.
To quote an example from an AIA training kit: “When a family loses the father,
the mother has to go out and work to raise the family. Therefore, the mother
becomes ‘a part-time mother.’ This is a loss forever. If the family wants to maintain
love and care forever, [the father] has to prepare in advance.”2 This script was
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irrelevant to the local situation, as married women often work in contemporary
China, and being a working mother does not carry any disparaging associations.
To facilitate the use of scripts, AIA’s training department brought in a number
of colorful leaflets from Hong Kong as sales aids. However, the stories in those
leaflets were likewise distant and irrelevant to the local people. For example, one
leaflet lists “The Three Big Risks of Life” with three pictures intending to raise the
audience’s sense of risk. One of them says “Death” with a Christian cross signifying a tomb, another says “Disability” with the back of a young man sitting on a
wheelchair facing a wall, and the last one says “Aging” with an old gray-haired
man (who looks like a Caucasian) picking garbage from a garbage bin. Another
leaflet shows a shiny red sports car. It asks, “Would You Insure This Car?” The
leaflet is intended to teach the prospects that their lives are more precious than
the car and that if they as owners would be willing to insure the car, they should
likewise insure their own lives. Commensurating the value of human lives into a
monetary term is especially conspicuous in another leaflet that pictures a “money
copying machine” printing out money to analogize the earning capacity of human
lives. This leaflet is an attempt to alert the prospects that they will not be able to
make money if they suffer an accident or illness. The agents reported that they
initially brought these leaflets with them, but soon they found that they were
“useless.” It is quite obvious why. Using the Christian cross and the luxurious
sports car were all out of the cultural frame and the daily life of the Chinese in
mainland China. Even sitting on a wheelchair was not a common practice among
the majority of the disabled Chinese in the early 1990s. Furthermore, the sports
car and the copying machine analogies portrayed human lives in too commodified a light. These leaflets simply reveal AIA’s lack of local cultural knowledge
upon its entry. The sales agents of AIA soon gave up the “ideal” marketing model
that their company coached, especially when they witnessed the much more efficacious strategy adopted by their key competitor in the field.
The Ping An Model: Guanxi and Renqing
As opposed to AIA’s cold-call method, Ping An began with a yuangu fa (“preexisting relationship method”) to prospect for clients. Instead of approaching strangers, Ping An agents aggressively utilized their guanxi networks by approaching
their close friends and relatives to sell them insurance.3 In doing so, they activated
the cultural schemas of intimate relationships to overcome the problem of trust
and mobilized the etiquette of renqing, or interpersonal obligation, to manage
the lack of a sense of need for life insurance.
Cultural schemas and etiquette are some of the ingredients of a cultural repertoire. Cultural schemas refer to the cognitive terrain in which categorization,
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attention, and perception are constituted (DiMaggio 1994; Cerulo 2002; Steensland 2006; Vaisey 2009). In Paul DiMaggio’s (1997) definition, schemas are both
representations of knowledge and mechanisms for information processing. As
representations, they entail images of objects and the relations among them. As
mechanisms, they simplify cognition and promote efficiency at the expense of
synoptic accuracy. The cultural schemas of preexisting close relationships invoke
the images of the “ought-to-be” relations among “friends” and “relatives” and provide cognitive shortcuts to simplify the interpretations of their motives and
behaviors.4 Therefore, cultural schemas as such entitled the agents to the benefit
of the doubt from their friends and relatives, especially when the general public
was unaware of what life insurance was and regulations were not yet formalized.
When the general public had some idea about what life insurance was but did not
feel a need for it, the etiquette of renqing, which is the essential element of the
Chinese norm of reciprocity governing socially acceptable and appropriate
behaviors for interpersonal relationships, became a more powerful resource for
the agents to capitalize upon.
Although the first product Ping An offered was also a personal accident insurance policy similar to AIA’s, this domestic insurer did not bother to spend much
time educating the public about the risk management concept of life insurance.
Instead of telling stories of misfortunes that happened to other families, Ping An’s
sales agents simply told their friends and relatives that insurance was good and
that they joined the insurance industry because it could benefit people. They did
not lie to their friends and relatives, since they themselves did not really understand the logic of life insurance either. These friends and relatives, who had maintained trusting relationships with the agents and who were not aware of the
commission-based income system, had no reason to doubt what the agents said.
Cao Shenjie (~ 40 years of age) explained to me why she did not know what kind
of insurance she bought in 1995.
Oh, I had no idea at all what life insurance was when I bought this policy.
The sales agent is one of my good friends. . . . One day she called me, saying
that she wanted to come to visit me. Of course, I was happy to see her. She
told me that she was now selling life insurance. I said, “ah, what is life insurance?” She said it was a protection. She didn’t say much. And I didn’t
ask much. You know, she is my good friend, I trusted her that she would
not sell something bad to me.5
The trust Cao had in the agent was based on a set of cultural schemas that
define “a good friend.” Examples of these schemas include “a good friend will
not cheat me,” “a good friend will not sell something bad to me,” and “a good
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friend cares about my interests.” Such framing allows friends or relatives to
interpret each other’s motives in a positive light to generate “reflexive trust”—a
sense of trust provoked by the cultural schemas of intimate relationships without forethought.
The cultural schemas of intimate relationships most effectively induced life
insurance transactions when the prospects did not know what life insurance was.
Soon after the public learned that the money they paid for life insurance might
not be returned if no misfortune happened to them, they were much less interested in this new commodity. Although Ping An responded to the resistance by
redefining life insurance as money management and offering products that served
primarily a savings function, the interest rates offered on these products were not
competitive enough to appeal to the prospects. And yet, many continued to purchase life insurance. Why? Wu Jun (34 years of age), who bought a yanglao
(retirement) policy from Ping An in 1995, told me about his reasons: “The agent
is my friend. I didn’t want to disappoint him. He’s my friend. I should give him
some face. I actually didn’t feel that I needed insurance. The interest rate at savings banks was higher at that time. . . . But that’s okay. He’s my friend. If I can
help, I ought to help him.”6 This is what the Chinese call renqing baodan, a purchase driven by a prospect’s voluntary or involuntary rendering of interpersonal
obligations for maintaining and reproducing her or his relationship with the
agent. Because renqing can manifest in different forms, such as sympathies, affections, face, or favors (Y. Yan 1996, 2003; King 1994), a renqing baodan can be
driven by expressing sympathetic or affective feelings for the agent, giving face to
the agent, doing a favor for the agent, or repaying a favor to the agent (Chan
2009b). Wu Jun’s purchase was driven by a little bit of everything, including a
sympathetic feeling of not wanting to disappoint his friend, a sense of obligation
to give face to his friend, and a feeling of obligation to do a favor for his friend
who needed help.
Therefore, existing guanxi facilitates life insurance transactions not only
through cultural schemas but also through the enforcing power of renqing.
Among the different manifestations of renqing, the sales agents most often
asked for face-giving from the prospects. Although the Chinese concept of
“face” has multiple meanings in different contexts, Erving Goffman (1967:5–
12) has provided generalized definitions of “face” and “face-giving” that are
derived from the Chinese usage. Accordingly, “face” can be defined as the
socially approved and positively evaluated attributes a person claims for himself
by the line others assume he has taken during a particular contact. “Face-giving”
refers to arranging a better line for a person or a group of persons than the person or the group might otherwise have been able to take. If someone “loses
face,” the person loses social standing in the opinion of known or knowable
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social circles (Hertz 2001). Giving face expresses the interpersonal obligation
that defines the signification of a relationship and cements social relations.
Thus, refusing to give face is akin to refusing to present gifts, which can be tantamount to declaring war and irrevocably harming the relationship (Mauss
[1950] 1990; Komter 2007). When mobilizing the etiquette of face-giving
tactfully and properly, the sales agents normally had no difficulty selling their
products to friends or relatives.
Although relying on guanxi and renqing to sell appeared to contradict the
professional model of marketing that AIA endeavored to create, this foreign
insurer, seeing Ping An seizing the market, had no option but to let their sales
agents use Ping An’s approach. As a result, selling life insurance to friends and
relatives without having them feeling a need for it became so common that people in Shanghai described this phenomenon as a “renqing baodan market.”
The Limits of Guanxi and the Decline
of Renqing Baodan
The prevalence of renqing baodan faded toward the end of 1990s. Given the high
annual turnover rate of the sales agents, as noted in chapter 3, the decline of renqing baodan cannot be fully explained by the structural problem of exhausting
existing intimate circles. Moreover, if the agents simply needed to expand their
pool of prospects, they were free to do so in addition to selling to close intimates.
During my research period, I observed that insurance agents felt quite ambivalent
about approaching their existing close friends and relatives. Selling to those in
intimate guanxi networks became undesirable and negatively labeled as “unprofessional.” What happened?
I propose elsewhere that it was the disclosure of the commission-based sales
system to the public that put a twist in network sales (Chan 2009b). Making a
living based on commissions, a practice introduced by AIA, was new to the local
population.7 Knowing that the local people might not accept the idea of people
making a living on commissions and that a substantial proportion of their premium payments would go directly to the salespersons, insurers and their agents
tried to conceal their payment system. However, under pressure to sell, some
agents were too eager to offer discounts to their prospects and unintentionally
leaked information about the commission system. Such information was then
circulated by word of mouth. Toward the end of the 1990s, more life insurers
joined the market and pushed the demand for sales agents. In order to recruit
aggressive and ambitious agents, the new companies not only disclosed the commission system but also exaggerated the income of insurance agents in recruitment advertisements. Chang Pingkai, a young agent of China Life Insurance
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Company, Ltd. (China Life), described how his relatives responded after reading
the advertisements:
[The recruitment advertisements] posted that insurance agents could earn
one million in five years. This is a lie. . . . But my clients called me after they
saw the ads. They said I had made a fortune. . . . Some of them, mostly my
relatives, asked if they could get some huikou (rebates). It was very embarrassing. Even if they didn’t ask me for that, they knew that I got 40 percent of the
premiums they paid. This made me feel embarrassed and uncomfortable.8
The transparency of the operation of the commission income system, together
with rumors that many insurance agents made a fortune, changed people’s perception of the motives of their close friends or relatives who sold them insurance.
Prior to this time, the cultural schemas of intimate relationships framed the
prospects’ interpretation of the agents’ motives in a positive light. When the
commission sales system was made known, another line of cultural schemas that
defined commercial oriented sales set in. These schemas, such as “commercial
sales are profit oriented,” “commercial sales are designed to make money,” and
“commercial sales exaggerate the value of a product,” are in conflict with the
ethical-affective definition of intimate relationships. A person can be profit oriented, but he or she should not apply this orientation to good friends and relatives. Ma Xiaojun (mid-40s) bought two policies from her good friend a few
years ago. Upon learning about the commission system, she felt that her friend
had taken money out of her pocket:
When I bought these policies, I didn’t know what they were. I trusted the
agent. She’s one of my very good friends. I believed that she was selling
those to me for my benefit. . . . I just bought what she recommended. . . .
At that time, I didn’t know that she actually took 40 percent of the premiums I paid into her own pocket. . . . I was a bit shocked, honestly. How
should I put this . . . it’s fine that she was selling insurance to make a living.
But I don’t feel good when she’s making money off of me.9
When the commission income system was revealed, it was like an “inopportune
intrusion” that exposed the backstage of the salespersons’ performance (Goffman
1959). This intrusion changed the perceived symbolic meanings of agents’ behaviors, which affected not only prospects’ perception of the agents’ motives but also
the feelings and self-image of the agents themselves when they approached their
friends and relatives. When it became publicly known that agents lived on
commissions, the agents felt, in their words, that they were “begging for money”
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when selling insurance to their close friends and relatives. Dai Hong, one of the
senior agents of Ping An, told her fellow agents that she had this worry when she
was about to meet a wealthy prospect: “He has millions of dollars. We are pretty
good friends, and so it’s especially difficult for me to talk about insurance to him.
He might think that I want to make money off of him.”10
Because conducting business with existing friends is a way of drawing economic gains from the ethics of social relationships, the parties involved constantly
have to negotiate and manage the movement between ethically binding sentiments and the economic calculation of gains. Thus, the relation between guanxi
and economic transactions is much more complicated than the common notion
that the former always facilitates the latter. Despite a noticeable social trend of
using guanxi for self-interests in China in the last two decades (Gold 1985; Yang
1994), the boundary between personal and business relationships has never completely dissolved. While the role of guanxi in economic life in China is indisputably influential, its use is highly contextual. The extent to which business
rationales and activities are morally legitimate to take place in a preexisting personal relationship is subject to the meanings and social rules attached to the category of the relationship (Zelizer 1996, 2005a ; Chan 2009b).
What Next? Selling the “Self”
and Making Guanxi
The undesirability of renqing baodan, however, does not mean that sales agents
cease making use of guanxi and renqing in their marketing strategies. During my
field research, the sales agents from all different insurers devoted most of their
time and energies to establishing friendships with existing clients, acquaintances,
and referred prospects. They were marketing the “self ” and making guanxi with
these people, not only to gain trust and recognition but also to distinguish themselves from other competitors so as to win over the prospects. While making the
“self ” likeable is also a common practice of the insurance agents in the United
States (Leidner 1993; Oakes 1990), marketing the “self ” in an effective way is
culturally specific. Leidner (1993) and Oakes (1990) observe that American
insurance agents attempted to win over the prospects by creating a friendly
atmosphere, telling jokes to make them laugh. The social convention of reciprocity, Leidner reports, is least employed by agents to induce conformity.11 The common way of marketing the “self ” in China, however, is rather different. The
Chinese agents attested that the most effective way of being a likeable person was
what they called “affective investment” (ganqing touzi). Affective investment,
which cultivates relational bond and elicit indebted feelings and empathies, is a
strategy anchored in both the principle of reciprocity that lays the foundation of
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the Chinese guanxi and the significance of kinship that structures Chinese guanxi
networks.
The cases I present in this chapter demonstrate that, when marketing the
“self,” the variation among agents from different insurers was not as obvious as the
variety of strategies deployed by individual agents. Most agents marketed themselves as helpful friends by actively rendering favors to the prospects to induce
indebted feelings, some interacted with the prospects as if they were kin to bring
out empathies and affections from the prospects, and some strove to present
themselves as professionals. In what follows, I give examples of each.
A Helpful Friend
Dai Hong, the Ping An agent who felt ambivalent about approaching her wealthy
friend, wore a purple tweed suit and a pair of short black boots. Her short straight
hair was moussed to make her look spruced up. And her platinum earrings made
her look feminine. Dai and I arrived at Fujian Industrial Bank at 2:00 p.m. to
meet with her prospect for the first time. The prospect, a 40-year-old divorced
woman, was a branch manager of the bank. Dai was able to make an appointment
with this manager because a number of her staff members were Dai’s clients and
they strongly recommended her.
Dai and I waited for 15 minutes before a staff member led us to the manager’s
desk. The manager was busy handling some paper work but greeted us and apologized that she had her hands full at the moment. Dai apologized for disturbing
her and asked her to take her time. We sat by the desk of this manager to let her
finish her work. Twenty minutes later, she finally had a few minutes to talk to
Dai. Before Dai mentioned anything about insurance, the manager said she
already bought a policy from AIA a few years ago. But the agent from whom she
bought the policy had left AIA. It was about time she had to pay the annual premium, but no one from AIA ever contacted her. Dai offered to handle the payment for her and help her to open an automatic payment account at AIA. The
manager was thankful that Dai was willing to help even though the policy
belonged to AIA. Knowing that the prospect was quite busy, Dai and I had not
stayed long. Dai briefly mentioned to her that Ping An had a couple of very good
yanglao policies. She left some product leaflets for this manager, who in turn gave
her 1,564 yuan (~ US$189) for the payment to AIA.12
On our way back to the agency office, Dai was indeed very eager and anxious
about how to get this prospect to buy some “big policies” from her. She told
me that this manager must be making more than 150,000 yuan per year
(~ US$18,123), so she could afford a total premium up to 30,000 yuan
(~ US$3,625, which is 20 percent of her salary). However, she maintained an
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unhurried composure in front of the prospect, telling me that to deal with those
with high purchasing power, she had to be patient and go one step at a time.
Dai, about 40 years of age, was married and had a 13-year-old son in high
school. She joined Ping An in 1998 and had been a high-performing sales agent.
Her strategy of rendering favors to prospects and her dramaturgical performance
in front of them had won applause. She was renowned for her not-too-eager
manner, nonutilitarianistic attitude, and helpful behavior. She paid visits to her
existing clients as often as she could and was always ready to explain to them the
terms of their policies, including those that were purchased from someone else.
Her helpful and nonpushy gestures earned not only her clients’ thankfulness but
also indebtedness to her generosity. In return, they spoke highly of her and connected her with their friends.
Being a helpful friend was the most conventional way of selling the “self.” The
agents all emphasized that they had “to be friends to the prospects first before
talking about insurance.” Some of the agents, nevertheless, went further than
being helpful friends.
A Filial Daughter-in-Law
Chang Qing, another agent of Ping An in her mid-20, sold her “self ” in a way
very similar to Dai’s, but in certain situations she behaved as if she was fictive kin
to her clients in order to elicit affections and deeper feelings of indebtedness.
Occasionally, she took her 30-month-old son with her to be her sales aid.
On the birthday of one of her clients, Chang took her son with her to visit the
client. She taught her son a Chinese blessing, “Wishing you health and to live a
hundred years,” to say to her client. She bought a scarf that cost 10 yuan
(~ US$1.2) as a birthday gift and arrived at her client’s residence early in the
morning. Her client, more than 50 years of age and suffering from a deformed
leg, was very moved when she saw the agent and the little boy. The boy was barely
able to say “wishing you health,” but this client was extremely delighted to see his
attempt. She bent her waist to reach the face of the little boy to show affection.
She kept asking Chang why she would have done such a nice thing to her. She was
very touched by Chang’s gesture, as Chang had visited her just two weeks before
on Women’s Day to give her a carnation. The client felt much indebted to her
kindness. Not sure how to repay these favors, she went to her bedroom for a few
minutes and came out with tears in her eyes. She walked over to the boy and put
a note of 100 yuan (~ US$12) into his pocket. Chang courteously refused to take
the money. During their chat, the client told Chang that the last wish in her life
was finding a wife for her 28-year-old son. She said if she could have a daughterin-law like Chang, she could be at ease for the rest of her life.13
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Chang shared this story to her fellow agents in a morning assembly at her
agency office the following day. She proudly told other agents how she successfully created a personal relationship with a client and how her efforts paid off.
“When we want to build a relationship with our clients, we should not be stingy
about giving. You see? I bought a scarf that cost only 10 yuan. But what did my
client do? She gave me 100 yuan! You see the payoff ? It’s ten times of what I paid!
Whenever we help our clients, they are going to help us even more. You know, we
Chinese care about renqing.”14 Chang then asked her fellow agents to help her to
find a potential girlfriend for her client’s son. She said if she could find a good wife
for her son, the client’s whole extended family, relatives, and even her expected
grandchildren in the future would all be her clients. Indeed, this client had been
very helpful to the agent. Besides referring her relatives to Chang, she even went
further to help to convince them of the importance of buying life insurance.
Interacting with clients as fictive kin in order to cultivate empathies and motivate them to help in the selling process is found not just among the agents from
the domestic firms but even among agents from the seemingly least localized
joint venture.
A Naive Little Sister
Wearing a similar hairstyle as Dai Hong, Zhang Ying, age 24, was making a
promising income as an agent of Allianz-Dazhong Life Insurance Company, Ltd.
(Allianz-Dazhong). She joined the insurance industry right after her graduation
from Fudan University, one of the top universities in China. This young agent
always wore a dark pantsuit, which made her look career oriented. Nonetheless,
at times she presented herself as a naive little sister to please and to earn sympathies from her clients and prospects.
For more than a year Zhang had tried to sell a “big policy” to one of her clients, Hang Ganzhi, who was making a good income. However, she was not able
to close the sale because Hang’s wife, Li Yun, was reluctant to buy from her.
Knowing that her client would need to get the approval from his wife if he wanted
to purchase a “big policy,” Zhang made many efforts to please his wife. She called
his wife upon learning that she was pregnant, addressing her as “Sister Li Yun.”
But Li remained unenthusiastic. Zhang then bought a book called “How to Raise
Your Lovely Baby” and sent it to her along with a greeting card. Li did not reply.
After the baby was born, Zhang visited the couple. She brought a “big policy”
proposal with her. On her way, she bought a bunch of lilies and a can of formula
that altogether cost 230 yuan (~ US$28) as gifts. When Zhang presented the
proposal to the couple, the wife remained silent. Her client, who used to be very
friendly to her and treated her like his little sister, was critical and asked her a lot
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of questions concerning the policy. Zhang realized that Hang was actually pretending to be critical and asked all those questions for his wife’s benefit. Sometimes Zhang simply put on a pitiful face when he was too critical. The client and
the agent were thus actively engaging in dramaturgical interaction with each
other in front of the wife. After Zhang’s presentation, the couple said they needed
a few days to think over the proposal. Before she left, Zhang deliberately walked
over to the couple’s wedding picture. She exclaimed in a naive tone, “Sister Li
Yun, you are so beautiful! You two are such a perfect match! I can’t imagine ever
having a picture like this.”
Two days later, Zhang received a call from headquarters, saying that Li Yun
wanted to terminate her husband’s existing policy in Allianz-Dazhong. Anxious
and worried, Zhang called Hang and made an appointment to see him. She had
prepared a specific script based on the couple’s situation that was intended to convince them of the importance of retaining the policy. However, right before she
arrived at Hang’s office, she decided that the script might be too banal. So she
changed her strategy. Instead of talking about insurance, she talked about her feelings. Looking upset, she said: “Brother Ganzhi, is it true that Sister Li Yun doesn’t
like me? Tell me the truth, please.” Hang said it was not true and asked her what
happened. Zhang said: “Sister Li Yun called our headquarters the other day. . . . If
she liked me, she would have called me instead. Sister Li Yun does not seem like
me. Did I do something wrong? I felt hurt when I got the phone call from the
headquarters that sister Li Yun wanted to terminate the policy.” Hang comforted
her, saying that it was only because his wife’s brother was an insurance agent that
they once had difficulty choosing. He said he was very pleased with the proposal
she presented and had successfully convinced his wife to agree on a new purchase
from her. The annual premium was more than 30,000 yuan (~ US$3,625).15
A Knowledgeable Salesman
Shao Xinluo, a 28-year-old agent of Ping An, was ambitious about establishing
his career and proving his ability. He sold industrial machines before becoming
an insurance agent at Ping An in 1996. By 2002, he was head of a sales group of
30 agents. Wearing a dark gray suit and a dark blue tie with the Ping An logo,
Shao was counseling his downline agents and teaching them how to deal with
“big shots” during my first visit to his office. He proudly told me that he only sold
“big policies.” The biggest policy he sold cost 300,000 yuan (~ US$36,245) per
year. He described to me how he did it:
The key is to get the prospect’s recognition. . . . The client with this big
policy is an owner of an electronic manufacturing enterprise. He is making
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millions. In order to earn his trust and recognition, I spent a lot of time
reading magazines and books to learn more about this manufacturing
industry. I equipped myself with adequate knowledge so that I was able to
communicate with him. When I read some magazines that seemed very
interesting and useful, I sent them to him. He might have already had
those magazines, but what I did was to show him that I had similar interests as his, and that I cared about him. When he found that I could have a
dialogue with him about electronic manufacturing industry, he began to
accept me.16
Shao said he studied music, information technology, and automobiles in order to
impress his prospects in those professions. In other words, he made an effort to
expand his cultural capital to make connection with the “big shots.”
Another agent of Ping An, Cao Jin, has been using the same strategy as Shao.
Cao told his downline agents that the biggest taboo in selling life insurance was
talking about insurance when they first met with the prospects.
Having a common interest in a conversation with the prospects is more
important than trying to change their concepts or saying how good your
products are. Facing different prospects, you have to use different methods.
BUT NEVER TALK ABOUT INSURANCE AT FIRST! I have been
reading a lot of this and that to equip myself with very broad knowledge. . . .
I am able to communicate with prospects from different backgrounds.
When the prospects feel that you have good knowledge about the issues that
are of concern to them, they will recognize you and trust you. Once they
trust you, they will listen to you and buy whatever you recommend.17
Being knowledgeable seems to be more important for male agents than their
female counterparts to gain the prospects’ recognition. The last case I describe
below illustrates that a woman can be seen as a presentable professional without
the need for broad knowledge. Nonetheless, she needs something else.
A Professional Saleswoman
“Have you ever tried to carry Chu Siujuan’s briefcase? Do you know how heavy it
is?” a male agent of AIA asked me. Chu Siujuan, an agent of AIA in her early 30s,
was admired by her clients as “very professional.” She wore make-up, had her long
straight hair hanging down all the time, and very often wore a bright blue, red, or
black suit. Chu’s briefcase was a black rectangular leather box measuring about
6" × 12" × 18". It was heavy because it contained not only a number of product
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leaflets, policy application forms, policy contracts, a premium calculation handbook, a stack of blank paper, a calculator, and some other stationery but also a
photo album and a number of award certificates. Chu carried all of this with her
every day.
On a Saturday afternoon, Chu and I went to a residential estate in the suburbs
of Shanghai. While we were riding on the bus, Chu was reviewing the details of
the policy she was about to sell. She was pondering what kinds of questions the
prospects might ask and how she should respond. The prospects included a young
couple and a middle-age man, who might be their relative. They were referred to
Chu by one of her clients. The couple met with an agent from Ping An the week
before but asked Chu to prepare a proposal for them so that they could make a
comparison. They were waiting for us at the shop owned by the middle-age man.
Before we went in, Chu walked over to a corner on the street, pulled out a small
mirror, and checked her make-up. With a confident smiling face, Chu (and I)
walked into the shop. Chu greeted them and opened her briefcase right after we
sat down. She presented a business card to the couple and another to the man.
Without a serious look at the business cards, the prospects put them down on the
table. The woman said they wanted to buy a savings policy with a dividend component. After Chu had presented the details of the policy proposal she had prepared for them, the prospects pondered for a while. Suddenly, Chu’s folded
business card accidentally caught their eye. On the inside of the card, it listed all
the major awards Chu had received since 1995. Chu told them how AIA maintained a high quality control of their agents (implying that the agents from Ping
An might not be as good). She explained to them how she had won those awards,
recognitions, and titles, saying that it was because she had achieved high sales
volumes. Then, she showed them a number of her award certificates and the photos taken of her receiving awards and with the general manager of AIA. She did
so to assure the prospects that she was an excellent agent, to show off her achievements to earn trust from the prospects whom she had just met for the first time.18
Chu’s style of marketing herself was closest to the ideal type of “professional”
defined by AIA and Allianz-Dazhong. Chu never bought any gifts to her prospects and clients. She usually began her sales talk with the risk management function of insurance. What made her well received by prospects was her commitment
to the job and her good command of the details of the insurance products. She
worked 12–14 hours a day, seven days a week. She was single and never had time
to date. She was known by the clients as a responsible agent. When she received
phone calls from clients whose agents had left the company, Chu provided the
same kind of services for them as for her own clients. Her clients usually repaid
her by connecting her to their friends. Unlike Shao and Cao, Chu did not attempt
to impress the prospects by broadening her knowledge. Instead, she worked
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around the clock and used the awards conferred by her company as the means of
demonstrating her ability.
Reciprocity, Fictive Kin, and Gender Roles
in Making Guanxi
Although the above examples do not cover the full variety of agents’ strategic
interactions with prospects, they represent the most common ones. Most of the
dramaturgical strategies that sales agents deployed to interact with prospects, I
suggest, are organized primarily by the norm of reciprocity, specifically the principle of symmetric obligations that governs “not-too-close” relationships. Mobilizing one’s social networks and capitalizing on the norm of reciprocity to facilitate
economic transactions is, of course, not confined to China (Granovetter 1985;
Biggart 1989; Dore 1983; Sako 1992; Uzzi and Lancaster 2003; Guseva 2008;
Bandelj 2008). The Chinese sales agents, however, intersected the use of the norm
of reciprocity with fabricated kinship sentiments and gender role stereotypes.
I argue elsewhere that close relationships, defined by an ethical-affective principle, are generally not the optimal type of social tie for negotiated economic
exchanges (Chan 2009b). While the presence of a strong sense of trust can certainly reduce transaction costs, the elements of affection and asymmetric
obligation are unfavorable to instrumental, self-interest–oriented economic
transactions. Instead, the “not-too-close” relationships, including former schoolmates, former colleagues, former neighbors, ordinary and distant friends, distant
relatives, business clients, and referred prospects, are the best type of relations for
economic exchanges. These relatively loose relations allow calculative and economically driven exchanges and yet still possess a certain degree of trust, affection, and obligation. Favors in these relationships are expected to be more in
balance. The socially acceptable time lag that allows one party to owe the other
party a favor is normally shorter in loose relationships than in close relationships.
The Chinese sales agents tactfully capitalize on this principle by actively presenting gifts and rendering favors to prospects or clients in order to make them feel
indebted and obligated to repay their favors. “The Chinese are afraid of being
cared for. When someone cares for them persistently, they feel indebted to that
person,” a Ping An agent said. The importance of repaying a favor, which is rooted
in the Confucian teachings of how to maintain social order, is stipulated in the
common aphorism lishang wanglai (gifts coming and returning). Furthermore,
the Chinese norm of renqing encourages returning more than what you have
received. It is expressed unmistakably in the Chinese aphorism nijingwoyichi,
wojingniyizhang (you respect me for a foot, I respect you for 10 feet).19 Chang’s
client offered 100 yuan to the little boy when Chang’s gifts cost much less is just
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one of the examples enacting the principle of repaying more than the amount
received. When this principle is applied to sales agents and prospects or clients,
the repayment of favors from prospects or clients, more often than not, involves
buying a policy or referring someone to the agents.
In fact, sales agents rely considerably on referrals when prospecting new clients. Referrals help to screen out uninterested prospects, and the problem of trust
is less of an issue with the presence of intermediaries. Nicole Biggart and Richard
Castanias (2001) maintain that collateralized social relations serve as a presumptive guarantee for managing risky transactions. This is especially the case in
Chinese contexts where trust is vested in interpersonal networks and institutional trust is embedded in personal trust ( Tang 2005; Wong 1996). Furthermore, referrals are often the only way through which the agents can reach those in
higher social and economic levels (Bian 1997). This explains why agents spend a
lot of time rendering favors to their existing clients, making the clients feel obligated to refer their friends and relatives to the agents.
An even more powerful way of creating lasting guanxi with clients or prospects, as Chang demonstrates, is to mobilize the norm of reciprocity together
with the bonds of kinship. Despite the argument that postreform China has been
shifting from a group-based to a network-based society (Gold 1989; Lin 2001),
kinship continues to be of paramount importance to Chinese business practices
(Peng 2004; Bian 1997; Lui 1998). Blood ties in the Chinese guanxi hierarchy
often belong to the strongest tie category, even though contacts between members may be infrequent. Therefore, if sales agents are able to establish fictive kin
relationships or sentiments with their clients or prospects, these relationships and
sentiments will significantly facilitate the agents’ selling, either by helping the
agents to prospect potential buyers or by purchasing policies from the agents as
renqing baodan. Both Chang of Ping An and Zhang of Allianz-Dazhong actively
offered asymmetric favors to their clients and tactfully interact with them as if
they were fictive kin. But they did it differently. Chang mobilized her son to participate in the dramaturgical stage to solicit not only indebted feelings but also a
familial sentiment from her client. This is a very powerful tool. She moved the
client to tears, which called out her client’s affective feelings for her and her little
boy. On the other hand, Zhang presented herself as a younger sister to her client.
When confronted with difficulty with the client’s wife, she acted naive and a little
silly to draw the client’s sympathies and to minimize the wife’s apprehension.
The different strategies that Chang and Zhang used to establish fictive kin
relationships with their respective clients, I suggest, are tied to a simultaneous
process of invoking gender stereotypes (Lan 2006). Zhang’s portraying herself as
a naive little sister worked well only because she was single and her client was a
man who was older than she was. On the other hand, although Chang was also a
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young woman, her married status required her to behave more maturely. More
important, when her target was a lady in her 50s, it would be expected that
Chang, as a younger person, would offer favors and care for the elder. Playing the
role of a daughter-in-law resonated well with Chang’s gender role in relation to
her client. Although variations exist, a general pattern of interactions as organized by gender roles and age can be discerned. Middle-age female agents tend to
act like mothers to the young prospects and clients. Middle-age male agents act
like elder brothers to the young targets, especially to the females. Young female
agents present themselves as daughters or little sisters most effectively to mature
men and as daughters-in-law to middle-age women. Young male agents act like
sons to middle-age women and as younger brothers to middle-age men.
Furthermore, the pattern of gifts giving and the creation of a professional
image are also influenced by gender. Note that Zhang delivered gifts to her client’s
wife in an attempt to please her, but she did not offer any gifts or favors to her
client when orchestrating a sibling-like relationship with him. As gift giving to
the opposite sex may carry meanings that involve romance, the sales agents are
mindful of the consequences of sending gifts to prospects of opposite sex. Thus,
female agents buy gifts and render favors more often to their female clients and
prospects than to the males. To please men, female agents either act naive or professional. They act naive to fulfill the general gender stereotype that paints women
as subordinates so as to draw sympathies. On the other hand, some female agents,
like Chu of AIA, act professionally to gain respect from male prospects. However, due to the gender stereotype that the personal attributes of females do not
match well with a professional image, female agents seem to rely more on external
proofs to build their professional image. For instance, Chu relied on institutional
awards and certificates to prove her ability, while both Shao and Cao of Ping An
built knowledge to serve the same purpose.
The cases above illustrate that while marketing the “self ” and making guanxi
are a must, there is no single formula for doing so. Despite the popularity of capitalizing on the norm of reciprocity and the kinship culture, and despite the general pattern of embedding the marketing of the “self ” in gender roles, each move
and its effectiveness are often subject to the agent’s creativity in mobilizing the
appropriate cultural elements in specific structural and situational conditions.
Discourses on the Need for Life Insurance
Unlike the renqing baodan that occurred in the agents’ close social circles, transactions in fabricated guanxi usually require the prospects to have a certain sense
of need for life insurance. How agents talk to the prospects to move them to sign
and pay is critical. Although the Chinese agents found the mechanical scripts
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printed in their training materials to be rather ineffective in arousing the prospects’ interests, they often discussed among themselves which sales talks worked
and which did not.
AIA and Ping An started off with two very different models of discursive
practice in selling their products, one as risk management and the other as money
management. When agents from AIA talked about “risk,” “protection,” “love,”
“human value,” and “responsibility,” agents from Ping An talked about “saving,”
“return,” “retirement,” “dividend,” “profit,” and “good deal.” Their sales discourses
were as contested as their products until the end of 2001, when Ping An and
other domestic insurers began to place risk management products at the center of
their marketing efforts. Then agents from all insurers had to sell something not
well received by the local public. However, a general pattern of differences
between the foreign and domestic insurers in their sales discourses still existed.
Agents from domestic insurers mentioned “protection,” but the central focus of
their sales talks was money management. They concentrated their efforts on selling products regardless of the conceptual understanding of their prospects. On
the other hand, agents from foreign insurers usually began with a risk management discourse. At times they still attempted to influence the prospects’ concept
of insurance. Only when they found that it did not work did they switch to
money management. Their variations, I suggest, lay in the subtle differences
between their products and the agents’ training. The products from foreign insurers were usually more expensive because the savings components were typically
offered at lower interest rates. If these products were presented primarily as
money management, they were at a disadvantage compared to those from domestic insurers. Therefore, their agents had to highlight the protective function of
their products, making them sound different to prevent the prospects from comparing the details of their products to those of domestic insurers.
In the following paragraphs, I present several different styles of sales talks
commonly used by the sales agents and describe the responses of the prospects.
Sales Talks That Do Not Work
Zhong Xinru, a new agent for AIA, and I visited her prospect’s residence to
present an insurance policy that combined life, accident, hospital care, critical
disease, and endowment components. The endowment component is a participating type that carries a dividend. Zhong explained to her prospect, a woman in
her early 30s, why she needed this policy:
This policy has everything. It gives you both protection and savings. It
gives the client a large sum of money if she suffers from any of the listed
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critical diseases here, or if she has any accidents. This money can be used
for her medical treatment and living expenses, or it will go to her family [if
she dies]. For a family of three with a little child like yours, it is necessary
for you and your husband to each get a policy like this.
Although Zhong used a third person “she” rather than “you” when talking about
misfortunes, the prospect did not let her finish, saying that the chance of contracting any critical diseases or having an accident was very low. She added that
she did not want the chance to get money from the insurance company either.
Zhong pointed out that the prospect could get the money back if she lived to age
88. If not, the money would go to her beneficiary. Then, she began to tell stories
that came from the training materials of AIA:
I had a prospect, an outstanding young lawyer in his early 30s who earned
up to 150,000 yuan (~ US$18,123) per year. . . . He had a pleasant character and a happy family. . . . Two months ago when I visited his office, I was
terribly shocked. His colleagues said he was bedridden due to a blood
cancer. I visited him in the hospital. His wife was there, desperate and
mournful. You know how expensive the medical fees are nowadays, right?
He regretted so much not having bought the critical disease insurance
from me. They had spent all their savings. . . . But still, they couldn’t pay
their bills. His wife borrowed money from relatives and friends. They
spent almost 400,000 yuan (~ US$48,327) in total. But he passed away.
Now his wife . . . is badly in debt.
The prospect remained silent the whole time while Zhong was narrating the
story. After finishing, Zhong told another story about another prospect who died
in a traffic accident on his way to work one morning. She went on to describe how
this prospect’s family suffered afterward and what it meant to have an insurance
policy. The prospect, who did not seem to be listening to Zhong, was flipping
through a magazine on the table. Zhong asked her, “Do you love your family?”
She said, “Of course, everyone loves her family. Who doesn’t?” Zhong elicited
this answer for a script about love and responsibility:
Buying insurance is an act of love and responsibility for your family. Why
do we work so hard everyday? We all work for the well-being of our family,
especially our children. . . . But what happens if something makes us not
capable of raising our family anymore? Insurance can give our beloved a
family protection. It lets us and our loved ones live with dignity and
respect.
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The prospect seemed a bit impatient. She said it was about time to prepare dinner
and implied that Zhong should leave.20
Zelizer (1979) found that imbuing life insurance with benevolent meanings,
and human life with economic values, was an effective discursive practice in making life insurance popular during its formation phase in the United States. Nevertheless, this discursive practice did not work in China. People simply did not
believe that they would be the victims of premature death. The following episode
demonstrates this point with a debate between Chu, the professional saleswoman
of AIA, and her prospects, three men in their mid-40s.
Chu was introducing a critical disease policy to Yang. She explained to
him that if he bought an insured amount of 300,000 yuan (~ US$36,245),
he would pay 2,200 yuan (~ US$266) a year. He would pay until age 59
and get whole life protection. If he passed away before reaching 88, the
insured amount would be paid to his beneficiary. If he became totally
handicapped or survived until the age 88, then he would receive the payment. Furthermore, if he suffered from any of the listed critical diseases,
he could get half of the insured amount for medical treatment and the
other half for rehabilitation. While Yang was punching the calculator to
see how much he would have to pay as compared to how much he would
receive, his friend sitting next to him said: “You don’t have to punch the
calculator. You are giving them money for their profit. You will lose. I tell
you. You will lose if you don’t die early.” Slightly smiled, Yang asked Chu if
she had a different product. Chu said: “Your concept of insurance is not
right! Insurance is for protection. How can you tell that nothing will
happen?” Again, Yang’s friend challenged Chu. Yang sided up with his
friend and said: “If I didn’t have any of these serious illnesses, then I’ll have
paid a whole lot for nothing. It doesn’t sound right!” Chu responded: “If
there is nothing happens until you reach 88, then congratulations!” She
then took some newsletters out of her briefcase, with the intention of
showing some statistics to tell these prospects how risky the world was and
how vulnerable human lives were. However, Yang and his friends were
talking to each other and they simply ignored the newsletters. Yang’s another friend said: “If I knew I would suffer from any of these critical diseases tomorrow, I would immediately buy a policy with an insured amount
of a million yuan from you.” Chu said: “How do you know that it won’t
happen tomorrow? How do you know?” Yang’s friend replied: “If I knew,
I would have bought it!” Chu took pains to convince these men that insurance was not about “returns,” but it was for “in case.” However, because
the term “in case” in Chinese is wanyi (wan means ten thousand, and yi
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means one), Yang’s friend responded: “Yes, it is buying a wanyi, a chance
of wan-fen-zhi-yi (one in ten thousand).” Yang finally turned down the
critical disease policy.21
As discussed in chapter 5, Chinese clients and prospects refuse to buy those
policies that do not give them the insured amount when they are alive and healthy,
but not because they are selfish or unwilling to leave money for their families.
Instead, the cultural taboo has pushed thoughts about premature death out of their
cultural schematic frame, so those products are deemed unnecessary and useless.
Sales Talks That Work
Lai Jiemin, a senior agent of Ping An, was selling a combined policy similar to the
one Zhong from AIA had introduced to her prospect. Lai’s prospect had a similar
socioeconomic profile as Zhong’s prospect. However, Lai used a completely different sales talk to convince her prospect that she needed the policy: “This is the
newest fenhong (dividend) product of our company. . . . The dividend is given to
your policy account annually. Twenty years later, you can take the accumulated
dividend out, or you can leave it in our company to let it accumulate.” When the
prospect heard the word fenhong, she seemed curious. She asked if the dividend
could be taken out annually. The answer should have been “no,” but Lai skillfully
activated the usual concern about yanglao to get around the question: “You don’t
want to take the dividend out every year. You want to leave it in our company to
let it accumulate. . . . Now you don’t need this money since you are young and
healthy. You want to leave it in our company to generate a profit. You can then use
the profit as part of your yanglao jin (retirement fund).” The prospect seemed
convinced. But she was concerned about whether the dividend rate was fixed. She
wanted to have a fixed rate. Lai replied: “The dividend rate depends on the annual
investment returns of our company. . . . An insurance company is a financial company. . . . The head of our actuarial department, Stephen Meldrum, was recruited
from the United States. He is serving on the investment management committee
of our company. Our investment returns must be good.” This time Lai drew on
the notion that “American things must be good” to handle her prospect’s query.
(As far as I have learned, Stephen Meldrum was recruited from Britain, but for
some reason, many sales agents mistook him as coming from the United States.)
Her prospect seemed persuaded. She asked how much she would receive in total
by the time she retired. Lai then went through the benefits for the prospect and
the total amount of the premium. The prospect was not interested in the accident
component because it had no cash value. She saw this part as a “waste” if no accident ever occurred to her. Lai suggested that instead of taking it out, she cut down
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the insured amount of the accident insurance to 50,000 yuan (~ US$6,041) and
pay only 75 yuan (~ US$9) per year. The prospect finally agreed to buy this policy
and pay an annual premium of 7,214 yuan (~ US$872) for a total insured amount
of about 150,000 yuan (~ US$18,123).22
Throughout the hour-long meeting with the prospect, Lai did not invoke
death or other misfortunes, even though the policy served various risk management functions covering sudden death, accident, hospital care, and critical diseases. Arousing the prospect’s interest and curiosity in the first few minutes is
crucial. The terms like yanglao (life after retirement), yanglao jin (retirement
fund), fenhong or hongli (dividend), touzi (investment), huibao (return), and
hesuan (good deal) more often than not elicited interest and curiosity from the
prospects. However, emphasizing a return of money to the policyholders meant
the insurance products had to compete with other money management tools
such as savings, government bonds, and stocks. What makes insurance distinct
from other money management tools is its risk management function. Nevertheless, this function is at best presented as secondary, like a bonus attached to a
savings plan. For example, agents might say, “This policy can also give you some
protection” and be vague about what “protection” means so as to let the prospects
interpret it in a way they feel comfortable with. In some cases, the agents even
attempt to conceal the fact that the policies carry a rider that serves a risk management function. An agent from China Life told me about his trick:
If we sell a pure savings policy to our prospects, the premium is high and
the insured amount is very low. We usually add a term life component into
the policy to make the insured amount higher. We do see that many prospects need this component for a protective function. However, the majority of our prospects think that this component is a waste of money.
When they learn that a small portion of the premium they’d pay is nonreturnable when they are alive, they don’t want it. They think that their
money was lost to the insurance company. We normally don’t tell our
prospects that we’ve added a term life component. . . . The premium for
term life is very, very low. But still, it’s better not to tell them. . . . If you
explain to them why they need it, they don’t listen to you.23
Term life is purely a risk management product with an insured amount payable
only upon the death of the insured within a stated period. It may seem ridiculous
that a sales agent would conceal the fact that the insurance policy carries a rider
that serves this risk management function. This finding, nonetheless, indicates
just how strong the repulsion is toward buying insurance products for death and
misfortune.
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Dealing with the denial of the possibilities of early death was usually more
difficult than dealing with the denial of critical illnesses. For the latter, an effective sales strategy that some agents used during my field research was to activate a
familial sentiment. An agent from Ping An described how she used this strategy
to convince some of her prospects that they need insurance:
When my prospects said they would just let it be rather than spend hundreds of thousands for medical treatment if they were so unlucky to have
contracted a critical disease, I asked, “Would your wife let you?” “Would
you son let you?” When I asked these questions, they usually would think.
Then I said their family members would do whatever necessary to get
money for their medical treatment. I asked them, “Do you want to let your
family worry and bear heavy debts?” I just kept asking questions. Some
prospects came to agree that it was not a bad idea to buy some insurance.24
Quite a number of agents from different insurers reported using a similar script
to draw out the prospects’ fear of leaving a financial burden on their families due
to illnesses. The effectiveness of this script is strengthened by the institutional
changes in medical care and other welfare discussed in chapter 1.
Switching Sales Talk from Not Working to Working
Because of the features of their products, sales agents from foreign insurers normally started with a risk management sales talk but then switched to whatever
might work to move the prospects. This “whatever,” nonetheless, is not random.
Let me quote at length one of the cases showing how an agent switched the discourse in her sales talks. This example demonstrates how insurance agents
attempted to teach the public about the foreign concept of insurance, on the one
hand, and endeavored to arouse concerns and interests by using local cultural
symbols on the other.
Jin Lang, an agent of Pacific-Aetna in her early 30s, and I went to a computer
shopping mall to look for potential clients. Jin approached a young man in his
mid-20s who was working in one of the shops. After introducing herself and me
to the young man, the agent began with a question:
Agent: “You know that now we are having economic reforms and a lot of
changes are taking place. Do you think that the employee benefits provided
by your employer are adequate to cover your needs in the future?”
Prospect (smiles, lowers his head, and speaks in a very low
voice): “I haven’t thought of it.”
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Agent: “You haven’t thought of that? (smiles) Although we are now young and
don’t have any serious health problems, but life is full of risks. Look at the
September 11 incident in the U.S. (the agent looked at me, someone from the
U.S.). Who knew that that would have ever happened?”
(Prospect’s head is lowered. He plays with the agent’s and my
business cards while the agent talks to him. He remains
silent and never makes eye contact with the agent.)
Agent: “May I ask if you feel that the medical fee you can get from your company is adequate?”
Prospect: “I’ve never thought of it.”
Agent: “You’ve never thought of it. In fact, there are many risks in our life. Now
you are young and you don’t feel the need for medical insurance. But when we
grow older, we will have a strong need for medical care. We have to think
about our future. You know, our parents worked very hard to raise us. We
Chinese said “yang er fang lao” [raising sons for securing the aged life]. If we
encounter any accidents, at least we can leave some money for our parents. It
is a kind of fidelity. We ought to have a plan.”
Prospect (nods his head): “Ng” [meaning yes].
Agent: “I understand that you just started working and might not have too
much extra money now. But let me ask you, can you pay yiyuan [a dollar in
Chinese currency, about US$0.12] a day?”
Prospect: “Yiyuan a day? Yes.”
Agent: “If yes, then you may consider getting an accident insurance. Indeed,
accidents happen all the time. . . . Don’t think that that’s trivial. The medical
fee for a bruised injury is 200 to 300 yuan. Now you said you can pay yiyuan
a day. Just yiyuan per day, you can transfer your medical fees to the insurance
company.”
(Prospect does not say yes or no but still maintains a shy smile.)
Agent: “You think there is no problem paying yiyuan a day, right?”
Prospect: “No.”
Agent: “Then, let me draft an accident insurance plan for you. The plan will
include both life and medical components.”
Prospect: “Life?” (He seems to not understand what a “life” component
means.)
Agent: “This product also includes a life component, which means if an accident causes you to lose your life, the insurance company will pay double of the
insured amount. Now, you said you can pay yiyuan a day, right?”
Prospect: “Yes, I can.”
Agent: “Okay, then I will design an insurance plan for you according to your
current situation.”25
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When the prospect remained silent or said, “I haven’t thought of it,” which might
be true, he was in fact saying “I’m not interested in hearing more about.” However, when the agent used the moral duty of being filial to one’s parents to appeal
to the prospect, she broke the ice by getting the prospect to agree with her for the
first time in the conversation. Immediately, she asked a simple, practical, and yet
symbolic question of whether the prospect could pay yiyuan a day. An answer to
this question indicates the minimum economic ability of the prospect. Furthermore, when the question is asked right after the prospect’s agreement on the
moral duty of being a son, a negative answer implies that he is not willing to pay
yiyuan a day to fulfill that duty. When the prospect did not know what the “life”
component of the policy meant, the agent straightforwardly explained that it
referred to “losing your life.” However, she did not elaborate further on this topic
but immediately switched back to his ability to pay for yiyuan a day. The turning
point in this sale thus had nothing to do with a sudden awakening of one’s risks
or a feeling of a need for insurance.
Cultures, Institutions, and Sales Discourses
The above sales discourses illustrate that the cultural taboo on premature death
was less about a deliberate avoidance of saying the word “die” than a subjective,
psychological avoidance of thinking about the possibilities of an early death. This
avoidance, which filters their selective attention to different kinds of risks, is
observed not only among prospects and clients but also among the sales agents
themselves. For instance, I observed that Chu, the professional saleswoman of
AIA, who was already more keen than most agents on educating her clients and
prospects about the risk management concept of life insurance, unintentionally
slipped into her clients’ definition of risks when interacting with them:
Chu met with Zhang (mid-40s) to sell him a new whole life policy that
would benefit mainly the beneficiary. . . . She focused on the benefits that
the policy could bring for Zhang’s 16-year-old son. . . . When Zhang
refused, saying that he wanted his son to be financially independent. . . .
Chu got stuck and didn’t know what else to say. She had managed only
to leave him the product leaflet. . . .26 On our way back to Chu’s office, I
asked her if Zhang would consider putting his wife as the beneficiary if
he preferred his son to be financially on his own. Chu responded, “It
doesn’t make sense to put his wife as the beneficiary because they are
about the same age.” What Chu implied was that Zhang and his wife
would pass away at about the same time and so his wife would not benefit from it.
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141
During an interview prior to this visit, Chu, like many other agents of foreign
insurers, emphasized that the main function of life insurance was for managing
unpredictable risks and misfortunes such as accidents and critical illness. However, when she was conversing with her client, the idea that Zhang might die long
before his wife did not come to mind. Her instinctive alignment with the client
was rooted in the deeply ingrained taboo on thinking about premature death and
the subjective immunity that they share. This inconsistency between what Chu
said in the interview and what she did when interacting with her client reflects
the conflicting logics between what she has learned from her company and what
she has in her cultural schemas. Using terminology from social psychology, what
she learned from the company belongs to “deliberative cognition” that rarely, and
only with conscious effort, can override what cultural schemas, or “automatic
cognition,” offer (DiMaggio 1997). The possibility of sudden death is out of the
cultural schematic frame of not only the prospects but also the sales agents,
unless the agents constantly make the conscious effort to expand their frame to
embrace it.
Hence, it is much easier for the agents to talk about money management
because, first, this subject does not necessarily touch on the troublesome topic of
premature death or other misfortunes, and second, it is part of the local cultural
repertoire constituted by both locally shared worldviews and existing institutional
arrangements. As elaborated in chapter 1, yanglao is a major concern of the Chinese, who place a higher value on the quality of life when one is aging than the
quality of life when one is young. This in part explains why the Chinese like to save
money and why sales talks about yanglao and savings are often well received. However, as Michele Lamont and Laurent Thevenot (2000) emphasize, structural conditions largely inform what aspects of cultural repertoires are drawn upon. The
cultural symbols of yanglao, savings, investment, and filial piety turn into resources
only in certain institutional conditions.27 At present, the one-child policy has
shrunk the average family size and resulted in an aging population. The privatization of medical care has dramatically increased medical fees for all kinds of care
and treatment. With these institutional changes, parents who do not want to add
financial burdens to their children become even more eager to save enough money
for retirement and for the medical expenses they may need during old age. Furthermore, the collapse of the socialist pension system and the uncertainty about
the performance of the new pension scheme further magnify people’s concern
about yanglao and bring the ethics of filial piety back to everyday life discourse. At
the same time, the arrival of the stock market has given Shanghai citizens a new
money management tool and an investment fad. Presenting life insurance as a
variant of the stock market is a way of maneuvering the concept of insurance to fit
into the newly emerged stock market fever culture.
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Although this chapter focuses on sales agents’ strategic interactions with prospects and clients, we have seen that the prospects and clients were not passive in
the process. Chapter 5 describes how buyers and potential buyers not only
resisted certain new concepts and meanings imposed on them but also persistently insisted on their preferences and actively negotiated with producers and
sellers about the meanings and the functions of a new commodity.
5
Buying Life Insurance
Multiple Motives but Consistent Preferences
W H A T M A K E S P E O P L E buy a commodity as invisible and intangible as life
insurance? Although commercial life insurance is one of the most instrumentalrational commodities that attempts to convert uncertainties into manageable
risks, buying life insurance is rarely based on rational economic calculations. In
England, commercial life insurance, initially invented as a risk management
device, became a risk-taking gambling instrument for the masses in the eighteenth century (Clark 1999). In the United States, life insurance became widely
accepted in the mid-nineteenth century when the purchase was driven by both
a sense of fear about the future and a sense of responsibility and moral obligation to the family ( Zelizer 1979). Nonetheless, sociological studies of life insurance thus far have focused on the strategies of the life insurance industry
( Zelizer 1979, 1985; Heimer 1985) and the selling culture of insurance agents
(Oakes 1990; Leidner 1993). Insurance buyers are either absent or treated as an
abstract mass in these studies. As Viviana Zelizer (1988, 2005b) and Paul DiMaggio (1994) point out, economic sociologists have made tremendous progress
in examining production and distribution but remain far behind our anthropological colleagues in the studies of consumption, particularly in deciphering the
cultural constitution of consumption. Life insurance as a new commodity and
buying life insurance as a new economic practice are both cultural objects that
require meaning construction not only from providers but also from recipients
(Griswold 1994). In this chapter, I approach the meanings of the consumption
of life insurance from the buyers’ perspectives through their intentions and
interpretations of choices (Griswold 1987).
Anthropologists assert the cultural constitution of consumption by questioning the fundamental economic assumption of the neutrality of “utility” (Sahlins
1976; Douglas and Isherwood 1982; Appadurai 1986). The constitutive role of
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culture in choices of material goods is succinctly articulated by Marshall Sahlins
(1976:204): “The relation between logics is that the first, the symbolic, defines
and ranks the alternatives by the ‘choice’ among which rationality, oblivious of its
own cultural basis, is pleased to consider itself as constituting.” This statement
challenges the conventional assumption that interests are governed by economic
circumstances and argues that culture shapes the very conception of rationality
that economists take for granted.
Based on a constitutive conception of culture in relation to interests and
consumption, this chapter has two objectives. First, it brings life insurance buyers and their subjectivities to the forefront by focusing on their meaning construction for their purchase. In particular, I am concerned with their motives
for buying life insurance, their preferences for and choices of products, and the
reasons they give for their preferences and choices.1 Second, this chapter
explores the cultural and institutional forces behind these motives, preferences,
and choices. These two lines of inquiry simultaneously engage the debates
between the Weberian and Swidlerian perspectives on meaning and action, particularly on the relation of meanings to motives and choices. A Weberian theorization of their relation is that motives and choices are always anchored in
meanings, and hence, it is always meaning that informs motives and steers
choices. Swidler’s supporters, on the other hand, may argue that motives and
choices can be driven by institutional realities and that meanings arise to make
sense of actions. Without making either of these presuppositions, I present a
number of empirical cases in which Chinese buyers talk about their purchase of
life insurance. Based on the reasons they give for their purchases and their
choices of products, I explore the cultural and institutional underpinnings of
their motives and explain how their preferences and choices are grounded in
local cultural logics.
Why and What?
Renqing and Favors
We have already learned from chapter 4 that many Chinese were driven by the
etiquette of renqing (interpersonal obligation) to buy life insurance from friends
and relatives in the early phase of the market’s formation. Some of them bought
an insurance policy to help or to express sympathies for the agents, while others
did it to give face to the agents. For example, Wei Jinggang (43 years of age),
married and with a 14-year-old son, bought an insurance policy from Ping An
Insurance Company of China, Ltd. (Ping An) out of his sympathetic feelings for
his good friend, Zhao Anpei.
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145
Xiao Zhao and I have been very good friends for more than 20 years.2 I
always regard her as my younger sister. We used to work in the same
factory. . . . I saw her getting married, having a child, and . . . later on . . .
divorced. Her ex-husband was an irresponsible person. . . . Now she is
raising her daughter on her own. It’s not easy. When she told me that
she worked as an insurance agent and had to meet a sales quota, I
bought a policy from her as I wanted to help her. You know, it’s tough
to be a sales agent. I didn’t care what I bought, and I actually didn’t
know what I bought.3
This represents a kind of renqing baodan, one where the purchase was driven primarily by the buyer’s affections and sympathies for the agent.
More often, however, a renqing baodan was driven by a sense of obligation
to give face to the agents. Such statements as, “He is a friend. I need to give him
face,” or “She is my relative. I should give her some face,” were heard most often
from the clients who bought life insurance due to renqing. Likewise, the prospects who felt indebted to the agents were likely to buy a policy to repay the
favors. When asked what made him buy life insurance, Li Fei, a man in his mid30s, said:
[The agent] is a very helpful and nice person. Once he did me a big favor
by helping my son to get into the high school that we liked. . . . I always felt
indebted to him. . . . This time he came to sell insurance. I didn’t care much
about insurance. But it was okay to buy some from him. . . . It was a way of
returning him a favor.4
Although Li did not have a close preexisting relationship with the agent, his purchase was also a renqing baodan when his primary motive for buying an insurance
policy was returning a favor to fulfill an interpersonal obligation, instead of feeling a need for it.
Peers’ Influence and Showing Off
Huang Jing, a married woman in her early 30s who worked for a Sino-American
technological company, recounted what made her buy an insurance policy from
Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong):
I bought my first life insurance policy under the influence of my colleagues. . . . They said if I could afford it, I should buy some for my future. . . .
They used this analogy to describe the function of life insurance: If you
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don’t have private insurance and instead rely only on your pension, you can
only have a bowl of plain noodles; if you have private insurance, you can
have a bowl of noodles with some meat in it.5
Peers’ influence was a rather common factor that drew people’s attention to life insurance. Another client in her late 20s, Hua Xie, initially rejected the idea of life insurance
but finally bought six policies from four different insurers. What made her change?
“Because of my friends! Agents had come to sell me insurance before, but I found
them annoying. I began paying attention to insurance . . . when my friends were talking to each other about the possibility of an increase in insurance premiums due to a
reduction in interest rate. As my friends were very concerned about this, I was curious.”6 People who refused to listen to the sales agents about the idea of life insurance
could be receptive to the very same idea coming from their friends or other insurance
clients. Because friends and clients were not supposed to receive any commissions or
other material awards by talking about the benefits of insurance, their word was taken
more seriously. This largely explains why sales agents endeavored to please their clients.
In chapter 2, I stated that some prospects actively approached Ping An sales
agents to purchase unit linked insurance, after they learned that their friends and
colleagues had this new type of policy. The social psychology of following the masses
and the fear of missing the boat were never better demonstrated than with the ardent
reception for child insurance. In American society, child insurance has been a controversial commodity since the nineteenth century, because of the problem of pricing the priceless child (Zelizer 1985). Even today, the idea of parents taking out life
insurance policies on their children encounters near universal resistance, if not revulsion, in American society (Oakes 1990). On the contrary, parents in China enthusiastically bought child insurance from the start. In 1996–1997, child insurance was
very popular in urban China. However, parents in China purchased policies for their
children intending for them to receive benefits while living and not for themselves to
receive death benefits. Yet, because the interest rates offered by the insurance products at that time were lower than those offered by savings banks, why did the parents
still take out child insurance policies if not for the death benefits? Shi Jin, an agent
who worked for Ping An before, recounted the “child insurance fad” in 1996–1997:
Through guanxi networks, we first visited some elementary schools, distributing a notice to the students that someone would visit their home
within the week to introduce insurance to their parents. We then visited
these students’ households. . . . Each [child] policy cost 360 yuan. We just
intended to sell one to each household. But later on many households
bought ten policies or more. Why? Some parents asked how many policies the parents who lived next door bought. When they heard that their
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147
neighbors bought one, they said they wanted two. When they heard that
their neighbors bought two, they wanted three or four. You know what?
They all wanted to show that they loved their child even more and to show
off . . . You wouldn’t believe it. I made tens of thousands in one evening. . . .
We didn’t say too much to the parents. Nor did they ask much in detail.7
No clients ever claimed that they bought a number of child policies in order to
show off their financial status. However, if Shi’s account is reliable, child insurance was received enthusiastically as an expression of love for the child and to
showcase one’s economic abilities (Veblen [1899] 1953). Since one’s economic
status cannot be established without socially constructed judgments (Beckert
2009; Aspers 2009), the purchase of a large quantity of child insurance became
one of the observables to claim recognition. Meanwhile, it was driven by the
social psychology of the fear of lagging behind, which I discuss further later.
Gifts and Promises
When people paid attention to the living benefits that life insurance could offer
for the insured (instead of the death benefits for the beneficiaries), life insurance
also became a trendy gift for loved ones. Buying insurance as a gift for children was
so popular that some parents even bought a child policy as a Lunar New Year gift
to substitute for the custom of giving their child “New Year money” (yasuiqian).8
People bought insurance policies as gifts not only for children but also for
spouses, lovers, and parents. Li Hai (35 years of age) and his wife (28 years of age)
each bought an endowment whole life policy from Manulife-Sinochem Life
Insurance Company, Ltd. (Manulife-Sinochem) and presented it as a gift for each
other on their wedding day in 1998.
My wife and I wanted to give each other an assurance about our love, and
so we each bought an insurance policy as a promise for each other. Insurance is like something lasting to symbolize the permanence of our love and
marriage. . . . It was like we put our love into a safe box. . . . Now people say
marriage is not secured, but we wanted to give our marriage security. Insurance was a gift we gave to each other. So, she paid for my policy and I
paid for hers. The policy each of us bought was called Hong Fu 99 (Grand
Fortune 99).9 It has a good meaning . . . for our wedding day.10
Buying a life insurance policy for one’s beloved, or putting the beloved as the
insured and the policyholder without having them pay the premium, was a very
common practice among the Chinese.
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Investment and Yanglao
What made me buy life insurance? The reasons are simple. First, the return
rate offered by the insurance companies was higher than the interest rate
offered by banks. . . . So, I took half of my money from the bank and
invested it in insurance. Second, buying insurance is for yanglao (retirement). I want to have some protection when I am retired. I don’t want my
retired life to be too bad.11
Ning Han, a finance and administrative manager for a Sino-American trading
company, spoke of the reasons she bought life insurance. In her late 30s, she was
married with a 12-year-old son. Her economic condition was far above average,
as she was making an annual salary of more than 150,000 yuan (~ US$18,123).12
As an active consumer of life insurance, she bought a number of insurance policies on her own initiative. When asked what made her so receptive to life insurance, she said: “You know, I majored in finance. Of course, I was very concerned
about money management. I bought these policies mainly for savings and investment. I didn’t think of unexpected contingencies, accidents, or anything like
that.”13 Because of her concern with money management, her household had
more than 20 insurance policies. She and her husband each bought four yanglao
policies from Ping An in 1995–1997. In 1996, she bought another eight yanglao
with dividend policies from China Life Insurance Company, Ltd. (China Life).14
Two of these policies were for herself, two for her husband, two for her son, and
two for her mother. “I bought these dividends policies for my son and my mom
as a gift for them,” she said. Then in 1997, China Life offered a savings policy with
a return rate as high as 9 percent, when the interest rate for savings deposits in
banks was less than 6 percent. Ning bought a number of these policies. In 1999–
2000, she bought two unit linked policies at two different times for investment
purposes.
Ning bought a large number of insurance policies with the hope of generating
more returns and accumulating enough money for a comfortable life during
retirement. She consciously compared the costs and benefits of buying life insurance to putting money in banks. As an active buyer, Ning had her own ideas
about the functions of life insurance, and she chose products that matched her
perceived functions.
Buying life insurance for yanglao was the most common response to the
question “What made you buy life insurance?” Xu Qing, in her late 20s, was a
sales representative at a state-owned department store. She and her husband
each bought an insurance policy from Ping An. The reason was that “I already
have some basic protection from my workplace. . . . But I bought some insurance
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149
for my yanglao. . . . When we grow old, we have to rely on ourselves. It is better
not to put the burden on our child.”15 Buying life insurance for yanglao stands
out as a widespread motive that cuts across different social groups and different
time periods.
By Chance or Misunderstanding
Unlike Ning Han, who had her own ideas about life insurance, Margaret Pang
did not have any preconceived ideas about life insurance when an agent
approached her in 1999.
I didn’t have any ideas about life insurance at all. It just happened that an
insurance agent from Ping An approached my boss. My boss didn’t want
to deal with her himself. . . . The agent convinced me to buy some insurance. She told me that, first, the interest rate for savings deposits was very
low. In addition, interests were taxable. For life insurance, the return rate
was a bit higher and the returns were not taxable. Second, she told me
that I could get some money back every three years. I like that. I don’t
like those keep me waiting for 20 years or so to get the money. . . . So, I
treated [life insurance] as a savings plan. . . . But I also bought another
policy where I can’t get the money until 20 years later. The agent said this
policy was mainly for my child. I don’t have a child yet. But she said
when I do have one, my child probably would be about the age for college 20 years from now. The insured amount 60,000 yuan (~ US$7,249)
could be used for tuition. I thought about it and found that what she
said made sense to me.
Pang, a married young woman in her late 20s, was a human resources manager in a
joint venture. Holding three insurance policies from Ping An, she was a rather passive buyer. She bought insurance policies initially without a very clear idea or concept of what insurance was. If she had not met the sales agent by chance, she
probably would not have bought any. Her case perfectly illustrates that meanings
arise through social interaction in concrete settings (Fine 1984; Hallett and Ventresca 2006), especially when her husband challenged her purchase and she
defended her action:
My husband didn’t like the insurance policies. He said it was unwise to pay
the money now in exchange for money in the future. He said the value of
the money in the future was unknown. I said, “Well, I already bought it. . . .”
I felt that what the agent said was quite right at that moment. And I was
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able to afford it. It’s no big deal. . . . Now I think it makes sense to have some
insurance just in case. Look at the 9/11 attack in the U.S. Who knew that
that could have happened? Life is hard to predict.16
Some other passive buyers, nonetheless, bought their policies simply out of
some misunderstandings of what life insurance could offer. Cha Jielin, a directselling agent in her mid-40s, bought a policy from American International Assurance Company, Ltd. (AIA) in 1994. She was among the clients who misunderstood
the terms of life insurance. “I didn’t know what it was. The agent was a friend, and
she said it was for my future protection. I thought the insurance company would
pay for my medical fees if I was ill or got a minor injury. I didn’t know that they
wouldn’t pay you unless you were dead or permanently handicapped. What’s the
use of that?”17 Cha’s motive for buying an insurance policy was for protection.
But her concept of protection points to medical coverage for minor and curable
illnesses or injuries. This concept of protection is different from the one that AIA
attempted to convey. Misunderstandings about what kinds of “protection” life
insurance could provide occurred most in renqing baodan in which buyers purchased their policies without knowing what exactly they were buying.
It’s All for Savings
Nee Jie worked as a software salesman in an information technology company at
age 25. He bought a dividend whole life policy called Smart Financial Management from Manulife-Sinochem. This policy carried two riders, one for personal
accident and the other for hospital care. Therefore, the policy served both money
management and risk management functions. His main purpose in buying this
policy, nevertheless, was to control his spending.
I’m making good income and I want to have a binding savings plan. I
have been spending quite lavishly and have no money left. . . . I feel a sense
of responsibility for my parents. But I have had difficulty saving some
money for them. The main function of insurance is savings. Insurance is
actually like a stock agent but operates as an insurance company. It is like
you hire a big corporation to handle your money. It’s more reliable.
When asked if he saw insurance serving a risk management function, he
responded: “No. Insurance can’t prevent you from running into any risks. Risks
are predestined. . . . I believe in fate. Risk is a probability, but no one knows who
will fall into that probability. Insurance can’t change it.” The reason he also bought
personal accident and hospital care insurance was that “their premiums are very
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low. The agent strongly recommended these to me. I thought that was okay. I
could afford it. If the agent didn’t recommend them, I don’t think I would have
got them. . . . I certainly won’t buy an insurance policy that serves mainly a protective function. I’ll get nothing in return.”18 Nee’s perception of risk is intriguing.
He believed in both fate and probability. Believing in fate sounds superstitious,
because it refers to a predestined, biased arrangement of the occurrence of risks.
On the other hand, believing in probability sounds rational, because it implies
the neutrality of the occurrence of risks. The coexistence of these two seemingly
contradictory beliefs in a person supports the fragmented notion of culture. Nevertheless, the existence of fragmented cultural properties by no means excludes
the possibility of the existence of some overarching cultural logics that are shared
by all actors. While Nee felt a strong sense of responsibility for his parents, he did
not think that the accident insurance could serve to fulfill his responsibility,
because the idea that he might die prematurely did not occur to him.
As we will see, the idea of “getting nothing in return” and the feeling that insurance products serve primarily a risk management function that is “a waste of
money” were conventionally held by the clients and prospects. On the other hand,
buying an insurance policy to serve a saving purpose was most common among a
wide range of clients, including those who bought critical disease insurance. When
asked what made him buy two critical disease policies from Ping An, Cui Ying (40
years of age) responded: “We just had a baby. We want to save money for her. These
policies carry some dividends. Ms. Dai (the helpful friend in chapter 4) said we
could leave the dividends in their company to let them accumulate. We thought
this might be a good way to save a lump sum for our daughter. So, I bought one and
my wife bought one.”19 Although Cui and his wife each bought critical disease
insurance, which was offered to handle medical expenses incurred by unexpected
critical diseases, their primary motive for the purchase was savings.
For Multiple Reasons
The above cases demonstrate that different buyers have different motives and
incentives for buying life insurance. Yet, some buyers have multiple motives. Ning
Han’s purchase of more than 20 policies for the purposes of investment, yanglao,
and gifts is an example. Wang Wugan, a 40-year-old father with a 9-year-old son,
also bought insurance for multiple reasons.
I first bought a yanglao policy from Ping An. It was in 1997. . . . There was
no unit linked or anything like that at that time. So, I bought the yanglao
policy as an investment. When I reach 60, they will give me some money
every month. I think insurance is for future protection. When I can’t work
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in the future, it will be useful. . . . I also bought . . . . critical disease insurance. For this one, the agent was referred by a friend, and so I bought it in
order to give face to my friend. . . . I also bought a policy as a gift for my
wife. It’s for yanglao. It’s kind of romantic and a way of showing affection.
(Laughs) . . . . Just last year, I bought a unit linked policy from Ping An.
Actually, my wife wanted me to buy it. I don’t know much about it. She
also bought one for herself.20
Thus, Wang had multiple motives for buying life insurance, ranging from investing for yanglao to showing affection and enacting renqing. Nonetheless, there
existed a dominant motive for each particular type of product: the yanglao insurance was for his own future protection and a gift for his wife; the unit linked
policy was bought upon his wife’s request; and the critical disease insurance was
for renqing. Furthermore, among these multiple motives, Wang held a primary
one: “The major reason for buying all these insurance policies is for yanglao. It’s a
kind of investment. For most of the policies we bought, we felt the need to have
them. But we bought a few policies that we didn’t feel the need for. It’s okay simply to give face to friends, even when we don’t feel the need for the purchase.”
Note that the kind of “protection” Wang wanted for the future is the same as the
one the finance and administrative manager Ning Han wanted: to have enough
money for retirement. On the other hand, the policy that he bought as an enactment of renqing (instead of a feeling of need) was the critical disease insurance,
which belongs to the risk management category.
Cultural and Institutional Underpinnings
of the Motives for Buying Life Insurance
The above cases illustrate that the majority of the life insurance buyers in Shanghai are white-collar workers, though the entire clientele covers a wide spectrum of
occupations, ranging from taxi drivers to business owners. Their ages range from
early 20s to late 50s. Unlike the life insurance markets in Euro-American contexts
in which males are the major sales targets and clients, the market in China is composed of a rather balanced ratio of male and female clients. Other than my observations that females tended to be influenced by their peers and that males tended
to give face to friends when they considered buying life insurance, they all shared
various economic and noneconomic motives.
Wang Wugan’s identifiable dominant motive for each particular purchase,
indeed, reflects one of the interesting features of the life insurance market in Shanghai. The variation in the motives for buying life insurance is not without a pattern.
In fact, prevailing motives for buying life insurance could be identified at different
Buying Life Insurance
153
times as the market emerged. Before 1996, the purchase of life insurance was more
driven by a mix of reflexive trust, enacting renqing, and showing love for the child.
After 1996, saving and investing for yanglao became the primary driving force.
Then in 2000, making profit was the primary motive for buying life insurance. Yet
starting in 2002, managing risks became a more common motive, alongside savings. How do we explain these dominant motives and their changes over time?
Trust, Renqing and Gifts (1993–1996): Cultural Schemas,
the Norm of Reciprocity, and the Child-Centered Ethos
Among the clients whom I interviewed, about one-fourth bought their first policy in or before 1995. Surprisingly, more than 80 percent of these clients reported
that they “had no idea what life insurance was” at that time. These clients mostly
bought their very first policy from agents who were friends or relatives. They
bought something that was a mystery to them because, as elaborated in chapter 4,
the problem of trust for this new commodity was suspended by the cultural schemas of intimate relationships. Through trusting the agents, the prospects came to
trust in the insurance companies and the products they were selling. When people came to know a bit more about life insurance but did not feel a need for it,
some of them still purchased a policy, again from friends and relatives, to observe
the norm of reciprocity through renqing. Another cultural element driving life
insurance purchases when the products were not particularly appealing was the
child-centered ethos. Almost all of the clients who had a child during my field
research had bought at least one child policy, and many had bought several, to
express love for their only child.
Savings and Yanglao (1996–1999): Changes in Interest
Rates, Cultural Values, and Changes in Pensions and
Population Structure
Motives and meanings, however, are not static. Motives shift and meanings are
redefined when institutions change. Starting in the second half of 1996, reductions in interest rates changed many parents’ primary motive for buying child
policies. When the interest rate for a year’s fixed deposits was reduced from 9.18
percent to 7.47 percent in August 1996, Ping An’s Child Lifelong Happiness
Insurance, which carried an interest rate of 7.8 percent, suddenly became a competitive savings plan. The purchase of the policy was then driven predominantly
by an economic calculation of costs and returns. Parents then bought child insurance because it was a “good deal.” In this case, child insurance was bought not
necessarily for the child but as a household savings plan. Therefore, whenever the
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MARKETING DEATH
interest rate for savings deposits was about to drop, people lined up outside the
headquarters of Ping An to purchase the child policy, as the agent Shi Jin
described in chapter 2. Hence, the same action of buying a child policy can be
motivated by different rationales with different meanings in different institutional conditions.
The consecutive reductions in interest rates not only changed parents’ primary motive for buying child insurance but also changed their motive for buying other types of insurance. When Ping An and China Life’s yanglao policies
were initially not competitive compared to banks’ products, people bought
these policies for observing the etiquette of renqing. However, when these policies later became competitive long-term savings plans with the decline of
interest rates in banks, people bought them with the dominant motive for
receiving higher economic returns for yanglao. This finding that motivations
change when interest rates change is in line with the institutional argument
that any activity may carry multiple motivations, and which motivation is realized often depends upon the specific institutional conditions (Swidler 1986,
2001; Friedland and Alford 1991).
Given that the Chinese have an unwavering habit of saving and that China
holds the world’s highest savings rate, why are the prospects still so concerned
about yanglao? I suggest that yanglao has been the center of the Chinese perception of risk for both cultural and institutional reasons. As the Chinese consider a “good life” as having a comfortable life after retirement, this cultural
value prescribes the Chinese’s predisposition to place great importance on
their yanglao. Such predisposition is actualized by institutional changes. The
uncertainties of pensions as a result of the privatization of the pension scheme,
the aging population, and the restructuring of family due to the one child policy all demand the aged population to be financially independent. Thus, culture, along with institutional realities, constitutes buyers’ subjectivities and
their constructions of meaning.
Investing for Profit (2000–2001): The Stock Market
Fad and the Social Psychology of Catching Up
With the introduction of unit linked and dividend insurance in October 1999
and March 2000, respectively, the dominant motive for buying life insurance
shifted from saving for yanglao to investing for profit. Although investing for
profit can serve the purpose of yanglao, saving was no longer the prevailing motivation. Instead, the Chinese bought life insurance with the hope of making
profit. However, investment and parainvestment products were designed to
transfer part of the insurers’ risks to the clients. Buying these products, particularly
Buying Life Insurance
155
unit linked policies, is a risk-taking behavior. Taking risk with the hope of making profit through life insurance was common in British society for more than
half of the eighteenth century (Clark 1999, 2002). It was not peculiar to the
Chinese. Chinese clients, however, as documented in chapter 2, were not fully
aware of the risk involved when they bought the investment products. Therefore,
the question is not why they were willing to take the risk, but why they associated
the investment and parainvestment products with “profit” but not “risk.”
The positive connotation of the term “investment” has both institutional and
cultural sources. First, household savings rates in China have been consistently
high, and the bourgeoning economy further strengthened the financial position
of many urban dwellers. With the dramatic reductions in interest rates in savings
banks, people had to find other outlets for their surplus cash. Second, the Shanghai stock index hit its record high in 2000–2001. The indexes reached 2125.72 in
2000 and 2245.44 in 2001, compared to 1756.18 in 1999 and 1422.98 in 1998.21
This created an optimistic atmosphere surrounding investment. However, I
observed that the positive connotation of investment was not entirely produced
by the strong performance of the stock market. It was also generated by a new
genre of “capitalism” and the social psychology of catching up.
Although investment was a new concept and a new practice to the Chinese, it
was believed to be a core representation, a symbol of capitalism. The stock market
became an officially promoted capitalist mechanism along with other marketization agendas in the early 1990s (Hertz 1998). That the state and ordinary people
jumped onto this bandwagon both signified and enacted the demise of the old
regime and the genesis of the new era. The positive meaning of investment was in
part a by-product of the birth of the nouveaux riches who dared to gamble in the
newly arrived stock market. Some informants recounted what happened in the
early 1990s, when the majority of the commoners were skeptical of the stock market and did not want any of the shares first issued by the government. “The few of
them who dared to buy turned rich overnight!” an informant said. Hence, the
positive and optimistic interpretation of the concept of investment was buttressed,
if not fabricated, by the state. Although some people lost everything, it was the
winners who had caught the attention of the media. With the dramatic and almost
unpredictable social changes in urban China, the commoners witnessed that being
opportunistic could result in dramatic gains. They came to realize how important
it was to snatch every opportunity before it vanished. The dramatic socioeconomic changes in China cannot be captured better than they were in this statement: “All that is sold melts into air, all that is holy is profane” (Marx and Engels
[1848] 1978:476). Those who had missed participating in the stock market in its
earliest phase lost compared to those who had participated. Those who did not
buy the yanglao and child policies when the return rates were high lost compared
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MARKETING DEATH
to those who did. Therefore, although dividend products might induce lower
returns than traditional savings products because the dividend (fenhong) rates
were uncertain and fluctuating, buyers were still fond of fenhong, because it is a
powerful semiotic code, a sign of a participation in the new capitalist games.
Simultaneously, it was an act of catching up.
The fervent eagerness to participate in the new capitalist games, I suggest, is
related to a social psychology of urgency of catching up. This social psychology,
as displayed in urban China (and other postsocialist cities), is orchestrated by
rapid internal economic reforms and external globalization pressure.22 At a
national level, this social psychology manifests as China’s eagerness to catch up
with the world economy.23 At the microlevel, it manifests as individuals grabbing every opportunity for the possibility of upward mobility. In this context,
the unit linked policy was presented as a variant of the stock market, which not
only gave the first batch of buyers the hope of getting rich someday but also
created a fear of missing the boat. Buying unit linked insurance was then exercised as a means for coping with dramatic social changes, increasing social inequalities, and a compression of temporality. Not only are the ordinary citizens
afraid of lagging behind and missing an opportunity, but society as a whole is
experimenting with everything new to create a miracle in the global context.
The feverish reception of the investment and parainvestment products and the
eagerness for making profits, therefore, can be understood as a reflection of the
social psychology of the nation at the disjuncture of internal realities and globalization pressure. Other phenomena that display this social psychology in
urban China include stock market craze (Hertz 1998), the direct selling fad
( Jeffery 2001), and the qigong fever (Ownby 2001; Palmer 2007).
Saving for Yanglao and Managing Risks (2002–2004):
Risk Perceptions and Social Insurance Reforms
With the “unit linked crisis” and the sudden “awakening” about what investment
insurance meant at the end of 2001 and early 2002, the dream of making profits
through insurance was spoiled. The unit linked crisis drove domestic insurers to stop
offering money management products and to promote critical disease insurance
instead. As critical disease insurance was formulated mainly for managing unexpected critical diseases, the purchase, theoretically, required a sense of risk that any of
the covered diseases might occur to the buyers. Nevertheless, as local people’s attention to risks often focused on life after retirement, the primary motive for buying life
insurance after the unit linked crisis returned to saving for yanglao. Although attractive yanglao insurance was no longer available, saving for yanglao was still a major
concern of the Chinese clients, even when they bought the critical disease insurance.
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157
Apart from yanglao, there was actually a demand for health insurance during
my research period. Although thinking about fatal risks is avoided, people generally are aware of the possibility of minor accidents and injuries in everyday life.
The only risk management product that the general public really wanted was
health insurance that, similar to the socialist medical care provided by the state
in the past, would cover outpatient treatments and hospitalization expenses.
The insurance companies were aware of this demand. However, they did not
trust the medical care system in China, so they estimated the risk too high to be
insurable.24 One particular risk management product quite well received by the
prospects was AIA’s integrated personal accident (IPA) coverage. This product
covers not only compensation for death but also medical fees for minor injuries
caused by accidents and daily allowances for hospitalization. The coverage is
relatively compatible with the sense of risk of the locals and is analogous to the
state provision of medical care in the prereform socialist regime. Zhu Shaoqiu
(mid-40s), an IPA policyholder, gave the following reasons why she bought it:
The agent wanted to sell me a critical disease product. But I didn’t like it. . . .
What I want is a medical insurance that covers everything when I am sick. In
the past, we practically had free medical care. Now the medical fees are so
high. . . . I bought [the IPA] because it covers surgical fees. If I am hospitalized,
the insurance company is going to pay me 50 yuan per day as an allowance.
This product is a bit similar to what we had before. But of course, now we have
to pay for it, and the coverage is not as comprehensive as what we had before.25
Because medical care used to be provided for free or for a nominal fee before the
economic reforms, it was still perceived as a necessity by the majority. When this
sense of necessity met with the privatization of the medical care system, it organized local people’s sense of risk. The press frequently reported how patients without cash were refused medical treatments by hospitals. Not having enough money
for medical treatment was felt as a noticeable risk. Managing this risk then
became one of the primary motives for buying insurance.
Preferences, Perceived Functions,
and Choices of Products
Despite the multiple motives for buying life insurance and the shifts of the primary motives over time, the Chinese insurance clients all shared the same preferences when it came to the category of products they liked. They all liked products
that let them see a return of money when they are alive. By the same token, they
all shared the same aversion to purely risk management policies.
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MARKETING DEATH
We have seen that it does not matter whether the clients are active buyers like
Ning Han, passive buyers like Margaret Pang, or under the influence of their
peers like Huang Jin and Hua Xie—they all prefer money management products.
It was not by accident that the insurance agent had successfully convinced Pang
and that Huang and Hua were effectively influenced by their peers to buy insurance policies. Pang was convinced by the insurance agent when the policies were
presented as being like term-deposit savings plans. Huang Jin was convinced by
her colleagues that having life insurance was like having “a bowl of noodles with
some meat in it.” And what drew Hua Xie’s attention to her friends’ conversations
about life insurance was the “interest rate.” Therefore, even though these clients
had no previous idea about insurance, it was the savings and yanglao functions of
life insurance that interested them.
The findings from the interviews are consistent with the findings from my
surveys on clients’ and prospects’ perceived functions of life insurance (see appendix A for the detail of the surveys). A total of 63 life insurance clients and 50
prospects participated in the surveys. Although these surveys were conducted in
2001–2002, a time when Ping An began to move closer to the foreign model of
defining life insurance as risk management, more than half of the respondents
perceived life insurance as a tool for money management (including savings,
investment, and child’s education). Table 5.1 illustrates that 51 percent of the life
insurance clients and 47 percent of the prospects who filled out the questionnaires said the most important function of life insurance was “saving for one’s own
yanglao.” But less than a quarter of the respondents considered “providing a protection for the family in case of the occurrence of accidents” as the primary function of life insurance.
The breakdowns of the respondents based on gender, age, income, education,
marital status, and workplaces are shown in table 5.2. A few interesting observations
Table 5.1 Perceived Functions of Life Insurance by Clients and Prospects
Saving
(%)
Clients
Prospects
Total
51
47
49
Accidents Illnesses Investment
Child’s
BASE
(%)
(%)
(%)
Education(%)
22
25
23
19
13
17
5
6
5
3
9
6
63
50
113
Note: Saving = “saving for my own yanglao”; Accidents = “providing a protection for the family in
case of the occurrence of accidents”; Illnesses = “paying for medical treatment in case of serious illnesses”; Investment = “investing for profit”; Child’s Education = “saving for child’s education”
159
Table 5.2 Perceived Functions of Life Insurance by Socioeconomic Status
Saving
(%)
Accidents
(%)
Illnesses
(%)
Invest
ment(%)
Child’s
BASE
Education (%)
Gender
Male
Female
56
44
20
25
15
19
4
5
6
6
53
57
7
7
0
5
7
7
53
28
27
Age
20–29
30–39
40–49
40
64
52
22
18
30
27
4
11
Annual Income (RMB)
< 18,000
18,000–
36,000
36,000–
84,000
> 84,000
50
58
32
8
4
22
4
8
11
3
28
31
57
23
17
0
3
29
33
33
25
0
8
11
Education
High
School
2-year
College
University
42
30
14
2
12
38
59
22
14
4
2
49
40
20
25
10
5
18
Marital Status
Single
Married
w/o child
Married
w/ child
48
52
20
19
20
29
10
0
3
0
37
21
49
26
9
4
11
48
0
6
17
Work Unit
SOE/
Collective
69
19
6
(continued)
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Table 5.2 (continued)
Saving
(%)
Accidents
(%)
Illnesses
(%)
Invest
ment(%)
Child’s
BASE
Education (%)
Domestic
private
40
28
Work Unit
24
4
4
24
Foreign/JV
46
24
17
7
7
69
Note: SOE, state-owned entireprise; JV, joint venture
are found in this table. First, saving for yanglao was the most popularly perceived function of life insurance across different social groups, with the exception of the highincome group, who also considered protection against accidents an important
function. It is likely that compared to those in the middle class, the upper class worried
less about their economic conditions during retirement. However, they were concerned about a sudden loss of their earning ability in case of the occurence of accidents.
While life insurance is supposed to be a modern risk management instrument for the
middle class, the findings illustrate that the majority of the respondents who belonged
to the new middle class (income level between RMB 36,000 [~ US$4,349] to RMB
84,000 [~ US$10,149]) did not perceive managing accidental risks as the most important function of life insurance. Another interesting observation is that a higher proportion (56 percent) of male respondents considered life insurance as savings for
retirement, compared to female respondents (44 percent). At the same time, a quarter
of the female clients thought that providing protection for the family in case of the
occurrence of accidents was the most important function of life insurance, compared
to only one-fifth of their male counterparts did. This finding goes against a common
notion that males tend to buy life insurance for protecting the family in case they have
accidents. Instead, they appeared to be more concerned with their own retirement.
This finding calls for further research on gender differences in risk and money management among the Chinese. Lastly, more than a quarter of the youngest respondents
(age 20–29) and more than a quarter of those who were married but did not yet have
a child considered the most important function of life insurance to be the coverage of
medical fees if they suffered from serious illnesses. This can be explained in part by the
structural change of the medical care system. Under the new medical care scheme, the
younger generations must be responsible for their own medical fees to a larger extent
than do older citizens.
The expressed preferences for and the perceived functions of life insurance
described above are consistent with the types of products purchased. Because
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161
Table 5.3 Types of Life Insurance Policies Purchased as
Reported by 128 Clients
Category
No. of policies (%)
Subcategory
No. of policies (%)
Risk management
77 (27.3)
Accident
Whole life
Hospital care
Yanglao
20 (7.1)
9 (3.2)
48 (17)
145 (51.4) (103
[71%] with
dividend)
50 (17.7) (21 [42%]
with dividend)
10 (3.6)
282 (100)
Money management 205 (72.7)
Child
Unit linked
TOTAL
282 (100)
systematic official data about the types of insurance policies sold are not available, I used the data I collected from both interviews and surveys to outline buyers’ choices of products. In this sample, a total of 128 clients in Shanghai bought
282 policies.26 The types of products they bought are summarized in table 5.3.
One of the most striking features in table 5.3 is that almost three-quarters
(72.7 percent) of the policies bought belong to the category of money management. Yanglao insurance was the most popular, with more than half of the policies bought belonging to this category. Child savings insurance ranked second,
far exceeding traditional whole life and accident insurance. The popularity of
child policies was not confined to Shanghai. A Ping An representative in Beijing
reported that some 80 percent of the company’s life insurance policies sold in
1996 were issued to children.27 In addition, table 5.3 shows that 71 percent of the
yanglao policies and 42 percent of the child policies bought carried a dividend
component. If we categorize the dividend and unit linked policies as investments,
then 47.5 percent of the policies bought belong to the investment type. On the
other hand, personal accident policies account for only 7.1 percent of the products bought by these clients. These findings are consistent with some official figures made available in Shanghai starting in 2001 (see chapter 1, figure 1.4).
Intriguingly, when we compared table 5.1 and table 5.3, there is somewhat of a
discrepancy between what people said about the perceived functions of insurance
and the accident insurance products they actually bought. About one-fifth of the
clients in the surveys considered handling the occurrence of accidents as the primary function of life insurance, but less than one-tenth of the policies the clients
bought belong to this category. Why? Apart from the difference in time frames (i.e.
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MARKETING DEATH
clients reported their thoughts about the functions of life insurance in 2001–2002,
but they might have bought their products any time between 1992 and 2002),
another plausible factor is the inconsistency between thoughts and feelings, or the
inconsistency between reporting what appears to be sensible and behaving according to one’s habits. Very often, even when the clients (especially the young, educated
ones) in my interviews told me that insurance was for protecting against unexpected misfortunes like accidents, they themselves did not hold any personal accident policies. Instead, they held policies that served primarily a savings function.
Therefore, in theory, some clients agreed that insurance was a risk management tool
and that accidents could happen to anyone. But in practice, they felt that buying a
purely protective product was “a waste of money.” Furthermore, as described in
chapter 1, saving is still the most commonly adopted risk management instrument.
It is likely that clients bought savings products for managing unexpected misfortunes. For example, a consumer survey in Shanghai in 2003 reported that “meeting
unexpected contingencies” was people’s primary reason for saving money.28
Saving for child’s education was also found to be very popular in the same
consumer survey in 2003. This is consistent with my finding that child insurance
was the second most popular product bought by clients. In fact, the popularity of
child insurance was not confined to China. Viviana Zelizer (1985) documents
that putting the child as the insured was once so popular in American society at
the end of the nineteenth century that it sparked off a national child-saving movement. The movement, organized by upper- and middle-class groups, accused life
insurers and parents who bought child insurance of speculating on children’s
deaths. While a societal value that the “child is priceless” is shared by many societies, the popularity of child insurance did not bring about a similar moral outcry
in China. The reason, as mentioned earlier, is that the Chinese child policies were
formulated as savings plans more than as compensation for death. No parent ever
cared about the compensation for death. Some parents even said they actually
preferred not to include this in the policies. Instead, education funds, wedding
funds, and even pension funds for the insured children were what appealed to
them. Again, this explains why the child insurance was bought as a “gift” for the
child, even though the child’s life was put as insured.
Among the risk management products bought by clients, those with hospital care coverage accounts for the most. This coverage was provided for by
the IPA, the only risk management product that was relatively well received
by the public as described above. On the other hand, critical disease products
have not been well received, despite the fact that critical diseases, such as heart
disease, cancer, and diabetes, are on the rise and the privatization of medical
care has made intensive medical treatments a luxury.29 An informant, Yang
Mao (57 years of age), lamented why he would never consider buying critical
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163
disease insurance: “It’s useless! They won’t give you any money unless you are
paralyzed, lying in the hospital awaiting death. They won’t give you any
money if you are healthy. . . . It’s a waste of money!”30 The sentiment against
purely risk management policies, such as critical disease, term life, and personal accident insurance, was noticeable and was expressed by a feeling that it
was a “waste of money.” Not only was this feeling a common sentiment found
in those in their 50s, but it was also expressed by 25-year-old Nee Jie, as
described earlier, who believed that he would “get nothing in return” from
personal accident and hospital care insurance.
Compared to critical disease products, term life insurance was even less popular.
Because the perceived chance of premature death was so small that it was practically
inconceivable, buying term life insurance was naturally felt to be a waste of money.
This is why some agents tried to conceal the term life component from buyers when
making sales. The same applies to selling personal accident insurance. Many buyers
of this component were rather passive. Because the premium of a personal accident
rider was very low and the insured amount was high, some agents simply added this
rider to the main policies as they did with term life without the prospects’ consent.
When the prospects learned that a personal accident component was added to their
main policy, they typically tried to keep this component as low as possible, since
they believed that the premium paid for this part was not returnable.
The Cultural Logics of the Preferences
and Choices
Some agents, mostly those from AIA and Allianz-Dazhong, commented that the
Chinese want to get their money back when they are alive rather than leaving the
money for the beneficiaries because “they are short-sighted and selfish.” The
underlying reason for the Chinese penchant for products that give returns when
they are alive, I argue, lies in the Chinese cultural logics rooted in the concepts of
life and death. It is the local concepts and perceptions that together constitute a
resistance to conceiving of life insurance as management for unexpected misfortunes, and instead produce a local interpretation as an alternative money management device. This local interpretation excludes the acceptability of certain types
of products and favors certain others.
The Chinese call purely protective insurance “nonreturnable” (bu huanben) or
“spending” (xiaofeixing) insurance. In other words, they regard the premiums
they paid as giving money away without any return. In fact, the purchase of a
purely protective policy has an invisible return—a sense of security or, as American insurers advertise, “a plan for if.” However, the purchase brings about a sense
of security only if one feels insecure without such a purchase; it is perceived as a
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MARKETING DEATH
“plan” only if one sees a possibility for the if to happen. Tom Baker and Peter
Siegelman (2010) found that young college students in the United States had an
optimistic bias about their health condition that deterred them from taking out
health insurance. It is understandable that young college students hold this optimistic bias that “bad things will not happen to them.” However, this optimistic
bias cuts across different age groups and educational backgrounds among the
Chinese. Fatal accidents and premature deaths seem to be out of their automatic
schematic reference frame. Consequently, they feel that the premium for that
impossible if is a waste of money. When people do not believe that they will die
before their children are grown and financially independent, naturally they do
not feel the need to rely on risk management insurance to make them “responsible.” Instead, they all want to have their money back when they are alive, because
taking care of one’s own yanglao issue prevents a financial burden from passing on
to the next generation.
An alternative explanation for the disproportionate preference for the kinds
of products that make payments to the policyholders is that people in general did
not trust insurance companies, and they wanted to see a return of money before
they died. However, if people did not have a sense of trust in the insurance companies, they would not have bought the yanglao policies that would not make
payments until, usually, more than 20 years later. Trust was indeed an issue early
on when the term “life insurance” was completely new to the public. As I
described in chapter 4, that was why sales agents approached their friends and
relatives to rely on the cultural schemas of intimate relationships to sell at the
beginning. During my field research, nonetheless, people in Shanghai were
already quite familiar with the insurance companies. They generally trusted the
foreign companies because, they believed, large transnational corporations were
financially solid. At the same time, they trusted the domestic companies because,
they believed, the state would not let them collapse and would back them up in
case of need.
When AIA promoted the idea of “love for the child” in selling life insurance, this foreign insurer intended to construct a means of realizing this love
that was very different from the local’s. The logic of love for the child embedded in AIA’s products held that working adults should insure their own lives
so that in case they die prematurely, their dependents, especially children,
would receive money from the insurance companies. However, the Chinese
way of using insurance to show love for their child was to buy an insurance
policy in the name of the child so that the child would become the policyholder.
Putting the child as the insured was always the first response of the informants
whenever the phrase “protection for the child” was mentioned. This response is
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165
deeply ingrained, as expressed by informants’ bypassing the contents of my questions or misunderstanding my questions regarding protection for the child. The
following extract of my field notes is telling:
Shin Sheng and Yin Fang are a newly wedded young couple in their mid20s. Both of them graduated from the prestigious Fudan University. The
husband, Shin Sheng, is a lawyer and the wife, Yin Fang, is a graduate
student in sociology.
The researcher : “What do you think is the main function of insurance?”
The husband : “Of course for savings. . . .”
The researcher : “How about if you have a young child? Will you consider
buying a protective type of insurance just in case?”
The husband : “If I have a child, I will get a policy for her or him.” (He means
putting the child as the policyholder).
The wife (spirited): “Yes, don’t you know that there are many child insurance
policies?”
The researcher : “I mean, if you have a young child who is financially dependent on you, will you get a policy that the child can be the beneficiary in case
something happened to you?”
The wife: “Now we have insurance that is tailored for children. We will buy
some for our child.” (Again, she is talking about putting the child as the policyholder.)
The researcher : “Well, I mean what would happen to the child if the primary
earner of a family lost her or his earning capacity?”
The wife (excited): “The education insurance for the child is quite good! The
child can get money when she or he reaches a certain age. The insurance gives
some education funds to the child until she or he graduates from a college.”
The husband (to his wife): “I know what she [the researcher] meant. She
meant putting the child as the beneficiary so that the child can get the 100,000
yuan (~ US$12,082) [which is the usual insured amount] in case I passed
away.”
The researcher : “Yes, exactly, that’s what I was asking.”
The wife (dispirited): “Well . . . .I don’t feel we need to get this kind of insurance.”31
Yin Fang repeatedly mistook my questions, because putting the child as the
policyholder comes as an answer so naturally that it belongs to the category of
“automatic cognition” (DiMaggio 1997). Because schemas function both as
representation and simplifying mechanism, they affect how people perceive
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information (e.g., the researcher’s questions) and direct their selective attentions. Putting the child as the beneficiary of insurance is a new concept. It is a
concept that comes from the insurance industry. A local conventional way of
showing affection for someone is giving that person the entitlement to possess
something or to use something. The idea that insuring one’s own life signifies
“love” for the child is an alien concept. When a parent dies early, that is a tragedy. Linking the early death to the availability of a lump sum of money and
linking the availability of the money to a sign of affection are all too indirect
and so new that they require “deliberate cognition” (DiMaggio 1997) to make
sense of it. Deliberate cognition rejects the handy representation and the shortcuts that automatic cognition offers. That is why it required effort on the part of
the informants to process the questions I asked.
Yin Fang’s misunderstanding of my questions is not idiosyncratic in the Chinese context. Putting the child as the insured is not only a common practice of
the ordinary people but also a normative practice of the state. Wang Wugan, the
client who had multiple motives for buying different kinds of insurance, told us
something interesting about the state practice:
The researcher : “In Shanghai, if one of the parents dies or loses working
ability due to an accident, are there any social securities for the child and the
single parent?”
Wang: “Yes, the state provides a universal child insurance policy for every child.
So, every child is insured. In case the child has any accidents, she or he is protected.” [Wang mistook the researcher’s question.]
The researcher : “So, you meant compensation is payable upon an accident
happened to a child?”
Wang: “Yes.”
The researcher : “Then what will happen if it is not the child that is involved
in an accident but the parents are? I mean, who will take care of the child if
the child’s parents die?”
Wang: “I see [your question]. We have welfare houses for orphans. The children
will be provided with free education.”
The researcher : “How about if only one of the parents, say the breadwinner,
dies and the child is left with a single parent?”
Wang: “Then the parent has to take care of the child.”32
Again, Wang misinterpreted my question in his first response. What is equally
interesting is that the state gave each child an accident insurance policy, instead of
giving one to each parent. Whether the motive of the state was to protect the
children or simply to present a gift to them is unknown. Nevertheless, the state
Buying Life Insurance
167
shows love and care for its people using the same logic that parents do for their
child. This logic is related to the local interpretation of life insurance as a new
instrument for savings.
Culture, Institution, and Action
The Chinese insurance buyers purchased life insurance with multiple economic
and noneconomic motives. Multiple motives exist because of the availability of
multiple cultural symbols for meaning construction. However, prevailing motives
for buying life insurance vary over time, because they hinge on the interactive
interplays of cultural symbols with institutional conditions and product features.
As the Chinese life insurance market evolves, how culture and institution
affect the consumption of life insurance varies among different motives. For example, buying life insurance as an act of renqing is a fulfillment of a normative demand
and, simultaneously, an economic act. In this case, culture constitutes not only the
motive but the economic transaction itself. The meanings of the transaction are
already given by the publicly shared meanings of renqing. The motive for savings
and yanglao, on the other hand, are construed by the Chinese concepts of a “good
life” and a “good death,” and the habits of risk and money management. Culture,
in this sense, constitutes the prospects’ predisposition to care about yanglao and to
favor savings, and such a predisposition is actualized by institutional realities,
namely, the reductions in interest rates and the uncertainties of the new pension
scheme. Culture, therefore, manifests in various forms when constituting the
motives for buying life insurance in different ways. In some cases, it gives meanings to products and to the act of buying. In others, it shapes the actors’ predisposition and habits. It may also directly cause transactions to happen as renqing does.
While culture is constitutive in various motivations for buying life insurance,
the primary motives change over time largely due to institutional changes. The
primary motives for buying life insurance changed from enacting renqing or showing love to a quest for economic gains when the interest rates offered by savings
banks dropped. The motive for making profits through insurance prevailed when
the stock index was climbing, and the concerns about yanglao and medical care
were intensified with the individualization of the pension scheme and the privatization of medical care. Elaborating on Gary Fine’s statement that “culture is situated” (1995:130, emphasis original), I suggest that the selection of cultural
symbols for meaning constructions is institutionally situated. Cultural symbols
exist in the form of repertoire, but each is mobilized piecemeal to defend actors’
existing patterns of life (Swidler 2001). Thus, culture lays the bedrock and supplies
symbols for meaning construction, but it leaves the selection of symbols to institutional realities. In this respect, our findings support Swidler’s theory of culture.
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Nevertheless, culture does more than act as a tool kit. Despite the mutability
of the motives for buying life insurance and their associated meanings, the market
is not without a shared dominant conception of life insurance and a persistent
pattern of preferences. The Chinese share a collective bias against risk management insurance, the so-called “nonreturning principal” insurance, and a collective
favor for money management insurance, the so-called “returning principal” insurance. Such collective biases cannot be explained by institutional realities. The new
institutional conditions brought about by the dramatic economic reforms should
have created a demand for both risk management and money management insurance products. Given that urban dwellers have been facing increasing risks with
the collapse of the “iron rice bowl” system, an institutional proposition asserts
that certain cultural symbols would be mobilized to favor risk management insurance products (so as to cope with the new institutional realities). Quite the opposite has occurred, as the Chinese have been collectively rejecting risk management
products throughout the market’s formation. The resilient resistance to purely
risk management insurance and persistent penchant for “returning principal”
insurance, I argue, are created by the cultural taboo on premature death, the definition of a “good life” and a “good death,” and the selective attention to risks—all
rooted in the Chinese concepts of life and death. When the local receivers have to
define life insurance as a new commercial entity, they are circumscribed by their
existing schematic frames to a range of possibilities for their interpretations.33 Therefore, culture in the Weberian sense does shape the Chinese consumption of life
insurance by prescribing predispositions to consistently and persistently favor certain types of products and reject certain others. The predisposition demarcates
the range of life insurance products that make sense to the Chinese. This argument is in line with that of Frank Dobbin (1994), that different national cultural
meaning systems carry prescriptions for how to achieve social ends as well as
warnings against the sorts of practices that are disruptive and inefficient.
However, predispositions guide the choices of insurance products but do not
directly cause the purchase. For example, a concern with yanglao does not necessarily result in a purchase of a pension product if traditional familial support is the
common practice or if a promising pension is provided by the state. The actual purchase of particular kinds of insurance products requires a set of institutional realities
that are immediate to the lived experiences of the actors. The purchase of yanglao
products, child policies, and hospital care insurance requires a certain form of retirement scheme, welfare program, family structure, and medical care system. Thus,
culture as shared ideas and beliefs prescribes the range of possible and sensible
actions. It is within this culturally prescribed boundary that culture as a repertoire
of different elements constitutes action according to institutional demands.
6
How Culture Matters
Culture, Market, and Globalization
THE ETHNOGRAPHIC DETAILS presented thus far have displayed the micropolitics and
the macrodynamics in the making of a life insurance market in mainland China.
In this concluding chapter, I hope to use the Chinese case to shed light on the
questions I posed at the beginning: What is the role of culture in the making of a
life insurance market? How can a particular market emerge in the face of cultural
barriers? How does culture shape economic practice in general? What are the
mechanisms through which culture works? What is the relation between the
development of life insurance and rationalization? Furthermore, how can various
modern capitalist enterprises be globalized in different cultural contexts? To
what extent does local culture wield the power to selectively adopt and reject
certain imported modern capitalist ideas and practices in the course of globalization? All these questions are addressed in the sections that follow. In addition, I
present the changes in some insurers’ strategies two years after my field research
and project the development of the market.
The Interactive Multiple Processes of Culture
in the Making of a Life Insurance Market
This project brings together two different concepts of culture—one as a
shared meaning system and one as a practical tool kit or repertoire—to understand the formation and the characteristics of the emergent Chinese life
insurance market. The basic findings and arguments can be summarized as
follows.
The economic and institutional contexts in urban China in the early 1990s
were favorable to the introduction and development of commercial life insurance as a new risk management institution. The cultural context, however,
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was rather mixed and not as conducive. Despite the presence of some facilitative cultural elements, the Chinese concepts of life and death resulted in certain taboos, moralities, values, and perceptions that were incompatible with
the ideological logic of life insurance. Such incompatibility resulted in a mismatch between what the local people wanted according to their cultural logics
and what life insurers could offer according to the profit-oriented institutional logic of life insurance. The local Chinese preferred money management
products, but risk management products were more profitable to insurers
under the constraints of the local institutional conditions. The foreign and
domestic life insurers handled this incompatibility differently. The former
adopted a profit-oriented model and attempted to change local preferences;
the latter adopted a market-share model and simply yielded to local preferences. The disparity between foreign insurers’ product development in one
camp and domestic insurers in another, I argue, represents their divergence in
handling the local cultural resistance to the risk management concept of life
insurance.
However, variations were found within each camp of insurers in their sales
volume and sales agents’ morale and commitment. The variations reflected
who headed the companies. Taiwanese–headed Pacific-Aetna Life Insurance
Company, Ltd. (Pacific-Aetna) stood out as a competitive joint venture, with
its sales volume growing impressively since its inauguration. The Taiwanese
managers deployed an emotional, relational approach to organize and manage
their sales agents, who turned out to be most strongly committed to their job
and to the company, compared to agents in the other companies. The localChinese–headed Ping An Insurance Company of China, Ltd. (Ping An), on
the other hand, used a paternalistic, authoritative approach to manage their
sales agents. The agents nonetheless were in high spirits when their products
met local preferences. The agents of the Hongkongese-cum-Taiwanese–headed
American International Assurance Company, Ltd. (AIA) were only loosely
motivated. AIA’s attempt to marshal a professional sales force was not successful. However, the sales agents from the German–headed Allianz-Dazhong Life
Insurance Company, Ltd. (Allianz-Dazhong) were even more demoralized.
The German managers attempted to create an instrumental-rational workplace
culture, which frustrated and alienated their sales agents. Thus, where the top
managers came from appeared to have an effect on their labor management,
which significantly affected the morale and commitment of their sales agents
and, consequently, their sales volume. I argue that Taiwanese managers were
the most skillful in motivating the sales agents, whereas the German managers
were least capable of doing so, because the cultural capital embodied by the
former was more relevant and thus was a resource, whereas the cultural capital
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171
embodied by the latter was irrelevant and thus was a constraint. I further relate
the enabling and constraining nature of their cultural capital to the institutional and cultural environments, and the workplace cultures, from which the
managers came.
When the sales agents approached target prospects to sell them life insurance,
they largely capitalized on facilitative cultural elements, such as the etiquette of
renqing (interpersonal obligation), the child-centered ethos, and the stock market fad. At the same time, they framed their products in accordance with the local
preferences, namely, that life insurance was a new money management instrument. In order to avoid the topics of death and misfortune and to present the new
commodity as compatible with the local definition of a “good life” and the local
habit of saving, the sales agents redefined buying life insurance as analogous to
saving for yanglao (retirement). In doing so, they succumbed to the local cultural
logics but, simultaneously, appropriated the incompatible cultural elements for
serving their interests. The Chinese life insurance clients and prospects, nevertheless, were not all passive and subject to manipulations. They had multiple motives
for buying life insurance, ranging from fulfilling the interpersonal obligation of
renqing and showing love to their one and only child, to saving for yanglao and
investing for profits, to managing certain kinds of risks. These multiple motives,
however, shifted over time under certain institutional and cultural influences.
And despite these multiple motives, the Chinese prospects and clients insisted on
a money management definition of life insurance and persistently adhered to the
products they preferred. Their insistence on their own definition of life insurance
and their adherence to money management products, I argue, were constituted
by the local cultural logics rooted in the concepts of life and death.
Figure 6.1 illustrates the mechanisms by which the two forms of culture shape
the formation of the life insurance market in China. I coin these mechanisms an
“interactive multiple-process model of culture in market formation.”
From this case study, it is apparent that shared cultural values and ideas among
the Chinese, rooted in their concepts of life and death, produce a taboo on thinking and talking about premature death. Moreover, these values and ideas define a
“good life” as living well toward the end and a “good death” as dying in full life,
assign economic obligations to living family members, and filter selective attention to fatal risks. These folklore, values, moralities, and perceptions are incompatible with the probabilistic assumption of risks and the commensuration logic on
which commercial life insurance operates. Together they compose public resistance
to receiving life insurance as an instrument of risk management (figure 6.1, arrow
A). This resistance manifests as a preference for payments to the insured, adherence to savings as the primary mode of risk management, a feeling of purely risk
management products being a “waste of money,” and a denial of the possibility of
Culture as
shared ideas
& values
Taboo on premature death
“Good life” and “good death”
Obligation b/w the living & dead
Selective attention to risks
Concepts of
life & death
Composing (A)
(A’)
Resistance to life
insurance as risk
management
Money Management Market
Necessitating (B)
Culture as a
tool kit or a
repertoire
Etiquette of renqing
Child-centered way of life
Habit of saving
Stock fever
Risk management practice
(C’)
Circumventing (C)
Figure 6.1 Interactive Multiple-Process Model of Culture in Market Formation
How Culture Matters
173
fatal misfortune. This public resistance necessitates the invention of marketing
strategies to remove or circumvent such resistance (figure 6.1, arrow B). Foreign
and domestic insurers in China adopted rather different strategies in this respect.
The foreign players attempted to remove the resistance by trying to raise local people’s sense of risk, and they accommodated to the local preferences only to the
extent that profits were not jeopardized. The Chinese insurers, on the other hand,
endeavored to circumvent the resistance by redefining the concept of life insurance according to local existing risk management practices and habits of money
management, modifying product features to accommodate local preferences,
deploying marketing strategies based on local etiquette, and designing sales talks
appealing to the local audience. It was through these circumventing strategies that
life insurance sales were fostered (figure 6.1, arrow C). Nevertheless, the Chinese
market has emerged with a trajectory and features different from those of the
Euro-American markets. It first emerged as a money management market and has
been moving toward one of money-cum-risk management. The characteristics of
this market, I propose, are shaped by the dual processes (figure 6.1, arrows A’ and
C’) in which one form of culture composes the resistance and the other form of
culture circumvents it.
Throughout the text, I have demonstrated that the characteristics of the life
insurance market in China were shaped by local cultural resistance and the local
insurers’ yielding to this resistance. Hence, I expand the “culture matters” argument by incorporating the tool-kit dimension of culture into the analysis, without denying the role of cultural values in shaping the development of a life
insurance market. I argue that the role of culture as shared ideas in shaping human
action was not as inactive as Ann Swidler (1986) proposes. If the Chinese concepts
of life and death did not matter, transnational life insurers would have succeeded
in inculcating the risk management concept of life insurance into the local
population and creating a predominantly risk management market.
Moving beyond the case of China, the interactive multiple-process model of
culture as illustrated in figure 6.1 can be used to reinterpret the making of the life
insurance market in nineteenth-century America, according to the empirical data
supplied by Viviana Zelizer’s (1979) Morals and Markets. I reinterpret the American case as follows: Christianity-dominated sociocultural values (sacralizing
human life and condemning speculation on death) widely held prior to the midnineteenth-century America resulted in a widespread cultural resistance to life
insurance (arrow A). The incompatibility between the Christian sociocultural
values and the commensuration logic of human life necessitated the life insurance
providers to adopt a religious discourse of life insurance from the 1840s to the
1860s in order to sanctify the nature of life insurance (arrow B). In dealing with
the resistance to pricing human life, existing cultural symbols and practices were
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mobilized by American life insurers and their sales agents to undermine the commercial nature of life insurance and to bestow a quasi-religious function on the
new commodity. Life insurance companies presented themselves as “human and
benevolent institutions” and sales agents presented themselves as “the clergy” to
convince the prospects that buying life insurance was a “religious duty” ( Zelizer
1979:96–99). Furthermore, life insurance providers also capitalized on the traditionally male-dominant culture by symbolizing the purchase of life insurance as a
moral obligation of breadwinners to provide “a form of economic immortality”
for their wives and children. Life insurance was presented as an instrument that
could prevent their wives from remarrying so that they could control the sexual
life of their wives upon their deaths (Zelizer 1979:58–61). All these strategies
precisely illustrate the use of the tool-kit properties of culture to define and package the nature, the meaning, and the appearance of life insurance in order to circumvent cultural resistance (arrow C).
Therefore, this project demonstrates that a life insurance market can emerge
without public receptivity to the idea that life insurance is an effective and desirable device for managing unexpected misfortunes. While the existence of a set of
cultural values compatible with the ideological contents of life insurance is certainly favorable to its development, their absence is not an insurmountable barrier. Instead, the market is made possible by the insurers and their sales agents’
strategic use of the local cultural repertoire to overcome the lack of public receptivity
due to incompatible cultural values. Therefore, creating a life insurance market is
simultaneously a cultural project. Its practice and meaning are constructed and
reconstructed through interactions, negotiations, collaborations, and contestations among the actors concerned.
Structure and Agency: The General Mechanisms
of the Interactive Multiple-Process Model
Deriving from inductive, ethnographic research, the interactive multiple-process
model praises the agency of both the globalizing agents and the local recipients,
and yet it pays equal attention to the structural constraints imposed by local cultural logics and profit-oriented commercial logics, and how the actors interact
with these structural forces. It may fall into the category of taking a middle theoretical position between determinist and voluntarist views of culture.1 Swidler’s
tool-kit image of culture has been criticized for being overly voluntaristic, downplaying the factors that push individuals to select certain tools rather than others
( Vaisey 2009; Go 2008; Lamont and Thevenot 2000; Lamont 1992; Berger 1991,
1995). While emphasizing the possibility for individuals to actively choose
among cultural resources, Michele Lamont challenges the fragmented paradigm
How Culture Matters
175
of culture by arguing that remote and proximate structural factors shape choices
from and access to the tool kit, and choices are largely channeled by the “cultural
supply side of the equation” (1992:135). Building on that insight, this project,
however, is a little more (or less) ambitious than proposing a middle-ground theory. It explores the mechanisms through which the two very different forms of
culture interact.
Extending the application of the interactive multiple-process model of culture to economic activities that go beyond the life insurance industry, I propose
three mechanisms through which culture as a coherent meaning system and culture as a repertoire of multiple symbols interplay in shaping a new economic
practice or the formation of a new market. First, shared meanings and values
necessitate the mobilization of the tool-kit dimension of culture to steer the direction along which the new economic practice or market develops. This mechanism recaptures and extends the Weberian theory of culture and economic
practice. Culture as shared worldviews and beliefs underlying theoretical and
ontological assumptions (Campbell 1998) generates a constellation of folklore,
values, moralities, and perceptions. This constellation, in turn, molds a pattern of
preferences and dispositions that can be compatible or incompatible with the
profit-making logic of a new economic practice. If this pattern is largely incompatible with the profitability of the new economic practice, it necessitates the
mobilization of the tool-kit dimension of culture to circumvent the incompatibility. The circumventing mechanism is like bricoler, an old French verb introduced by Claude Levi-Strauss (1966) to elaborate the concept of “bricolage,”
which describes diverging movements from a direct course to avoid an obstacle.2
Chinese insurers’ movements away from the risk management concept of insurance to avoid the cultural obstacle inevitably shaped the path and the features of
the market.
Second, the constellation of folklore, values, moralities, and perceptions,
together with institutions, constitutes the symbolic contents of a cultural tool kit
and circumscribes the selective use of the symbolic elements from the tool kit. This
is why shared meanings and values in their own right rarely completely suppress a
market embodying a contradictory set of values, precisely because they simultaneously constitute a repertoire containing numerous cultural elements for the
practicalities of a cause. The tool-kit elements, manifesting as etiquettes, recipes,
rituals, habits, styles, fads, skills, capacities, know-how, and practices, are constituted by various meaning systems and institutions. They are therefore heterogeneous and vast in number. However, because practices must be anchored in
shared meanings (Sewell 1999; Swidler 2001), the shared meaning system prescribes a “matrix of possibilities” (Goffman 1967:13), by setting “the floors and
ceilings” (Douglas 1985:75), “blocking out certain possibilities” (Emirbayer and
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Goodwin 1994:1440), or “determining the kinds of . . . . problems” (Dobbin
1994:20) for effective uses of cultural symbols and practical skills. Therefore, culture as shared ideas, values, and beliefs, combined with institutions, constitutes
cultural symbols for practical and strategic uses but simultaneously functions as a
structural force delimiting the range of possibilities and circumscribing the selective use of the cultural symbols.3
Lastly, in circumventing the tension between the local cultural logics and the
ideological logics of the new economic practice, it is economic actors who materialize the tool kit into resources. As William Sewell puts it, a capacity for agency
is inherent in all humans, and “part of what it means to conceive of human beings
as agents is to conceive of them as empowered by access to resources of one kind or
another” (1992:10, emphasis original). However, because an array of resources
can be interpreted in varying ways, actors’ agency is the “capacity to reinterpret
and mobilize an array of resources in terms of cultural schemas other than those
that initially constituted the array” (1992:19). Since the tool-kit dimension of
culture draws its properties from various logics and institutional resources, it is
indeed like “a bag of tricks or an oddly assorted tool kit” as portrayed by Swidler
(2001:24). The contents of these elements can be incoherent and even in conflict,
but they coexist because actors have agency—the ability to pick and choose only
those that are useful at one time for a particular situation. It is, after all, actors
who engage themselves in “practical experimentation” (Zaloom 2006) to make
the market possible. As Swidler (1986, 2001) emphasizes, the cultural elements
in a tool kit have adaptable and flexible meanings for practical and urgency management. I should add, however, that these cultural elements are not a pool of
resources in their own right. It is the actors who turn the normative rules and
cultural symbols into resources. Because rules and symbols can be contradictory
and carry multiple meanings in different contexts, the economic actors must have
enough local knowledge to selectively and appropriately mobilize some of the
cultural elements to orchestrate the new economic practice.
Nevertheless, I emphasize that the economic actors’ agency is bounded. The
bounded notion of agency was first portrayed by Sewell (1992). Accordingly,
agency is profoundly social and collective in both its sources and its mode of exercise. For its sources, it is formed by a specific range of shared cultural meanings
and schemas available in a person’s particular social milieu, and thus, it is “culturally and historically determined” (1992:20). This explains why the managers of
German origin were less capable of picking the appropriate symbols from the Chinese cultural tool kit. For its mode of exercise, agency involves an ability to coordinate one’s actions with others and against others, and hence, the extent of the
agency exercised by individual actors depends on their positions in the collectivity. Drawing insights from this study, I should add that economic actors’ agency is
How Culture Matters
177
bounded by both macro- and microcultural and institutional conditions under which
the agency is exercised. For instance, the strategic choices exercised by the Chinese
life insurance sales agents were profoundly bounded by cultural taboos, ideas
about good life, social insurance reforms, the performance of the stock market,
and strategies of the competitors. These factors all have an impact on choices and
the effectiveness of the chosen strategies toward the desired outcomes.
The above mechanisms illustrate how coherent and incoherent cultural elements interact with each other. The role of the cultural tool kit in constituting
action does not exclude an equally, if not more, important role of shared ideas in
the process. I maintain elsewhere that the debates over whether culture is coherent or incoherent are not productive to the field of cultural sociology (Chan
2009a). What will be more productive, and here I agree with Ronald Jepperson
and Ann Swidler (1994), is to study the hierarchic order of different cultural elements affecting human action. However, theorizing about various cultural
dimensions in a quasi-hierarchic order demands more empirical research, beginning with nonhierarchic treatment of different forms of culture in order to
explore the many possibilities of their linkage and ordering. Stephen Vaisey’s
(2009) “dual-process model of culture,” which integrates the unconscious, motivational level of culture with the deliberate, discursive level of culture to understand how Americans make moral decisions, is an excellent example of this effort.
These mechanisms also expand a cultural analysis of economic practice. The
cultural embeddedness of economic practice has thus far drawn less attention
from economic sociologists than its social, political, and institutional embeddedness. One of the reasons, as Zelizer (2002) points out, is that mainstream economic sociologists have not quite known what to do with culture. The elusive
nature of the concept of culture makes measuring “cultural effects” extremely difficult. The relational approach to culture proposed by Zelizer (1994, 1996, 2002,
2005a, 2007) in her studies of monies, payments, consumption, and intimate
transactions in various projects has offered a viable alternative approach to
unraveling the dynamics of culture in economic practices. Her insights into the
incorporation of social relations into various monetary transactions, and of monetary transactions into different types of social relations, unambiguously bring
forth the constitutive nature of culture. Yet, unfortunately, the constitutive capacity of culture is quite often ignored by prominent economic sociologists. As a
result, when culture is included as an independent variable in a causal model, it is
often defined as a distant tradition. This is another reason that the cultural
embeddedness of economic practice is undermined. For instance, by confining
their concept of Chinese culture to the overarching Confucian ethic of obedience to authority, Gary Hamilton and Nicole Biggart (1988) reject a cultural
explanation for national differences in market features and trajectories. However,
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as demonstrated through this case study of Chinese life insurance, culture in the
form of overarching shared ideas can influence economic practices through a
series of transmutations of cultural forms: from the concepts of life and death, to
values, moralities, and perceptions, and to preferences and choices. At the macrolevel, culture may not shape action directly. Nonetheless, through transmuting
its forms, it can travel from historically distant worldviews to more immediate
perceptions and norms that more directly organize actors’ strategies. The role of
culture in shaping a market, therefore, is not as remote as Hamilton and Biggart
propose. Furthermore, when the constitutive capacity of culture is ignored, institutional analysts tend to take for granted certain institutional arrangements that
call for explanation. For example, when establishing their institutional argument,
Marco Orru, Biggart, and Hamilton (1991) take Taiwanese firms’ pooling of
financial resources from extended families as one of the exogenous institutional
factors, namely, firm financing, that affect Taiwanese business practices and their
organizational behaviors. However, this analysis falls short of addressing these
fundamental questions: Why do Taiwanese extended families have so much
money in the first place? If the answer is that they have high savings, why do they
save so much? In addition, why are extended family members willing to loan
money to each other? Would extended family members in American society feel
the same obligation to loan money to each other and feel as comfortable borrowing money from each other? In tracing questions this way, we will find that culture, which is certainly constituted by historical and institutional conditions, has
itself a constitutive capacity.
Life Insurance in the Making of Culture
The above analysis leads us to a question concerning the relation between life
insurance development and rationalization. Timothy Alborn (2009) argues that
life insurance is itself a “creator of culture” that contributes to various important
substances of modernities, including new narrative genres, new statistical thinking, and new definitions of a healthy body. This study illustrates that a Chinese life
insurance market is emerging without a rationalized economic calculation of
human life from the clients’ subjectivities. However, once this new economic practice—buying life insurance—is adopted and popularized, new meanings and
rationalities may arise. In other words, life insurance is first legitimized through
existing cultural frames for meaning and legitimacy, but it can also transform local
cultures by altering in part the way of life and by adding to the cultural repertoire
a new set of vocabularies and schemas.4 Just as Donald MacKenzie and Yuval
Millo (2003) find that options in financial market have enriched the investors’
“repertoire of strategies” by allowing them to realize a different set of payoffs than
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they would have realized in their absence, Chinese life insurance clients may come
to associate life insurance more with the economic loss of human life after they
repeatedly witness payments made to beneficiaries. If this is the case, life insurance
is not only a product of rationalization but also an instrument of such a process.
With this hypothesis, one of the objectives of my return to Shanghai in the
winter of 2004 was to explore whether the new practice of buying life insurance
had generated new, rationalized meanings and definitions. I interviewed a total
of 37 clients (25 in person and 12 by telephone) who had received money from
their insurers.5 Although I wished to interview those clients who had received
payments for deaths or other serious misfortunes, such clients were usually
unwilling to be interviewed. As a result, the majority of the clients interviewed
had received small payments for minor injuries. Nonetheless, I managed to interview a few clients who received payments for deaths or critical diseases.6 Their
cases are quite telling.
In 1999, Xie Pingheng and her husband each bought an insurance policy from
AIA that covered life, yanglao, accident, and critical diseases. Unfortunately, her
husband died of cancer the following year. She received 60,000 yuan (~ US$7,249)
from AIA. When asked if the money paid by the insurer had eased a little bit of
the pain at the moment, Xie responded: “Of course not! Not at all! But now I feel
that it’s a bit useful. How useful? Well, if there were no insurance, then there
would be nothing now. The money I’ve got is mainly for my son’s future. I used
part of it to buy a child policy for his future education. This policy costs 4,000
yuan (~ US$483) a year. So, it’s a bit useful.” Xie, age 34, was raising her nine-yearold son on her own after her husband’s death. With a college degree, she earned an
above-average salary. Her feelings about the money from AIA were rather ambivalent. On the one hand, she refused to view human life as compensable by money,
but on the other hand, she appreciated the practical value of the money. These
mixed feelings make sense. As Zelizer (1979, 1994) points out, the relationship
between human life and money bears not only a practical but also a moral dimension. Morally, human life in the Chinese worldview is sacred, as it is in the Christian tradition. The sacredness of human life is expressed in the aphorism renming
guan tian (human life is a heavenly matter). In this sense, human life is noncommensurable. From a practical perspective, however, when a family breadwinner
dies prematurely, the family members need money for survival. Hence, when the
family members are grateful for receiving money from an institution as compensation for the loss of the breadwinner, it does not mean that they believe the money
can replace their lost loved one. It only means that without the compensation,
their lives would be impossible. Receiving money as a result of death, nonetheless,
is not something that deserves celebration. Therefore, the relationship between
money and death is better narrated in a very subtle, even hidden, way.
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Clients’ ambivalent feelings toward the money received from insurers were
best demonstrated by Huang Jing, who initially bought an insurance policy from
Allianz-Dazhong under the influence of her colleagues (described in chapter 5).
Huang bought a policy in 2001 with coverage similar to Xie’s. Her sales agent
informed me that she received a payment of 10,000 yuan (~ US$1,208) for a
critical disease. After I briefly introduced myself and my study, Huang’s first reaction, even before I asked any specific question, was, “I hate that money! I spent it
all as soon as I could. . . . I spent all the money on food and clothes. I really hate
that money. I really do. . . . That money reminded me of the terrible misfortune.”
When asked if her ideas about life insurance had changed since the time she
bought her policy, she said:
Not much. Probably because the amount [of money I received] was not
big. If I had bought a bigger policy, it might have had an impact on me. I
might have had some feeling after receiving the money. But I didn’t have
much feeling when I received this amount, probably because it is not a big
amount. Rationally, I understand that insurance can manage some risks,
but I don’t have such a feeling. If I had bought a policy with an insured
amount of, say 100,000 yuan (~ US$12,082), perhaps I would have a
feeling.
Intriguingly, while Huang expressed her hatred of the money, she also implied
that her view of life insurance might have been more positive if she had received
a larger sum from the insurer. When asked if the money she received from the
insurer had any use at all, she said, “The money did help economically.” Her
ambivalence about the money is obvious. During the entire 45-minute interview,
Huang never mentioned what critical disease she was diagnosed with. I felt as if it
was a somewhat taboo subject to her, so I did not ask. I later learned from her
sales agent that it was breast cancer.
For the majority of the clients who received small payments for minor injuries, I found that the tiny amounts of money they received strengthened their
sense of trust in the particular insurance companies who insured them, and in the
life insurance industry in general. For the small sample of clients who received
relatively large amounts, I found a common pattern: the pain brought on by misfortune was not mitigated upon receiving money from insurers, yet after their
period of grief, they realized that the money was useful, and their acceptance of
life insurance was slightly elevated. For instance, Xie bought another policy for
her son instead of simply putting the money in a bank. Huang thought about
what her feelings would be if she had bought a policy with a higher insured level,
which would be a risk management policy. Therefore, it is possible that with
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increasing significant payments made by life insurers due to various misfortunes,
the general public’s perception and definition of life insurance will change from
primarily money management to risk management. This inquiry awaits future
research with a different methodology.
Culture and Globalization of Modern Capitalism
In examining the question of how the global diffusion of a particular capitalist
enterprise is possible despite variations in local cultures, this project proposes that
localization is a necessary strategic move to create local markets in the course of
globalization. It is through localized interpretations and definitions that a particular capitalist enterprise can be grounded in a local context (Chan 2011). The
Chinese buyers’ understanding of life insurance as a primarily money management category unmistakably illustrates this point. Such localized interpretations
have produced a market with a trajectory and features different from those of the
transnational firms’ home countries. This proposal is in line with those from
cross-national comparative studies (e.g., Dobbin 1994; Guillen 1994, 2001;
Biernacki 1995; Dore 2000; Hall and Soskice 2001).
However, we have seen in the Chinese case that foreign and domestic economic actors in a locality assume different degrees of localization. To answer the
question about the extent to which local culture wields the power to selectively
adopt and reject certain modern capitalist ideas and practices in the course of
globalization, I suggest that (assuming the local institutions are supportive of the
new ideas and practices) it depends on three critical factors: (1) the extent to
which the local cultural elements are compatible or incompatible with the new
ideas and practices, and how resilient the incompatible elements are; (2) who the
creators of the new economic practices are; and (3) the presence or absence of competitive domestic players in the field. This section briefly recapitulates the first two
factors that have been substantially discussed throughout the text and elaborate
on the last one.
From this case study, we would predict that the greater the degree of incompatibility between the commercial logic of a new economic practice and the locally
shared ideas, traditions, values, and moralities, the more resistant a population
will be to the new practice. It then becomes more necessary to mobilize the cultural tool kit to circumvent this incompatibility. Depending on what kinds of
cultural elements are available in the tool kit, the new economic practice will be
modified in some way. This modification is a combined effect of the prohibiting
and enabling mechanisms performed by the two different forms of culture. The
operations of the mechanisms, however, are not automatic. In the case of life
insurance in China, the concepts of life and death as shared ideas and beliefs of
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the local population act as an exogenous factor in shaping the formation of the
market. The extent to which this cultural force is influential in shaping the market, nevertheless, is not definite. It depends on how the insurance practitioners in
the field respond to this cultural barrier.
The ethnographic details from chapters 2–5 demonstrate that the types of
strategies deployed by the insurance practitioners to handle the local resistance
are neither predetermined nor random. Economic actors choose their operating
and marketing strategies. Nonetheless, foreign and domestic companies display a
systemic difference. Different foreign companies headed by leaders from different cultural backgrounds also display a pattern of difference. Thus, who is in the
field affects the extent and the mode of localization. Although the shared concepts of life and death and the associated taboos, values, moralities, and perceptions set the boundary for the social construction of sales discourses, foreign
insurers constantly attempt to test the boundary, to soften it, and to expand it for
a discourse that is compatible with the profit-oriented institutional logic of life
insurance. To do so, they draw certain elements from the local cultural repertoire
but mix them with new cultural symbols that they intend to impose on the locals.
The domestic insurers, on the other hand, observe the limitations imposed by the
local cultural logics. They largely mobilize the local cultural repertoire to make
sense of the new entity in a locally acceptable way, without attempting to challenge the local mentalities or habits. Thus, the economic actors’ bounded agency
that entails their choice of strategy largely crafts the new economic practice in a
particular locality.
If, hypothetically, there were no domestic insurers or the domestic insurers
were not competitive enough, we could reasonably infer that the foreign insurers
would have localized their practices to an even lesser extent, but the growth of the
life insurance business would have been much slower. In other words, whether
the receiving end of a globalizing enterprise has competitive domestic player(s) will
affect the extent to which the enterprise is localized. This factor is well illuminated when we include the cases of Taiwan and Hong Kong for comparison.
The trajectory of the life insurance market in mainland China, thus far, closely
resembles the one in Taiwan. The Taiwanese life insurance market expanded
quickly during the 1980s–1990s. In 1991, life insurance premiums as a percentage
of gross domestic product reached 3.3 percent (compared to only 0.98 percent in
Hong Kong). By 2004, this percentage jumped to 10.55 (compared to 6.4 percent
in Hong Kong).7 This impressive development of the life insurance business in
Taiwan was likely due to the dominance of domestic players and its focus on
money management. Thanks to the protectionist policies imposed by the Republic of China (ROC) government, the life insurance industry in Taiwan has long
been dominated by domestic players. It was not until 1987 that a few American
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insurers managed their way in, and it was not until 1994 that the ROC administration allowed other foreign insurers to set up branches in Taiwan. Nevertheless,
due to protectionist policies early on, the Taiwanese life insurance market continued to be dominated by domestic players. In 1989, domestic insurers occupied
more than 90 percent of the market share (Lai 1991), and by 2001, they still held
88 percent of the policies in force in Taiwan. The distinction between the domestic and foreign insurers, like that in mainland China, was also remarkable in their
product development. With the cultural taboo on premature death, the locally
formed Taiwanese insurers presented life insurance as savings to the public and
offered primarily endowment products from the 1960s to the mid-1980s. In
1989, endowment insurance accounted for 86 percent of long-term individual life
insurance policies in force in Taiwan (Li, Duberstein-Lindberg, and Lin 1996).
Yet upon their arrival, foreign insurers, like those in China, attempted to create a
risk management market. More than 80 percent of the life policies sold by the
foreign firms in the first half of the 1990s were risk management products, mainly
whole life without endowment. However, domestic insurers still preferred to sell
money management products. About 65–80 percent of their life policies sold
during the same period were whole life with endowment or were pure endowment. Because the market had been dominated by the domestic insurers, it had a
distinct money management flavor. By the end of 2001, endowment policies still
accounted for 68 percent of the individual life premium income in Taiwan.
On the other hand, the trajectory of life insurance development in Hong
Kong was distinct from that in mainland China and Taiwan. As a British colony,
Hong Kong was not protected from foreign insurers. During its economic boom
in the 1980s, the life insurance industry was dominated by three major foreign
firms: AIA from the United States, Manulife (International) Limited from Canada, and National Mutual Life Association, Ltd. from Australia. At the beginning
of the 1990s, these three insurers had captured more than 70 percent of the life
business in Hong Kong. Although the locals in Hong Kong, like those in mainland China and Taiwan, also favored money management products, the foreign
insurers did not simply accommodate their preference. In the absence of competitive domestic players, the foreign firms in Hong Kong were under less pressure to localize their products. Instead, they aggressively promoted the risk
management concept of life insurance and strove to convince the public of the
necessity of purchasing traditional whole life. As a consequence, traditional
whole life consistently constituted more than 70 percent of policies in force from
1991 through 1999. Thus, the market during this period was predominantly one
with a risk management character. The dominance of traditional whole life policies in Hong Kong, nonetheless, by no means represents the general public’s
acceptance of the risk management concept of life insurance. The development of
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the life insurance industry in Hong Kong was not nearly as explosive as it was in
Taiwan. For instance, the number of policies in force in proportion to the population reached only 64 percent in 1999 (compared to 108.5 percent in Taiwan). In
fact, the size of the Hong Kong life insurance market in light of its economy and
population before the 2000s was significantly below the average compared to
other developed economies (Chan 2012). One possible explanation is that the
market was dominated by risk management products that were incompatible
with the local preferences. I have argued elsewhere that the cultural taboo on premature death is the same in Hong Kong as it is in Taiwan and mainland China,
and that residents of Hong Kong also tend to take out life insurance as a form of
money management rather than risk management (Chan 2012).
The distinction between the Taiwanese and Hongkong markets, I suggest, can
be attributed to the extent to which indigenization took place, which in turn is a
question of who dominated the markets. The market in Hong Kong has been
dominated by foreign players who attempt to remove the cultural obstacle in the
absence of competitive domestic players. These foreign players, like those in
Shanghai, operate according to a rigorous profit-oriented institutional logic at
the expense of a larger market. On the other hand, the market in Taiwan has been
dominated by domestic players who are more accommodating to the local resistance, in order to boost their growth. Therefore, the power of the domestic players
is an important element affecting how a globalizing enterprise operates in a locality. This power, in turn, is often a function of their policies and the bargaining
powers of the local states. The weak political position of Hong Kong as a British
colony entailed policies that favored transnational life insurance corporations.
These policies resulted in an absence of competitive domestic players and a market
with a lesser degree of localization (Chan 2012).
While the divergence in product development between transnational and
local life insurers is evident in all three Chinese societies, it is important to ask
whether this divergence will persist. The changes I observed in 2004 in the insurers’ marketing and managerial strategies may provide us with some clues to this
question.
Epilogue: Changes and Projections
In the winter of 2004, I returned to the insurance agency offices in Shanghai
where I did my study in 2001–2002. I was astounded to see the reversal of fortune between AIA and Ping An. AIA had achieved 12.3 percent growth in its
premium income that year, while the entire market was shrinking. Its sales agents
could not have had better morale, and it was the only insurer that recorded an
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increase in the number of sales agents, from about 4,200 in 2002 to around 5,000
in 2004. Ping An, in contrast, had suffered an impasse in the growth of premium
income, with merely 2.3 percent growth that year. Its agency office, which was
full of agents and filled with noise in 2001–2002, now had empty seats and was
filled with silence. The agents were demoralized, and the size of Ping An’s sales
force contracted to 9,300 from 16,400 two years earlier. Another surprising
observation was the dispiriting atmosphere in Pacific-Aetna’s agency office. The
agents who used to be upbeat, ambitious, cheerful, and enthusiastic in 2000–
2002 now, for the first time, were considering quitting. Pacific-Aetna’s sales force
dropped from almost 8,000 in 2002 to only about 4,700 by the end of 2004. Its
sales volume suffered a sharp fall to negative growth of -0.26 percent.
What happened? Why did the business change so drastically in such a short
period of time? How can we make sense of these abrupt changes? Does the “culture matters” argument still hold, given that the cultural elements working in
2000–2002 were not supposed to change overnight?
Dramatic Changes in AIA, Ping An, and Pacific-Aetna
On December 6, 2004, I revisited the agency office of AIA where I spent most of
the time during 2001–2002. Shen Hingfu, the unit manager of the agency office
I used to visit, excitedly told me that this was the best year for AIA’s sales since its
inception in 1992. The boom, unambiguously, was brought about by a new
money management product, a variable universal life. What made AIA give up its
insistence on promoting primarily risk management products and take the lead in
offering an investment product?
In July 2002, the Taiwanese general manager, Mr. Hsu, who headed AIA in
Shanghai for 10 years, was replaced by Mr. Chan from Hong Kong. Nonetheless,
Chan did not impress headquarters. In 2003, AIA’s growth hit a low point. That
year, Chan was replaced by Mr. Bao, who came from Macau and had worked
briefly in Hong Kong prior to this appointment. The sales agents believed that
Chan was in his position for only 14 months because he failed to boost AIA’s
business. As the newly appointed general manager, Bao was eager to increase sales
volume to prove his leadership. He seemed to be much more willing to accommodate the local preferences. He launched the variable universal life soon after he
succeeded Chan. Although this new policy had its origin in the United States,
AIA modified it by guaranteeing an interest rate of 1.75 percent in addition to
the investment return. According to the agents of AIA, the guaranteed interest
rate made this product more appealing than unit linked, so it was well received by
the public. Launching this variable universal life product marked AIA’s move to
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developing money management products. In fact, its move started in 2002 when
its critical disease insurance, which was originally a nonreturning principal type,
carried a 50 percent return of premium to clients who never filed claims. In April
2004, the return rate was raised to 100 percent. These recent changes in AIA’s
product development were a noticeable attempt to improve sales performance by
implementing a localizing strategy. Indeed, they boosted AIA’s share of the individual life business from 10.2 percent in 2003 to 11.2 and 11.7 percent in 2004
and 2005, respectively.
Nevertheless, the boom at AIA was only temporary. According to two managers of the sales and marketing department of AIA, their profits did not go along
with their increase in sales volume. A number of clients who bought the variable
universal policy in 2004 made a “one-time premium payment.” Some of them
bought the policy as if it were a fixed deposit savings plan, like certificate of
deposit savings in the United States. Some employers bought it to reduce their
profit tax for that particular year. Because the premium payment was made just
once, the growth of the business in 2004–2005 was, on its face, inflated. As a
result, its share in the individual life market dropped again in 2006 to 9.9 percent.
It was not clear why AIA had to localize its products when Ping An was already
moving toward a risk management definition of life insurance after the unit
linked crisis. A possible reason was that the newly appointed general manager felt
insecure due to the rapid change from the preceding manager, so he made this
bold move to make AIA’s sales performance look good.
Two days after I visited AIA, I went to the agency office of Ping An where I
visited regularly in 2001–2002. I was surprised by the depressing feel of the
office’s atmosphere. It was the office where Dai Hong and Chang Qing (the helpful friend and the filial daughter-in-law, respectively, in chapter 4) worked. I
joined the morning assembly as I used to do in the past. The agency office had
moved to another commercial building, and it was a bit more spacious than the
one from two years prior. The image left in my mind from 2002 was of an office
so packed of agents that they often had to squeeze space for one another. This
image, however, had completely disappeared in 2004. Dai was still the team
leader, but the number of her team members had dropped from 14 to 6 in two
years. Chang had left the life insurance industry. The team sitting next to Dai’s
shrank from 38 members to 15. In contrast to the memory I had of a room replete
with agents and noise of their chitchat, now more than one-third of the seats were
empty. Dai told me in a disheartening tone that sales were getting more difficult,
so half of her agents had left.
When asked what kinds of products they had been selling, Dai said a variable
universal life, first launched by AIA, began being offered by Ping An in June 2004.
To my surprise, Ping An, which had been bold in launching money management
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products from the beginning, seemed cautious in 2004. Its circumspect approach
might be related to its going public in Hong Kong in the same year. In fact, as
presented in chapter 2, Ping An’s move to a more conservative approach began in
the second half of 2002 after the unit linked crisis. HSBC Group’s acquisition of
10 percent of its shares might have further checked the development of risk-taking products by Ping An. The critical disease insurance, which used to carry a
dividend component that facilitated the sales talks of the agents, no longer had
this component, so it became more difficult for the agents to sell. In 2004, none
of the Ping An products stood out as uniquely appealing to the public. Although
Ping An followed AIA in offering variable universal life, Dai’s agents complained
that this product was too complicated for the agents and for the prospects to
understand. This, together with the unit linked crisis, lost the agents of Ping An
the competence and credentials to sell this investment product.
This seemingly depressing note, ironically, was brought about by Ping An’s
becoming more “mature,” by its being more profit oriented and offering more risk
management products. The reversal of fortune between AIA and Ping An in
2004, in fact, further buttresses the statement that the growth of the Chinese life
insurance market was brought about by money management products. However,
the static growth of Ping An’s premium income and the decline of its market
share cannot be taken at face value. After all, what matters to the shareholders is
net profit, and what mattered to Ping An after its public listing was its stock price.
By January 2007, Ping An’s price on the Hong Kong Stock Exchange had jumped
377 percent from its initial offering in June 2004. As mentioned in chapter 2,
when it was listed on the Shanghai Stock Exchange in March 2007, its price
recorded the world’s largest initial public offering by an insurance company. This
domestic insurer first made its name by its breathtaking expansion within a short
period of time from 1994 to 2001. Without this brave attempt to deviate from
the conventional, conservative model in its early stages, it is difficult to imagine
that it would have been expanded so rapidly.
Compared to Ping An, the fastest growing joint venture, Pacific-Aetna, was
faced with an even more severe setback in 2004. The setback was quite obviously
triggered by a significant change in the top managerial body, which had changed
the sales agents’ morale. The ING Group, which acquired a substantial share of
Aetna Inc. in December 2000, began to reform Pacific-Aetna’s (now called
Pacific-Antai) management in 2003. The Dutch-led headquarters complained
that the expenditure of this joint venture in China was too high. To reduce its
cost of operation, the headquarters replaced the Taiwanese expatriates with local
Chinese that cost much less; only the general manager still came from Taiwan.
Ms. Tao, a Taiwanese who also worked for Aetna in Taiwan, was appointed to
replace Manager Chang as the general manager in April 2003. In December 2003,
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a local Chinese, Mr. Ku, was appointed to replace Manager Ge as the sales and
marketing manager. Since the sales agents adored Ge, who had worked closely
with their senior agents, his firing by headquarters came as a blow to the agents’
morale. Some senior agents followed Ge to join Citibank in Shanghai, helping
this foreign bank to establish a joint venture life insurance firm.8
When I revisited the agency office of Pacific-Aetna where I spent most of my
time during 2001–2002, I was shocked to see the abrupt change in agents’ morale
and spirit. They expressed their sad feelings about the departure of the top managers and some senior agents whom they regarded as “parents.” Zhao Anpei, who
used to be upbeat, ambitious, and eager to expand her sales group, now told me
that she had been considering quitting Pacific-Aetna. It was the first time I saw
the low morale of the sales agents of this joint venture since my first encounter
with them in 2000. Wu Yunan, who was overwhelmingly committed and enthusiastic even with chronic headaches back in 2002, was now demoralized and
upset about the recent change in the company. She complained that ING only
cared about cutting costs. The new sales and marketing manager, Mr. Ku, was
paid only about one-tenth of what Manager Ge as an expatriate was paid.
The sales agents complained that Mr. Ku, though a local Chinese, had no
skills to inspire them. On the day I attended the morning assembly, it happened
that it was the last day for a contest in agency recruitment. Ku came with an
attempt to boost the last day’s effort for this contest. Having no experience in the
life insurance industry, Ku had little knowledge of how to motivate the sales
agents. Unlike Ge, who was often humorous and making the agents laugh, Ku
looked very uncomfortable standing in front of the crowd. In contrast to Ge, who
always had a smiling face and maintained eye contact with the audience, Ku wore
a solemn face and looked like a government official. He seemed ignorant of the
norms and the routines of the agency offices. After the team manager introduced
him, he embarrassingly asked, “What is this called? . . . morning assembly?”
Without any humor, he urged the agents to work harder for the upcoming new
round of sales contest. The agents, who looked bored and unconcerned, had no
responses to his speech. In contrast to the cheerful and warm atmosphere that I
experienced in the past, the morning assembly had become a dull routine. As
elaborated in chapter 3, part of the managers’ cultural capital comes from the
cultures of their former workplaces. The replacement of the Taiwanese sales manager with a local Chinese without experience in life insurance sales took away the
practical cultural capital to motivate the sales agents.
The change that the Dutch-based ING elicited in 2003 seemed detrimental to
Pacific-Aetna’s growth and popularity. Like Ping An, this was a move toward a more
profit-oriented operation. Previous chapters describe how Pacific-Aetna was profit
oriented from the beginning and that its product development was no different
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from other foreign insurers. Nonetheless, it was the most localized foreign insurer
in its organizational culture, agency management, and marketing strategies. Localization as such, which involved more ceremonial activities, might have induced a
relatively higher cost. In John Meyer and Brian Rowan’s (1991) classical hypothesis,
ceremonial activity is inherently in conflict with the logic of efficiency. Perceiving
the ceremonial expenditures spent by the Taiwanese managers as “pure costs from
the point of view of efficiency” (Meyer and Rowan 1991:55), the ING headquarters replaced the top managerial body in order to cut down costs. However, just as
Orru, Biggart, and Hamilton (1991) challenge Meyer and Rowan’s hypothesis, ceremonial expenditure and efficiency can go along well in some circumstances. As a
case in point, ING’s attempt to cut its cost of production limited its capability for
effective localization. This move in turn brought another cost to Pacific-Aetna: the
loss of company’s legitimacy for its internal participants—the sales agents. The
Dutch executives at ING’s headquarters, like the German managers from Munichbased Allianz AG, lacked effective cultural capital in the Chinese context. They
failed to realize that the ritual significance of ceremonial activities is not confined
to categorical rules or formalities but has concrete effects.
For Allianz-Dazhong, I did not see obvious changes in the atmosphere of the
agency office where I used to visit. The majority of the sales agents whom I spent
time with in 2002 had already left the company. The high turnover rate of sales
agents was not new for this insurer. Nonetheless, the problem had intensified, as
the number of agents dropped from more than 1,300 in 2002 to merely about
700 in 2004. Although its premium income increased 13 percent in 2004, the
total sales volume was not impressive due to its small base. As presented in chapter 3, Allianz-Dazhong began to replace the Caucasian managers with local or
overseas Chinese in 2002. However, the localization of managerial personnel had
not been accelerated since then. In January 2003, the German deputy general
manager was replaced by another German, Mr. Hans-Joerg. Then, in April 2005,
the general manager, Dr. von Canstein, was replaced by Mr. Molt, who was given
the title of CEO. Educated in Germany and the United States, Molt, like von
Canstein, had worked for Allianz in Germany for years. It was a bit surprising to
me that among the seven top managers that composed the new managerial team
of Allianz-Dazhong (now named Allianz China Life) in 2007, three of them
were still German, two were Hongkongese, one was Taiwanese, and only one was
a local Chinese.9 Thus, a full localization of its managerial body was still a long
way off. The market share of this Sino-German insurer remained insignificant
(1.7 percent in 2007 and 1.08 percent in 2009). These findings parallel other
studies of German multinational corporations, which maintain that German
firms adapt their business system in a largely path-dependent manner, which
results in a low degree of active globalization (Lane 1992, 2000; Whitley 1994).
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Projections
The findings from 2004 suggest that Ping An was moving toward a profit-oriented model of product development, whereas AIA once attempted to significantly localize its product line. Pacific-Aetna was moving away from a costly but
effective Taiwanese model of labor management, and Allianz-Dazhong seemed
to continue its German model of management. With the exception of AllianzDazhong, the changes in the other three companies suggest a convergent dynamic
at the organizational level, though the outcome of such a dynamic is not certain.
Will Ping An move to define life insurance as primarily risk management and
invest its energy in creating a risk management life insurance market? Will AIA
continue to localize its product development with an attempt to capture a larger
market share? Will Pacific-Aetna eventually display no difference in its organizational culture and agency management, compared to other joint ventures?
Finally, will the life insurance market in China ultimately move from a moneycum-risk management market to a primarily risk management market? If so, a
convergence of the life insurance markets may be seen at the transnational level.
From the available official data, it appears that there has been a convergence in
product development between foreign and domestic insurers in Shanghai over
time.10 In 2001, the proportion of individual premium income from money management products (namely, unit linked and dividend insurance) for foreign insurers was less than 27 percent, compared to more than 41 percent for domestic
insurers. Five years later, in 2006, the figures from both camps converged at
around 35 percent. This convergent tendency has been taking place at the national
level as well. In 2002, the proportion of individual premium income from dividend and unit linked products for foreign insurers was about 35 percent, compared to 50 percent for domestic insurers. In 2008, the figures from both camps
converged at about 60 percent.
The market as a whole seemed to maintain a money management character.
Although Ping An and other domestic insurers began to follow more closely their
foreign counterparts in offering critical disease insurance in 2002, the unpopularity of this risk management product, along with declining market growth, seemed
to push them to concentrate on investment products again. By the end of 2009,
premium income from unit linked and dividend insurance accounted for more
than 68 percent of the individual life business of domestic insurers in Shanghai.
At the same time, foreign insurers substantially increased their sales of these
money management products, resulting in unit linked and dividend insurance
accounting for more than 58 percent of their individual life premium income in
2009. The entire market therefore retained a money management character. Taking all the insurers together, the proportion of individual premium income
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received from selling unit linked and dividend insurance increased from 38.5 percent in 2001 to 66.8 percent in 2009. Furthermore, another money management
product, variable universal life, also came to account for 17.3 percent of the individual life business by the end of 2009. If we add up the sales of all these products
that carry an investment connotation (unit linked, dividend, and variable universal life), they accounted for more than 84 percent of the total individual life business in Shanghai in 2009. At this time, the market began to grow again from its
low point in 2004. Annual real growth in premium income during the period
2006–2009 ranged from 16.6 percent to 25.5 percent. At the national level, the
same trend was recorded. Annual real growth of the market during the period
2007–2009 ranged from 18 percent to 44 percent. Simultaneously, the proportion of individual premium income from dividend and unit linked products
increased from 31 percent in 2001 to 69.2 percent in 2009. Likewise, variable
universal life became popular, with 13.5 percent of the total individual premium
income coming from this product in 2009. Investment products therefore
accounted for 82.7 percent of the total individual life business in the country by
the end of 2009.
All these figures suggest that market growth after 2004 was likely brought
about by money management products and that the Chinese market has not yet
moved into a risk management direction. While it may be too early to draw a
conclusion from the case in mainland China, perhaps we can project the trajectory from the experience of other Chinese markets and the Japanese market.
In Taiwan, a convergence in product development across domestic and foreign firms was observed toward the end of the 1990s. While Taiwanese insurers
still focused on selling money management products, they were increasingly
offering more risk management policies. In 1987, products serving primarily a
risk management function, namely, whole life without endowment, accounted
for merely 9 percent of the total number of policies in force held by Taiwanese
insurers. By 2003, it had jumped to 49 percent. On the other hand, foreign
insurers were increasingly localizing their products, despite their continuous
effort to promote risk management policies. In 1991, less than 15 percent of the
policies in force held by foreign insurers served a money management function.
Yet by 2003, this proportion increased to 42 percent. As the domestic insurers
occupied a large market share, their movement to selling more risk management policies has resulted in a market moving from money management to
money-cum-risk management. While whole life without endowment constituted only 6 percent of the policies in force in 1985, its share substantially rose
to 49 percent in 2003.11 The Taiwanese life insurance market, though still
marked with a money management character, has been moving closer to the
one in Hong Kong.
192
MARKETING DEATH
On the other hand, following a similar trajectory as the development of life
insurance in Euro-American contexts, life insurers in Hong Kong began to diversify their product lines by launching money management products toward the
end of the 1990s. Since 2000, foreign insurers in Hong Kong have begun to promote savings and investment products, namely, whole life with endowment or
unit linked insurance. The market has been moving from risk management to
risk-cum-money management. In 2006, 14.5 percent of the number of policies in
force belonged to the investment category, compared to only 4.8 percent in 1999.
At the same time, whole life with endowment also doubled its proportion, from
9 percent to 17.6 percent.12
This brings us to the question of culture, globalization, and varieties of capitalism. Evidence indicates that the Chinese life insurance markets—a product of
the interplay of the local institutional conditions, the local cultural logics, the
cultural repertoire mobilized by the strategic actors, and the institutional logic of
capitalism (in general) and life insurance (in particular)—are unlikely to lose
their distinctive features in the near future. Nonetheless, I am reluctant to project
that their distinctive features will be preserved indefinitely. Just as Marion Fourcade and Kieran Healy (2007) reflectively note that local variations should not
blind us to the fact that unequal power exists among actors and among justificatory logics, my case study demonstrates that localization is not always a straightforward path. Despite the Chinese insurers’ daring adoption of a market-share
institutional logic at first, they later succumbed to a profit-oriented strategy and
began to imitate more closely their foreign counterparts’ product development,
both in mainland China and in Taiwan. As different institutional logics have different connections to the economic performance (or profitability) of a market,
the extent of localization is not without limits.
Take the Japanese life insurance market as an example. Under the influence of
Confucianism and Buddhism, the Japanese share quite similar concepts of life
and death with the Chinese. The idea of “death” was found to be as frightening to
the Japanese as to the Chinese (Long 2004). Intriguingly, during the first half of
its growth trajectory, the Japanese life insurance market corresponded closely
with the Taiwanese and mainland Chinese markets. Although American and
British life insurers entered Japan as early as the late nineteenth century, the life
insurance industry did not take off until the 1960s. Beginning in the 1960s, the
life insurance business in Japan expanded dramatically. In just three decades (by
1990), the Japanese life insurance market as measured in proportion to per capita
gross national product was the second largest in the world ( Yoneyama 1995). It
was during this period that foreign life insurers were not allowed, so the market
was entirely constructed by domestic players. Exactly as in Taiwan, life insurance
first emerged as money management, namely, endowment, in Japan in the 1960s.
How Culture Matters
193
More than 80 percent of the policies sold in the mid-1960s were endowment.
Starting in the early 1970s, the market gradually moved to a money-cum-risk
management market, offering mainly endowment and secondarily endowment
with term life. Nevertheless, the movement did not stop there. Endowment with
term life increasingly gained popularity in the 1980s. Since the early 1990s, the
market further transformed into a predominantly risk management market.
Whole life with a term component and other insurance against death increasingly became the key products.13 It is plausible that the Japanese life insurance
market first emerged as an endowment market owing to the overarching fear of
death and the dominance of the domestic players. Questions remain, however:
How did the market evolve to become a risk management market and finally
exhibit features similar to those of Euro-American markets? Was it due to
changes in local institutional conditions or cultural meanings? Was it the outcome of the triumph of the institutional logic of life insurance embedded in the
globalizing capitalist logic?
I placed the new findings about the development of the life insurance market
in mainland China in the last section of this book to entice speculations. I have
also left open the questions about the transformation of the Japanese market, to
likewise solicit further studies and debates. Future studies and debates may not
necessarily focus on life insurance per se but on the dynamic interplay between
local and global forces, particularly the dynamics through which local institutional and cultural properties collide, negotiate, contend, and compromise with
globalizing capitalist logics, and the possible outcomes that these dynamics entail.
By focusing on multiple forms of culture and their interaction with institutional
factors in making a Chinese market, this book is intended to facilitate dialogues
among the fields of cultural sociology, economic sociology, globalization, and
China studies.
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APPENDIX A
Methods
Ethnography and Data Collection
My data collection was divided into three stages: the summer of 2000, the academic
year of 2001–2002, and the winter of 2004. Most of the data presented in this book
were collected in 2001 and 2002. During this period, I focused on collecting three sets
of data for three levels of analyses: (1) The organizational level included insurance companies’ product development, marketing strategies, and agency management. To collect
these data, I interviewed managerial personnel, including general managers, marketing
and sales managers, agency development managers, actuaries, and underwriters. (2) The
interactional level included insurers’ training for their sales agents and sales agents’ selling strategies and interactions with potential buyers. (3) The individual level included
buyers’ consumption behaviors, preferences, and motives. For the latter two levels of
data, I mainly interviewed insurance sales agents, their trainers, prospects, and clients.
Observing the interactions between trainers and sales agents, and the interactions
between sales agents and prospects or clients, was also an important tool for collecting
these data. While the majority of these interviews were conducted at the four selected
companies, they were not confined to them. The observations and interviews were supplemented with 179 nonrandom sampled questionnaires, 66 of which came from sales
agents, 63 from clients, and 50 from prospects. Apart from the four insurers under
study, questionnaires were also distributed to sales agents in Manulife-Sinochem Life
Insurance Company, Ltd. (Manulife-Sinochem), AXA-Minmetals Assurance Company, Ltd. (AXA-Minmetals), and China Pacific Insurance Company, Ltd. To collect
data from clients and prospects, I distributed questionnaires to 8 different companies
for their employees to fill out. Among the participating companies, 3 were foreignowned, 3 private Chinese-owned, and 2 state-owned enterprises. (Samples of interview
questions and questionnaires are attached.) From 2000 to 2004, I observed 46 morning
assemblies, 48 small group meetings or gatherings, 28 training sessions, and 43 agent–
client or agent–prospect meetings. A total of 99 sales agents, 44 managerial staff, 96
196
Appendix A
clients, and 35 prospects in Shanghai were interviewed. (Summaries of fieldwork and
profiles of interviewees are attached.) As the competition among insurers was very
intense during my research period, I consciously did not tape record any interviews
with sales agents or managerial staff, in order to facilitate the greatest degree of honesty.
I simply asked for their consent to let me take notes on dates, figures, and names that
they mentioned for the purposes of accuracy. As for clients and prospects, about half of
the interviews were tape recorded with consent.
Any sociological study, be it under the rubric of a quantitative or qualitative
approach, inevitably involves a reconstruction of realities. While ethnography as a
research tool aims to capture the most natural and dynamic world of the cases of interest, it unavoidably pays selective attention to some actors and incidents while ignoring
others. As a method of social science, it also involves organizing a chaotic, messy, and
contradictory set of data into a theoretical order. The ethnography itself therefore is as
much a source of orientation, understanding, and insight as a source of data. Robert
Wuthnow (1987) suggests that candid disclosure of researchers’ methods and assumptions is the most viable way to make sociological studies scientific. I do not hesitate to
unveil my backstage stories: detailing the way I got into the field, the role I played, the
assumptions and feelings I had, the difficulties I encountered, and the remedies I pursued. Writing these stories serves two purposes. First, it reveals the backstage of my data
collection and any possible biased analyses I might have inadvertently advanced. Second, relating my ethnographic journey is an enjoyable process in and of itself. It serves
as a memory of happy and exciting moments, a dose of therapy for the tough times, and
an expression of respect for the informants who knew very little about what was on my
mind when they interacted with me.
As Michael Burawoy (2008:15) puts it, one’s “mode of entry always says much
about the place being entered.” At the initial stage of my research, I attempted to use
both formal (top down) and informal (bottom up) paths to get access to the life insurance industry. Formal letters were sent to various life insurance companies in China and
the headquarters of foreign insurance companies in the summer of 2000. Follow-up
phone calls were made to the public relations divisions of various companies. However,
only two companies responded to my letters: American International Assurance Company, Ltd. (AIA) and Aetna Inc.
I was not sure if Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna) would
be one of my research field sites at that time, but I was certain that AIA, as the first and
only wholly foreign-owned life insurer in China, would be. The public relations division of AIA’s regional headquarters in China scheduled an appointment for me to meet
with their Taiwanese deputy general manager. I was thrilled at getting this appointment
and took it as a sign of welcoming my study at their company. However, the meeting
with the top executive turned out to be too good to be true. His purpose in seeing me
was to tell me that they would not open their door to any academic studies. I immediately regretted meeting with him and worried that he would not allow me to interview
any of his staff or sales agents. I had already gotten to know two AIA sales agents
Appendix A
197
through personal networking. If the deputy general manager officially disapproved of
my interviews with any of their sales agents, my research plan would fall apart. In an
hour long meeting with this manager, however, I kept attempting to convince him of
the importance and the confidentiality of my research. While he insisted that he could
not change his company’s “closed door policy” to outsiders, he did soften his personal
attitude to me. He seemed moved by my persistence and sympathetic to my position as
a student. He gave me a very nicely printed company brochure and finally said, “I definitely won’t connect you to any of our staff or sales agents for your interviews. But if you
personally know anyone working for AIA, I won’t stop you from talking to them either.”
I was relieved to hear that, though I was disappointed that it would be very difficult for
me to interview the in-house staff of AIA.
After my encounter with the AIA deputy general manager, I was almost certain that
the formal and “top-down” approach to get into the field would not work. I was fully
aware that conducting research in China relies heavily on a personal guanxi network. I
exploited all of my personal friendships in Chicago and Hong Kong to connect me to
people in Shanghai. My friends’ friends in Shanghai connected me to a number of
insurance practitioners. Through the snowball method, these insurance practitioners,
mostly sales agents, further referred me to other sales agents, their clients, and prospects. One of the sales agents referred to me by a friend in Shanghai was the “professional saleswoman” from AIA, Chu Siujuan, presented in chapter 4. Chu connected me
to the sales team manager of her agency office. This manager was surprisingly open to
my research, hoping that I would be able to present the difficulties of their sales jobs and
the problems of the insurance industry in China so that improvements might be made.
I assured him that I would present what I saw as objectively as possible and conduct my
analysis from an academic perspective. However, I hesitated to promise that improvements would come along.
My presence at the AIA agency office invited many suspicions. Many sales agents
were curious how I was able to get the permission to spend time in their office. A few of
them suspected that I was a close relative of the Taiwanese general manager. They told
me that no one ever was allowed to “study” their company. They were skeptical about
my presence at the beginning but changed their attitude after they saw me frequently.
Some of them later became very friendly and helpful to me.
My access to Pacific-Aetna, likewise, was facilitated through guanxi. Aetna Inc.’s
headquarters in the United States, in fact, referred me to a Taiwanese representative in
Shanghai upon their receipt of my letter in the summer of 2000. I had a phone conversation with this representative while I was still in Chicago, and he agreed to arrange for
me to meet with a few sales agents. However, my earlier negative experience with the
deputy general manager of AIA made me reluctant to contact this representative of
Pacific-Aetna when I was in Shanghai. At the same time, I was overwhelmed by the
enthusiastic attitude of the Pacific-Aetna sales agents I met through guanxi. My sister
first introduced me to a Singaporean expatriate in Shanghai whose driver was a client of
Pacific-Aetna. This client, Wei Jinggang, whom I described in chapter 5, then connected
198
Appendix A
me to his sales agent, Zhao Anpei. Zhao was very helpful to me, because I was referred
by Wei, a very close friend of hers. She became my key informant at Pacific-Aetna,
invited me to visit her agency office and introduced a number of other sales agents to
me. I was surprised to see their enthusiasm and warm attitude toward my study. They
even invited me to join their celebration party on my first visit. It was during the celebration party that I decided that this insurer should be included as one of the companies that I would study in depth. The party overflowed with tears and laughter that
seemed exaggerated to me. The sales agents related to each other as if they were family
members. The sales team looked exactly like what Nicole Biggart (1989) had described
about direct selling sales groups. I knew that Pacific-Aetna would give me a lot of interesting sociological stories to tell.
Nevertheless, I regretted later that I did not contact the Taiwanese representative
referred to me by Aetna’s headquarters when I first arrived in Shanghai. I realized that I
had become deterred by my negative experience with AIA’s top executive. Although I was
able to get to know many sales agents of Pacific-Aetna through Zhao Anpei, no one could
connect me to the managerial body of this company. Despite the top managers’ effort to
create a “big family” atmosphere and to flatter the sales agents by calling them “partners”
and “bosses,” the hierarchy and boundary between the managerial staff and the sales agents
was still clear. The sales agents of Pacific-Aetna, like those of AIA and many other insurance companies, had no authority or power to connect me to someone in the in-house
management. In the second stage of my research in 2001–2002, I tried to contact the
Taiwanese representative, but he had already left the company and the position no longer
existed. Afterward, I called up the public relations division of Pacific-Aetna in Shanghai in
the spring of 2002 and, through a series of negotiations, was allowed to interview two
members of their managerial staff, including an actuary. In addition, I interviewed two
more managers from my personal solicitation when I joined their training sessions.
At one point, I was tempted to study another two joint-ventures, AXA-Minmetals
and Manulife-Sinochem, instead of Allianz-Dazhong Life Insurance Company, Ltd.
(Allianz-Dazhong) and Ping An Insurance Company of China, Ltd. (Ping An). One of
my former schoolmates was working as an underwriting manager at AXA-Minmetals.
He helpfully scheduled a number of appointments for me to meet with different managerial staff members and sales agents. I could easily get access to an agency office for
participant observation. As for Manulife-Sinochem, the general manager was especially
supportive and open to academic research. The division head of the agency training was
similarly supportive. I went to the training sessions of these two joint-ventures and
attended their morning assemblies a few times. However, these two insurers did not
display any significant differences from AIA. It would have been redundant to include
them in the study. On the other hand, Allianz-Dazhong presented an organizational
culture that was quite different from the others. Compared to Pacific-Aetna, AllianzDazhong represented another extreme. It seemed to be the most “rational” and “formal”
firm. To widen the representativeness of my cases, Allianz-Dazhong would have to be
included. It represented the least localized and most westernized end of the spectrum.
Appendix A
199
Through a friend’s connection, I got to know the head of the public relations division of Allianz-Dazhong and her assistant in the summer of 2000. She arranged for me
to interview the general manager and a few sales agents. As mentioned in chapter 3, the
German general manager was very open to my research. This company seemed very different from the others. I saw a number of young Caucasians in the office during my first
visit. I was told that some business majors from Germany came here for internships. The
general manager and other staff, therefore, were used to having students ask them questions. When I approached Allianz-Dazhong again in 2001, the public relations division
head, who helped me before, had already left. Fortunately, her assistant was willing to
connect me to a young sales agent on the Venus Team where I conducted participant
observations. The young agent, “the naive little sister” presented in chapter 4, later
introduced me to some agents on the Aries Team. At the same time, the secretary of the
general manager scheduled a number of appointments for me to interview their inhouse staff. My access to Allianz-Dazhong was relatively easy, and the in-house staff was
most open talking to me.
It was during the first stage of my research that I learned about the popularity of
Ping An. However, none of my key informants at that time had any connections with
Ping An. I did not have a chance to meet with any Ping An sales agents in the summer
of 2000. In the second stage of my research, I made a pointed effort to get to know some
Ping An sales agents. Through two of my friends’ indirect connections, I met two sales
agents of Ping An. One of the agents was planning to study abroad and so was quite
interested in getting to know me (someone studying in the United States). The other
agent, the “helpful friend” Dai Hong in chapter 4, was hoping that I could be a resource
for her sales team. She became one of my key informants and led me to her agency office
where I took part in their daily routines. To my surprise, Dai did not ask for her subteam manager’s permission for my study. In contrast to my experience at AIA, no one at
the agency office of Ping An ever cared about my presence. Many people probably
thought that I was a new downline agent working for my key informant. The subteam
manager soon realized that I did not speak Shanghainese and so was obviously not a
sales agent. To my surprise again, she did not bother to ask what I was doing in her
office. I did not know if my key informant ever told her about me. To minimize the possibility of being kicked out, I took the subteam manager’s silence as an implicit consent
to my research. After I was in their office for more than a month, this subteam manager
once came to me for help when she had difficulty reading an English memo. This eased
my fear that she might disapprove of my presence.
Again, there was no way I could hope to interview the in-house managerial staff
of Ping An through the sales agents. I was, however, able to interview a trainer by
regularly going to their training sessions. Through my friend Wu Yuxiao at Northwestern University, I was connected to an in-house manager at the headquarters of
Ping An in Shanghai. This in-house manager helpfully introduced me to a sales and
marketing manager, an agency development manager, and an actuary of Ping An for
interviews.
200
Appendix A
The four companies I chose to study represented a wide range in their organizational practices and cultures. However, the agency offices where I conducted participant observations were all above average. Despite my efforts to study the agency offices
with average sales performance, only those team managers in the “better-than-average”
offices were willing to let me stay with them. Their sales agents were more confident and
open to my presence and enquiries. I managed to conduct my participant observation
in two of the agency offices of Allianz-Dazhong and Pacific-Aetna on a regular basis.
But for AIA and Ping An, I mainly stayed at one agency office of each. I pursued two
remedies to address the possibility of a biased sample. First, I visited other agency offices
whenever possible on a nonregular basis to cross-check the “typicality” of the offices
where I visited regularly. Second, I sampled the gender, age, seniority, and sales performance of the agents I interviewed to seek variation in the interviewees. It was especially important to interview and observe the top sales agents to see the keys to their
success, the senior agents to know their routines, and the new agents to learn about
their difficulties and socialization.
In each agency office, I stayed with a sales group on a daily and routine basis. I had
no difficulty interviewing and chatting with the sales agents and observing their daily
routines and interactions. The difficult part, however, was observing their interactions
with prospects and clients. The sales agents normally preferred not to have me there
during the selling process. Their reluctance was totally understandable. To have someone watch them being rejected all the time would be embarrassing. Moreover, they
might have had to apply certain dramatic strategies to move the more reluctant prospects, and felt uneasy doing so in front of me. Upon my request, some agents were willing to let me go along to their meetings with prospects and clients once or twice.
Although the male agents tended to be more open to my interviews, they were less willing to let me observe their interactions with prospects. A male agent from Ping An
explicitly spoke of how embarrassing it would be to have me see him being rejected, and
how my presence would cause him to lose his sense of how to “strategically deal with”
(duifu) the prospects. Among the agents who were willing to let me observe their interactions with prospects, many of them invited me to go along only when they were meeting with the cooperative ones. When they had to deal with resistant prospects, which
were the encounters I was most eager to observe, they were normally reluctant to bring
me along. Fortunately, the sales agents shared about their stories of dealing with difficult prospects in the morning assemblies, group meetings, and training sessions.
Although retrospective cognitive processes were involved when they recounted their
interactions with the prospects, listening to a substantial number of stories told by different sales agents permitted me to discern some general patterns and became a valid
and reliable method of obtaining data inaccessible to direct observation.
Interviewing life insurance clients and prospects was not as easy as interviewing
sales agents. The difficulty of recruiting clients and prospects to interview came from
the fact that people in Shanghai were tired of hearing the term baoxian (insurance). As
some insurance agents pretended to be researchers to identify potential clients, some
Appendix A
201
interviewees were initially suspicious of my motives for interviewing them. Fortunately, soon after they learned that I was not local and therefore not selling them insurance, they felt more at ease talking to me about their views and concerns. The clients
and prospects interviewed in 2000–2002 came from four different sources: some were
referred by friends, some were referred by sales agents, some filled out the questionnaires I distributed to various workplaces, and some were my new acquaintances in
Shanghai. But the majority of interviewees came from friends’ referrals and those who
filled out the questionnaires, as I preferred these two sources over the others. The problem of having the sales agents’ referrals was that the agents tended to refer their “best”
clients to me. Alternatively, some of them referred “difficult” prospects to me, expecting me to help them to “convert” these prospects. When I found that the clients and
prospects referred by the sales agents were too atypical, I turned down their offers.
Then, in 2004, I specifically wanted to interview clients who had received payments
from life insurance companies or had family members who had received payments.
The deputy general manager of Haier New York Life Insurance Company, Ltd. (who
was an alumnus of my former school) and the trainer at AIA (who initially refused to
have me attend their training sessions but later became a friend) both helpfully assisted
me by each giving me a list of clients who had received benefits from their companies.
In addition, the key informants at Ping An and Allianz-Dazhong also referred me to
some of their clients.
My role in the field was primarily peripheral according to Patricia Adler and Peter
Adler’s (1987) classification of membership roles. I was “with” the insurance sales
agents but not “part of ” them. I maintained some distance with the people I studied
but exchanged information and services with them. Quite a large number of sales agents
were eager to know more about the life insurance markets in the United States and
Hong Kong. The very limited contribution I could make was to answer their questions
and provide relevant information for their interests. As the sales agents were told by
their companies that the life insurance sales agents in the United States and Hong Kong
were making a fortune and enjoyed high social status, they often asked me about the
social status of the agents outside China. I was struck by how many agents asked me this
question. This revealed how much they were concerned with their low social status and
their hope for its improvement in the future. While I did not observe that the life insurance sales agents in the United States and Hong Kong enjoyed a particularly high social
status, I felt ambivalent about saying something frank that might disappoint them.
Therefore, I typically provided an evasive response. Instead of focusing on the status of
the sales agents, I described the lesser degree of public resistance to life insurance in
places where the life insurance industry was more developed. One of the sales agents at
AIA invited me to give a talk to her newly recruited agents. I focused on the evolution
of the life insurance market and the development of different products in the United
States, and I doubted if they found my talk of any use at all.
I was clearly an observer in the agency offices, and my identity as a Ph.D. student was disclosed to my informants. Nevertheless, when I went out with the sales
202
Appendix A
agents to sell, I sometimes acted as if I were a would-be agent. This was especially
the case when the agents did cold calls, what they called “stranger visits.” I normally
followed the agents’ preference concerning my identity. It would simply be too
complicated for the agents to explain to the strangers about my research and my
identity. So I agreed to act as a would-be agent. On the other hand, when the agents
had already earned a certain degree of trust from their prospects, they preferred to
disclose my identity. A few agents, especially those from Ping An, expected me to
use my knowledge about the life insurance markets in the United States and Hong
Kong to convince their prospects of the importance of life insurance. In those circumstances, I agreed to tell the prospects about the life insurance development in
places outside China should they ask me questions. However, I refused to help to
convince prospects to buy their products or to put down the products of another
company. I did talk about the variety of insurance products and the buyers’ characteristics and concerns in the United States and Hong Kong to the prospects upon
the request of the sales agents. As a whole, my participation in the selling process
was minimal.
I took two short breaks from the field, going to Hong Kong for library resources in
February and May 2002. The breaks were particularly useful for getting some distance
from the field for analytical purposes, helping me to modify my analytic frames, and
adjusting my lens for the next stage of data collection. In order to see how culture works,
I first had to desensitize myself to noncultural elements. As Eviatar Zerubavel (1991)
maintains, one must perceive some noticeable discontinuity between that which we are
to attend to and that which we are to ignore, in order to be able to focus on something.
During the first half of my field research, I focused on how culture mattered and analytically separated culture from institution and other sociological factors. During the
second half, I paid equal attention to culture, institution, and economic factors and,
finally, to the intertwining dynamics of culture and institution in shaping the subject
matter I was studying.
My peripheral membership role allowed me to maintain a relatively neutral position in my analysis. Nonetheless, I must admit that I felt sympathetic toward the insurance sales agents throughout my research period. When I saw the insurance companies
portraying the life insurance sales job in the United States as a prestigious career in
order to create “dreams” for their sales agents, I struggled with whether I should tell the
agents about the “realities”—the ones described by Guy Oakes (1990) and Robin Leidner (1993). This uneasy struggle lingered throughout my entire field research period,
though finally I chose not to say something that would directly destroy their “dreams,”
in order to maintain a maximum level of nonobtrusiveness in the field. However, my
sympathetic feelings for the sales agents made me feel uncomfortable when I wrote
about some of their malpractices. In a sense I felt that I was betraying them. I hope that
in return this book reveals the structural issues inherent in the life insurance industry
that drive market misconduct, if indeed there is any, and relieves individual agents from
blame.
Appendix A
203
Summaries of Fieldwork and Profiles
of Interviewees
Table A.1 Summary of Fieldwork, 2000–2004
AIA Ping An Pacific- Allianz- Others Total
Aetna Dazhong
Participant Duration
observations (months)
Interviews
Surveys
3
3
2
2
4
14
Training
(sessions or
days)
10
9
4
3
2
28
Morning
assemblies
(per week)
1–2
5
2
2
OL
NA
Group
meetings and
gatherings
OL
Daily
Daily
OL
OL
NA
Agent–
prospect/client
interactions
18
16
4
3
2
43
Agents
20
21
18
17
23
99
Managerial
staff
8
7
4
11
14
44
Clients*
35
40
8
7
23
96*
Prospects
35
Community
observers
20
Sales agents
13
13
12
11
17
66
Clients*
21
27
3
2
19
63*
Prospects
50
OL, occasional.
*The sum of the number under each company is greater than the total number of clients interviewed or surveyed because some clients held policies from more than one company.
204
Appendix A
Table A.2 Summary of the Socioeconomic Profiles of the Insurance
Practitioners Interviewed (N = 143)
Sales agents
Gender
Age (years)
Seniority*
Division
Male
Female
20–29
30–39
40–49
50–59
Senior
Junior
General management
Marketing and agency
management
Training
Product development
Public relations
Managerial staff Subtotal
52
47
19
46
24
10
52
47
NA
NA
33
11
4
19
19
2
NA
NA
8
18
85
58
23
65
43
12
—
—
—
—
NA
NA
NA
7
8
3
—
—
—
*Senior, those who have been working as insurance sales agents for two years or more; junior,
those who have been working for less than two years.
Table A.3 Summary of the Socioeconomic Profiles of the Clients
and Prospects Interviewed (N = 131)
Gender
Age (years)
Annual income
(yuan)
Male
Female
20–29
30–39
40–49
50–59
60 or above
< 18,000
18,000–36,000
36,000–84,000
84,000–120,000
> 120,000
Clients
Prospects
Subtotal
46
50
20
37
28
10
1
18
28
26
14
10
16
19
8
16
6
5
—
9
12
10
3
1
62
69
28
53
34
15
1
27
40
36
17
11
(continued )
Appendix A
Occupation*
205
Clients
Prospects
Subtotal
Blue-collar
10
13
23
Lower level white-collar
40
10
50
Upper level white-collar
34
9
43
Self-employed/owner
12
3
15
*Lower level white-collar, lower level office employees such as clerks, secretaries, sales representatives, and junior officers; upper level white-collar, various managerial personnel, senior
officers, and professionals.
Samples of Interview Questions and Questionnaires
The interviews were semistructured, and questions were changed when the analytic
frame was modified as the research progressed. Quite often the questions for insurance
practitioners were modified according to the specificities of individual interviewees,
such as their seniority in the field, their specialties, and their former work experiences.
The samples provided below are collections of the questions that were asked most frequently at different stages of the research. Therefore, not all of the interviewees in a
category were asked identical questions. These questions guided my interviews but were
not presented verbatim to the interviewees.
Interview Questions for Sales Agents
1. Why this job, rewards, difficulties, experience, and benefits
1.1 When and why
– When did you become a life insurance sales agent?
– What made you join the life insurance industry?
– Why did you choose this company?
1.2 Nature of the job, happiness, and difficulties
– Is the job what you expected?
– What is most rewarding in your job as an agent?
– What are the difficulties?
– How do you deal with them?
– What keeps you in this job given these difficulties?
1.3 Former work experience
– What did you do before you became an insurance agent?
– How is working as an agent different from your former job?
206
Appendix A
1.4 Benefits and support
– What are the other benefits you get besides commissions?
– Are you satisfied with your income and benefits?
– How important are different kinds of rewards to you: money, promotion,
ranking, free trips, colleagues, memberships, etc.
2. Training and morning assembly: reception and application
2.1 Training received
– Please describe all the training you have received from your company from
the very beginning to this moment.
2.2 Applying and useful?
– To what extent do you follow instructions from training in your selling? To
what extent do you find the training useful and helpful?
– What instructions do you follow? What do you find useful and helpful?
– What do you find not useful? Why not?
2.3 Morning assembly
– (For senior agents only) When was the morning assembly introduced? By
whom?
– What do you feel about the morning assembly?
– Do you enjoy it? If not, how do you deal with it?
– Do you find it useful? If so, how? If not, why?
3. Concepts and purchase of life insurance
3.1 Functions
– What is your understanding of life insurance?
– What is its major function? (To see if it’s a risk management or money
management concept or both)
– If risk management
– What are the risks the Chinese are facing?
– Can the products you sell deal with these risks? How?
– How is insurance different from charity and community mutual
help in dealing with risks and misfortunes?
– If money management
– How is insurance different from savings, stock investment?
– How can you compete with banks and the stock market?
– Has your understanding of life insurance changed since you have become an
agent?
– If so, how?
3.2 Purchase?
– Among the products offered by your company, which do you like the most?
– Have you bought any?
– If yes → What? When? Why?
– If no → Why not?
Appendix A
207
4. The selling process
4.1 Selling a policy
– Can you describe to me how you sold your first policy, e.g., whom you
approached, how you approached them, and what you said to them?
– Now, can you describe to me how you sold your last policy?
– (If substantially different from the first one, explore the changes.)
– How typical is your last successful sale? (If not, probe the typical one.)
4.2 Selling to different categories of relations
– Are there any differences, in terms of strategies and feelings, when you
approach and sell to friends, referral prospects, and strangers?
– What are the usual responses of the prospects you already know?
– How about the usual responses of those you don’t know?
– When you sell to friends and relatives, do you feel uneasy and embarrassed at
first?
– If yes → What makes you feel this way? How do you deal with these feelings?
4.3 Selling to different social groups
– Are there any differences (in terms of strategies and feelings) when you
approach and sell to males versus females?
– If so → How different? Why?
– Are there any differences (in terms of strategies and feelings) when you
approach and sell to people of different age groups?
– If so → How different? Why?
4.4 Sales talks, impression management, trust
– Do you follow the sales talks that you learned from training and morning
assemblies?
– Which sales talks work and which do not work?
– How do you deal with the problem of trust?
4.5 Dealing with rejection and resistance
– Who are those least interested in purchasing insurance of any kind?
– What do they usually say?
– What do you think are the “real” reasons for their being not interested in
insurance?
– What do you usually do when people show no interest in insurance of any
kind?
For successful cases → How did you achieve success? What did you do and
what did you say to them?
For the failing cases → What did you do and what did you say to them?
– (For senior agents only) Have there been any changes in the prospects’
responses compared to the time when you joined this industry?
208
Appendix A
– If so → What do you think are the factors that contributed to the
changes?
– (If always resistant) Ask the agents’ interpretations of the reasons.
– What do you feel when being rejected so often in your job?
– If negative → How do you deal with the feelings?
4.6 Buyers versus nonbuyers
– Who are the buyers? Who are the nonbuyers?
– How would you describe the differences among these three groups of people:
those who have very positive response to life insurance, those who doubt and
hesitate but finally buy, and those who strongly refuse to buy any no matter
what?
5. Popular products and buyers’ concepts
5.1 Popular and unpopular products
– What are the most popular products?
– Why are they most popular?
– Usually, who are the beneficiaries that the buyers put in?
– What are the most unpopular products?
– Why are they unpopular?
– Any changes in the last few years?
5.2 Child products
– Are they popular today? Why?
– Do you agree to put the child as the insured?
– If no → How did you convince the parents to do otherwise?
5.3 Buyers’ concept of insurance
– What are the typical understandings/concepts of life insurance among your
clients?
– If not agreeing with their concepts → What do you do with their concepts?
6. Chinese culture and insurance
6.1 From your experience, do you think that life insurance has anything in conflict
with the Chinese culture and habits?
– If yes → What is it? How can you tell? How does it affect the prospects’ attitude to life insurance and the products you sell? How do you deal with such
conflict?
6.2 Is anything in life insurance in harmony with the Chinese culture and the Chinese habits?
– If yes → What is it? How can you tell? How does it affect the prospects’ attitude to life insurance and the products you sell? How does it benefit your
selling?
Appendix A
209
Interview Questions for Managerial Staff
1. (For foreign insurers only) Choosing the site and partner
1.1 What made your company choose Shanghai to start with the business, instead
of Guangzhou or other cities that are open to foreign life insurance companies?
1.2 How did your company chose its local partner in forming the joint venture?
2. Favorable and unfavorable conditions
2.1 What are the favorable and unfavorable conditions in China in general and in
Shanghai in particular for the development of a life insurance market?
2.2 Do you think if there are any elements in the Chinese culture that are obstacles
to the development of the life insurance industry?
– If yes → How does your company deal with that?
2.3 Are there any elements in the Chinese culture that are facilitating the development of the life insurance industry?
– If yes → How does your company make use of them?
3. Public concept of insurance and life insurance
3.1 What do you think of people’s concept and knowledge of insurance in general
and life insurance in particular in Shanghai?
3.2 Are their concepts and knowledge of life insurance different from what you or
your company thinks it should be?
3.3 How about the insurance agents? Do they understand insurance and life insurance in the same way as you or your company defines it?
3.4 How does your company educate the people on the “right” concept and knowledge of insurance and life insurance? How successful is it?
4. Product development
4.1 In formulating and launching products, what considerations does your company take into account?
– Any of these considerations are particularly related to the Chinese market?
4.2 Do you think what your company offers is what the people in Shanghai want?
– If no → Why not offer those products that they want?
4.3 What are the most popular and unpopular products in Shanghai?
– What do you think are the reasons for this?
4.4 Have there been any changes in the popularity and unpopularity of the products since your company started its operation in Shanghai?
– If yes → What are the changes? What do you think are the factors
that contributed to the changes? Are the changes good or bad for your
company?
4.5 Do you think Shanghai represents a typical Chinese market for life insurance?
– If no → What is unique about it?
210
Appendix A
5. Agency management
5.1 Agents’ profiles
– What are the socioeconomic profiles of the majority of your sales agents in
terms of their sex, age, education, and experience, etc.
5.2 Recruitment
– Are these agents’ profiles exactly what your company wanted to recruit?
– What is/are your company’s agency recruitment method(s)?
– What difficulties do you face in the recruitment?
5.3 “Ideal model” and performance
– What is the “ideal model” of a sales agent from your/your company’s perspective?
– How many (in percentage) of your agents are like this “ideal model”?
– Who are these “ideal” agents? Why are they better than the others?
5.4 Labor management
– How do you/your division motivate the agents and keep up their morale?
– What are most effective? Monetary award, free trip, honors. . . .
– What are the major difficulties of managing the agents?
– (For expatriate only) What are the difficulties that you as an expatriate manager encounter in managing the sales agents or the internal staff in Shanghai,
as compared to your past experience in . . . ?
– (For expatriate only) What are the advantages that you as an expatriate manager have in managing the sales agents or the internal staff in Shanghai, as
compared to your past experience in . . . ?
5.5 Turnover rate
– What are the usual turnover rates of the sales agents and the internal staff
respectively?
– Have they been rather consistent since the beginning of the operation?
– If no → What has affected the change?
6. Company images and marketing strategies
6.1 What is the image that your company is creating? Why?
6.2 Can you describe to me the marketing strategies that your company deploys?
– In your opinion, how effective are these strategies?
– If not → What do you think are the reasons?
→ Are you/your company going to change the strategies?
– If yes → In what way?
6.3 (For foreign insurers only) How are these marketing strategies similar to and
different from those of your parent company. . . . ?
– Are there any particular strategies tailor-made for the Chinese market?
6.4 (For foreign insurers only) What do you think are the key features of your company that distinguish it from domestic firms?
Appendix A
211
6.5 (For domestic insurers only) What do you think are the key features of your
company that distinguish it from foreign firms?
7. Role of the state
7.1 In what way does the Chinese government or the CIRC affect your company’s
product development, agency management, marketing strategies, and investment practices?
7.2 (For foreign insurers only) Compared to your company’s experience in other
countries, what would you say about the role of the Chinese state in the life insurance industry in China?
Interview Questions for Clients (2000–2002)
1. Products bought
1.1 What made you first be interested in buying life insurance?
– (If more than one reason) Among all these factors, what concerned you the
most when you were considering buying life insurance?
1.2 What did you buy?
– Why this particular type?
– Why not other types of insurance (state those that s/he didn’t buy)
– Who’s the beneficiary?
2. The buying process
2.1 What made you buy from this/these insurance company/companies?
2.2 What made you buy from this/these particular sales agent(s)?
– Did you know the sales agent(s) before?
– What made you trust the agent(s)?
2.3 Can you describe how the agent(s) approached you?
– What was your first response?
– If negative → How did the agent(s) convince you? What made you change
from not accepting to accepting?
3. Perceived functions of life insurance
3.1 What’s the major function of life insurance?
(If the perceived function is inconsistent with the function(s) performed by the
product(s) purchased, explore why the inconsistency.)
– Does/do the product(s) you bought fulfill this function?
– If no → why didn’t you buy a different policy that can fulfill this
function?
– Can this function be fulfilled by other means?
– What’s the difference between insurance, savings, and investment?
3.2 Do you think insurance can manage certain kinds of risks? Or can it reduce the
consequences of adverse events?
212
Appendix A
3.3 What would be the use of the money that may be given to you by the insurance
company in the future?
– Would this money have any particular meanings for you?
3.4 Some agents said buying insurance was related to one’s sense of responsibility
and love for their families, do you agree? Why?
4. Risk profiles and perceptions
4.1 Employment and fringe benefits
– Is your current employment on a contract base?
– If yes → For how long? How likely/easy is it to get a renewal?
– How certain do you feel about your employment? Do you ever worry about
losing your job?
– What other fringe benefits do you get other than income?
4.2 Pension scheme
– Can you tell me about your pension scheme?
– How sure do you feel that you will get your pension when you are retired?
4.3 Health care
– What kind of health care scheme do you have?
– How sure do you feel that health care will be available when you need it?
4.4 Child care
– Who is now (financially and physically) taking care of the child?
4.5 Which part of life makes you feel most insecure?
– What do you do to deal with this insecurity?
4.6 Hypothetical risk questions (wanyi)
– (For single person) Let’s consider a hypothetical situation that something
bad happened and you could no longer financially take care of yourself. What
would you do? Could you get assistance from somewhere?
– (For married person without child) Let’s consider a hypothetical situation
that something bad happened and you could no longer financially take care
of yourself and your spouse. What would happen to your spouse? Could
your spouse get assistance from somewhere?
– (For married person with child) Let’s consider a hypothetical situation that
something bad happened and you could no longer financially take care of
yourself and your family. What would you do? Could your family get assistance from somewhere? Who could take care of the child?
– (For married women not working) What would happen if something happens to your husband that causes him to lose his earning ability? Could
your family get assistance from somewhere? Who could take care of the
child?
4.7 Do/Did you ever worry that this hypothetical situation might happen?
– If yes → How did you deal with the worries?
– If no → (explore why not?) Some people have these worries. What make you
different from them?
Appendix A
213
5. Perceptions of responsibility
5.1 What do you think is your major responsibility for your family?
5.2 When someone is facing a financial crisis due to unexpected events, do you
think that it is mainly the individual’s responsibility to deal with the crisis? Do
you think that the government or the workplace should also shoulder part of
the responsibility?
5.3 How about friends, relatives, neighbors, and colleagues? Do you think that
these people should offer help to someone who is in crisis?
6. Definition of good life
6.1 Do you feel if you are now living a good life?
– If yes → What is the most important aspect of life that makes you feel that you
are now living a good life?
– If no → Which part of your life makes you most unsatisfied? What can make
your life better?
– If so-so or okay → What do you think can make your life even better and be
perfect?
6.2 What do you think/feel (juede) is/are the most important thing(s) in life?
7. Needs and products
7.1 To what extent do the insurance products available today suit your needs?
7.2 Hypothetical question about purely risk management insurance (term life):
– If a policy costs 1000 yuan per year for an insured amount of 500,000 yuan
for death or severe handicap, would you want to buy this policy? Why?
8. Personal information
– Age, marital status, living arrangement, child’s age, occupation, income,
family income
Interview Questions for Clients (2004)
[Notes: Questions with * are only for those who have received payment(s) from insurance companies.]
1. Background information
1.1 What kind(s) of life insurance products did you buy?
1.2 When and from whom did you buy?
2. Reasons for buying and perceived functions of life insurance
2.1 What made you first interested in buying life insurance of these kinds? What
was the major concern when you bought these products?
2.2 When you bought these products, what did you think was/were the major
function(s) of insurance? Can this/these function(s) be fulfilled by means other
than insurance? If so, what are they? How are they different from insurance?
2.3 Did you ever worry that some unexpected events might happen to you or your
family? To what extent and in what way did you think life insurance could help
you in case unexpected bad things happen?
214
Appendix A
2.4 What do you think are the differences between buying insurance, putting
money in a savings bank, and buying stock?
*3. Impacts of misfortune and payments
*3.1 After having received payment(s) from the insurance company, what do you
now think are the major functions of insurance?
*3.2 I understand that when the tragedies/accidents/illnesses happen, it must be
very hard to take. Did the money paid by the insurance company help to
release part of your pain/sadness? How did you feel when you received the
money from the insurance company? (Do you see the money that you received
from the insurance company as different from money you obtained through
work?)
*3.3 After that misfortune happened (be it death, injury, illness), did you worry
more that something unexpected might happen to you or your family? To
what extent and in what way now do you think that life insurance can help?
*3.4 As a whole, do you have different feelings/thoughts about life insurance after
you have received the payment(s)?
4. Risk, insurance, responsibility
4.1 Do you agree that we are now living in a “risk society” such that unexpected
contingencies can happen anytime to anyone?
4.2 During the SARS crisis last year, did you feel less secure about life?
4.3 To what extent do you think that life insurance can help to manage the risks that
we are facing? Do you feel having more control over life/over your future after
you have purchased those insurance policies? Do you feel more secure after
holding these policies?
4.4 Do you think that buying life insurance is a way of expressing love and fulfilling
responsibility to your family?
Interview Questions for Prospects
1. Contacts with insurance
1.1 Did any life insurance sales agents ever contact you?
– When?
– From which company does/do the agent(s) represent?
– What did the agent(s) say to you?
– What was your response?
– What was your impression of the agent(s)?
2. Why not
2.1 What is the major reason that you have not bought any life insurance?
2.2 Would you consider buying some in the near future?
– If yes → When? What? Why? From whom? Who would be the beneficiary?
Appendix A
215
3. Perceived functions of life insurance
3.1 From what you know about life insurance, what do you think is its major
function?
– Can this function be fulfilled by other means?
– What’s the difference between insurance, savings, and investment?
3.2 Do you think insurance can manage certain kinds of risks? Or can it reduce the
consequences of adverse events?
3.3 Some agents said buying insurance was related to one’s sense of responsibility
and love for their families, do you agree? Why?
All the rest of the questions are the same as questions 4–8 in the “Interview Questions
for Clients (2000–2002).”
Questionnaire for Sales Agents
I am a doctoral student of sociology at Northwestern University in the United States.
My name is Chan Shun Ching. I am now conducting research on the development of
the life insurance market in China. Your assistance in this research is very important for
my understanding of the insurance clients in Shanghai. All the information you fill out
will be kept confidential and will be used for academic purposes only. If you would like
to know more about this research or have any questions, please feel free to contact me
at 6251-2816 or 138-1760-5277. Thank you very much for your participation.
_______________________________________________________________
Date: ____/____/____
1. Clients’ profile
1.1 About how many clients do you have? _____
1.2 What percentage of your clients fall into the following categories?
Gender: Male ____ Female ____
Marital status: Single ____ Married without child ____ Married with child ____
Separated or Divorced without child____ Separated or Divorced with child ____
Occupation: Blue-collar workers ____ Lower rank white-collar employees
(e.g., clerks, secretaries, officers, sales representatives) ____ Higher rank
white-collar employees or professionals (e.g., managers, executives, doctors,
lawyers) ____ Owners or self-employed ____
Monthly income (yuan): Under 1,500 ____ 1,500–2,999 ____
3,000–4,999 ____5,000–6,999 ____ 7,000–9,999 ____ 10,000 or above ____
1.3 Approximate age of the majority of your clients: _______________________
The next major age group: _______________
The third major age group: _______________
216
Appendix A
2. Beneficiaries
2.1 For the majority of your clients, who are the beneficiaries of their policies?
Spouse ____ Child ____ Parent(s) ____ Legal person(s) ____
3. Popular and unpopular products
2.1 The product you sold the most:
____________________________________________________________
2.2 The second most sold product:
____________________________________________________________
2.3 The third most sold product:
____________________________________________________________
2.4 The product least wanted by your prospects and clients:
____________________________________________________________
2.5 The second least wanted product by prospects and clients:
____________________________________________________________
4. Correlation between products and clients’ profiles
4.1 The names of the products (can be more than one) that are most popular to the
following buyers:
Male:
____________________________________________________________
Female:
___________________________________________________________
Single
____________________________________________________________
Married without child
____________________________________________________________
Married with child
____________________________________________________________
Separated or divorced without child ________________________________
Separated or divorced with child ___________________________________
People in their 20s ______________________________________________
People in their 30s ______________________________________________
People in their 40s ______________________________________________
People in their 50s ______________________________________________
People in their 60s or above _______________________________________
Blue-collar worker ______________________________________________
White-collar employees (lower rank) _______________________________
White-collar employees (higher rank) _______________________________
Owner or self-employed _________________________________________
5. Working experience
5.1 How long have you been a life insurance sales agent? _______
5.2 Your current title is: ___________________
Appendix A
217
5.3 Did you work for another life insurance company before?
Yes _____ (Which one? ______________________)
No _____
6. Your information
6.1 Gender: Male ____ Female ____
6.2 Age: Under 20 ____
20–29 ____
30–39 ____
40–49 ____
50–59 ____
Over 59 ____
6.3 Education level: Primary school ____ Lower high school ____ Upper high
school ____ Community college ____ University ____
6.4 Approximate income per month (yuan): Under 500 ____ 500–999 ____
1,000–1,999 ____ 2,000–2,999 ____ 3,000–3,999 ____ 4,000–5,999 ____
6,000–7,999 ____ 8,000–9,999 ____ 10,000 or above ____
7. If you don’t mind, I would like to have your contact number so that I can reach you
in case I have further questions related to the above answers.
Name: __________________________
Phone number: ____________________
I have been interviewing some insurance agents concerning their experience of
selling insurance and the difficulties they face. Please indicate if you will be willing to
be one of the interviewees. The interview will take about 30–45 minutes.
Yes: ______
No: ______
Thank you very much for filling out this questionnaire.
I wish you every success in your business!
Questionnaire for Clients
I am a doctoral student of sociology at Northwestern University in the United States.
My name is Chan Shun Ching. I am now conducting research on the development of
the life insurance market in China. Your assistance in this research is very important for
my understanding of clients’ needs and considerations when purchasing life insurance.
All the information you fill out will be kept confidential and will be used for academic
purposes only. If you would like to know more about this research or have any questions,
please feel free to contact me at 6251-2816 or 138-1760-5277. Thank you very much
for your participation.
__________________________________________________________________
Date: ____/____/____
218
Appendix A
1. From which company/companies did you buy your life insurance policy/
policies?
China Life ____ Ping An ____ China Pacific ____ AIA ____
AXA ____ Manulife-Sinochem ____ Allianz-Dazhong ____
Pacific-Aetna ____ Other (please specify) _________________________
2. The time of purchase and the title(s) and premium(s) of the product(s) you bought
(if more than one product was bought, please fill out chronologically):
Year when purchased:_______ Product title:________________ Premium:______
Year when purchased:_______ Product title:________________ Premium:______
Year when purchased:_______ Product title:________________ Premium:______
Year when purchased:_______ Product title:________________ Premium:______
3. At the moment when you purchased the above insurance policies, the major reasons
were (if more than one, please specify the order of importance: 1 as most important,
2 as secondary, 3 as tertiary, etc.)
Agent(s)’ recommendations _____
The product(s) met my needs _____
My family said it/they was/were good _____
My friends or colleagues said it/they was/were good _____
I have more confidence in this insurer _____
Other (please specify) _________________________________________
4. To you, the most important function of life insurance is (if more than one, please
specify the order of importance: 1 as most important, 2 as secondary, 3 as tertiary,
etc.)
Saving for my own yanglao _____
Providing a protection for the family in case of the occurrence of accidents _____
Paying for medical treatment in case of serious illnesses _____
Investing for profit _____
Saving for child’s education _____
Other (please specify) _________________________________________
5. What first made you ever consider buying life insurance?
I already wanted to buy some before any agents approached me _____
I felt what the agent(s) said make sense to me _____
My family wanted me to buy some _____
The agent was a friend or a relative _____
The agent was very sincere and I was moved _____
Other (please specify) _________________________________________
6. How important is the insurance company’s reputation to you? (1: very important; 2:
important; 3: a bit important; 4: not too important; 5: not important)
7. When you were considering from which company to buy from, was the insurance
company’s reputation or the agent’s quality more important to you?
Company’s reputation _____ Agent’s quality _____
Appendix A
219
8. Up to this moment, how satisfied are you with services of the insurer(s) and the
agent(s)? (1: very satisfied; 2: satisfied; 3: a bit satisfied; 4: a bit dissatisfied; 5:
dissatisfied; 6: very dissatisfied)
____ (Please specify the reason(s) if you choose 4, 5, or 6:
_______________________)
9. What is the percentage of the premium(s) to your annual income? ______
10. Your information
Gender: Male ____ Female ____
Age: Under 20 ____
20–29 ____
30–39 ____
40–49 ____
50 or above ____
Monthly income (yuan): Under 1,500 ____ 1,500–2,999 ____
3,000–4,999 ____5,000–6,999 ____ 7,000–9,999 ____ 10,000 or above ____
Education level: Primary school ____ Lower high school ____ Upper high
school ____ Community college ____ University ____
Marital status: Single ____ Married without child ____ Married with child
____ Other ____
Occupation and position title: ______________________________
Work unit category: State-owned enterprise _____ Domestic private firm ____
Joint venture ____ Foreign-owned ____
Other (please specify) ________________________________
11. If you don’t mind, I would like to have your contact number so that I can reach
you in case I have further questions related to the above answers.
Name: ___________________________
Phone number: ____________________
I have been interviewing some insurance clients to know more about their experience of buying life insurance and their thoughts about this industry. Please
indicate if you will be willing to be one of the interviewees. The interview will
take about 30–45 minutes.
Yes: ______
No: ______
Thank you very much for filling out this questionnaire!
Questionnaire for Prospects
I am a doctoral student of sociology at Northwestern University in the United States.
My name is Chan Shun Ching. I am now conducting research on the development of
the life insurance market in China. Your assistance in this research is very important for
my understanding of prospects’ needs and considerations in regard to life insurance. All
220
Appendix A
the information you fill out will be kept confidential and will be used for academic
purposes only. If you would like to know more about this research or have any questions, please feel free to contact me at 6251-2816 or 138-1760-5277. Thank you very
much for your participation.
__________________________________________________________________
Date: ____/____/____
1. Did any life insurance sale(s) agents ever approach you?
Yes _____ (please continue to answer question 1.1)
No _____ (please continue to answer question 1.2)
1.1 Which company/companies did the agent(s) represent? What was your impression of each of these agents?
China Life _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Ping An _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
China Pacific_____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
AIA _____(Impression: 1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Manulife-Sinochem _____(1 – very good; 2 – good; 3 – just okay; 4 – not
good; 5 – very bad)
Pacific-Aetna _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
AXA-Minmetals_____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Allianz-Dazhong _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Other (please specify) _____(1 – very good; 2 – good; 3 – just okay; 4 – not
good; 5 – very bad)
1.2 Have you ever heard of the following companies? What is your impression of
each of them?
China Life _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Ping An _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very
bad)
China Pacific_____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
AIA _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad)
Manulife-Sinochem _____(1 – very good; 2 – good; 3 – just okay; 4 – not
good; 5 – very bad)
Appendix A
2.
3.
4.
5.
221
Pacific-Aetna _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
AXA-Minmetals_____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Allianz-Dazhong _____(1 – very good; 2 – good; 3 – just okay; 4 – not good;
5 – very bad)
Other (please specify) _____(1 – very good; 2 – good; 3 – just okay; 4 – not
good; 5 – very bad)
What is the major reason that you have not yet bought a life insurance policy? (If
more than one reason, please specify the order of importance: 1 as most important,
2 as secondary, 3 as tertiary, etc.)
I don’t feel the need_____
The products do not meet my needs_____
The products are not good deals_____
My spouse/family members are not interested_____
I don’t trust life insurance companies_____
I don’t trust the sales agents_____
I don’t have money for insurance premiums_____
I had unpleasant experience in buying life insurance in the past_____
Other (please specify) _________________________________________
To you, the most important function of life insurance is (if more than one, please
specify the order of importance: 1 as most important, 2 as secondary, 3 as tertiary, etc.)
Saving for my own yanglao _____
Providing a protection for the family in case of the occurrence of accidents _____
Paying for medical treatment in case of serious illnesses _____
Investing for profit _____
Saving for child’s education _____
No specific function_____
Other (please specify) ______________________________________________
Do you think you will buy life insurance in the near future?
Yes _____ (please continue to answer question 4.1)
No_____ (please continue to answer question 5)
4.1 What would you buy?
Traditional whole life_____
Term life_____
Personal accident_____
Endowment or annuity_____
Medical insurance_____
Investment insurance_____
Child insurance_____
How important is the insurance company’s reputation to you? (1: very important; 2:
important; 3: a bit important; 4: not too important; 5: not important)
222
Appendix A
6. Is the insurance company’s reputation or the agent’s quality more important to you
when considering buying insurance policies?
Company’s reputation _____ Agent’s quality _____
7. Your information
Gender: Male ____ Female ____
Age: Under 20 ____
20–29 ____
30–39 ____
40–49 ____
50 or above ____
Monthly income (yuan): Under 1,500 ____ 1,500–2,999 ____ 3,000–4,999 ____
5,000–6,999 ____ 7,000–9,999 ____ 10,000 or above ____
Education level: Primary school ____ Lower high school ____ Upper high school
____ Community college ____ University ____
Marital status: Single ____ Married without child ____ Married with child ____
Other ____
Occupation and position title: ________________________________________
Work unit category: State-owned enterprise _____ Domestic private firm ____
Joint venture ____ Foreign-owned ____
Other (please specify) ________________________________
8. If you don’t mind, I would like to have your contact number so that I can reach you
in case I have further questions related to the above answers.
Name: ___________________________
Phone number: ____________________
I have been interviewing some insurance prospects to understand more about their
thoughts about life insurance. Please indicate if you will be willing to be one of the
interviewees. The interview will take about 30–45 minutes.
Yes: ______
No: ______
Thank you very much for filling out this questionnaire!
Coding and Sample Statements
Perceived money management functions of buying life insurance
• I was very concerned about money management. I bought these policies mainly for
savings and investment.
• The return rate offered by the insurance companies was higher than the interest rate
offered by banks. . . . So, I took half of my money from the bank and invested it in
insurance.
Appendix A
223
• These policies carry some dividends. . . . [W]e could leave the dividends in the
company to let them accumulate. We thought this might be a good way to
save a lump sum for our daughter.
Perceived risk management functions of buying life insurance
• I think insurance is for future protection. When I can’t work in the future, it will be
useful.
• Buying life insurance is “just in case.” It is there in case something happens, such as
accidents or illnesses.
• Now the medical fees charged by hospitals are very high. . . . Insurance could relieve
part of my financial burden if I am ill and hospitalized. It is better than nothing.
Perceived renqing functions of buying life insurance
• I bought a policy from her as I wanted to help her . . . .[but] I actually didn’t know
what I bought. I don’t really care about the product. I just wanted to help her.
• It’s hard to say “no” to him. You know, he is my nephew. I need to give him and my
sister a bit of face.
• I always felt indebted to him. . . . This time he came to sell insurance. I didn’t care
much about insurance. But it was okay to buy some from him. . . . It was a way of
returning him a favor.
Money management sales discourses
• Now the interest rate offered by banks is less than 2 percent. . . . It is the best time to
buy some life insurance. . . . This product guarantees at least 2.5 percent return. In
addition, we give dividends based on the profits of our company. It’s a real good deal.
• Education fees have been rising. Don’t think that you should provide the best education for your one and only child. If you don’t set up an educational fund for him
right now, you may end up using your retirement fund to support his education in
the future.
• Insurance is for those, like you, who have extra money but don’t know how to invest
because you don’t have time to study the stock market. Our insurance company can
help you come up with a profitable investment plan.
Risk management sales discourses
• Insurance is simple. You pay a small amount of money to transfer your risks to the
insurance company.
224
Appendix A
• We want our children to have a good education. But what happens if something
makes us incapable of raising our family anymore? Insurance can give our beloved
family protection. It lets us and our loved ones live with dignity and respect.
• Have you already made plans to protect your family members? Buying an insurance
policy now is like bringing an umbrella when you go out. It always gives you a protection no matter what kind of weather it will be.
Professional rhetoric
• To be professional, you have to always be aware of the way you dress. Men should
wear suits and ties, and ladies should wear skirts and jackets. . . . You should always
be aware of your manner, such as how to present your business card . . . how to shake
hands . . . how to say “good-bye”. . . .
• Don’t feel bad when you get rejected. You are the expert on insurance. Your prospects reject it out of ignorance. Your job is to educate them on the importance of
insurance. They may not understand at first. But you can gradually change their
concept.
Missionary rhetoric
• Don’t think that you are begging for money from the prospects. Instead, always
keep in mind that you are giving them money. Insurance is a business of giving
people money. . . . Insurance is about love. It’s about helping people.
• Do you love your family? Do you love your friends? If you find that something is
really good, that could give your friends and their families a protective shield against
all kinds of risks, would you introduce it to them? The mission of being an insurance
agent is to distribute this protective shield not only to those you love, but also to
people you don’t know. . . . Being an insurance agent is like being a philanthropist.
Money rhetoric
• When your family members oppose your being an insurance agent, what can you
do? The only thing you can do is to prove to them that they were wrong. How? By
making a lot of money! When you succeed in building your career, will they oppose
you anymore?
• Many insurance agents in foreign countries are driving Mercedes and BMWs when
they visit their prospects. Will the prospects respect these agents? Of course! When
they see that these agents are all successful people, they respect them. . . . Don’t complain that your prospects do not respect you. When you prove to them that you
make more money than they do, they will naturally respect you.
Appendix A
225
Business rhetoric
• You are the boss. No one else is your boss. We are business partners. You depend on
me and I depend on you.
• Do you want to be the owner of a business? Do you want to be in charge of your
own business? Here we give you a platform to build your teams. You will be your
own boss. We provide you a platform to set up your own business.
Familial rhetoric
• Welcome to this big family! . . . Some new agents in other companies complained
that they felt like orphans, having no one to go out with them to teach them how to
approach strangers. Pacific-Aetna is different! Your parents are taking care of you.
• We are engaging in a job about human beings. We need to take a humanistic approach to treating our employees. . . . We are all brothers and sisters, and we help
each other.
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APPENDIX B
Life Insurance Companies in China: 2009
To represent the emergence of the life insurance market in China, I list the companies
in a chronological order according to their years of founding or entry into China.
Company Name as of 2009
China Life Insurance (Group) Company*
Ё೟Ҏ໑ֱ䱾˄䲚೬˅᳝䰤݀ৌ
Ping An Insurance (Group) Company of China,
Ltd.**
Ё೟ᑇᅝֱ䱾˄䲚೬˅㙵ӑ᳝䰤݀ৌ
China Pacific Insurance (Group) Company, Ltd.
Ё೟໾ᑇ⋟˄䲚೬˅㙵ӑ᳝䰤݀ৌ
American International Assurance Company, Ltd.
㕢೟ট䙺ֱ䱾᳝䰤݀ৌ
Union Life Insurance Company, Ltd.
ড়ⴒҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Manulife-Sinochem Life Insurance Company, Ltd.
ЁᅣҎ໑ֱ䱾᳝䰤݀ৌ
New China Life Insurance Company, Ltd.
ᮄ
㧃ֱ䱾㙵ӑ᳝䰤݀ৌ
Taikang Life Insurance Company, Ltd.
⋄ᒋҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Pacific-Antai Life Insurance Company, Ltd.
(formerly Pacific-Aetna Life Insurance Company,
Ltd.)
໾ᑇ⋟ᅝ⋄Ҏ໑ֱ䱾᳝䰤݀ৌ
Year of
Founding
Location of
or Entry
Headquarters
into China Ownership in China
1949
(1996)
1988
Domestic
Beijing
Domestic
Shenzhen
1991
Domestic
Shanghai
1992
American
Shanghai
1993
Domestic
Wuhan
1996
Shanghai
1996
SinoCanadian
Domestic
1996
Domestic
Beijing
1998
Sino-Dutch Shanghai
(formerly
SinoAmerican)
Beijing
(continued)
228
Appendix B
Company Name as of 2009
Allianz China Life Insurance Company, Ltd.
(formerly Allianz-Dazhong Life Insurance
Company, Ltd.)
Ёᖋᅝ㙃Ҏ໑ֱ䱾᳝䰤݀ৌ
(ࠡ䑿⚎ᅝ㙃໻ⴒҎ໑ֱ䱾᳝䰤݀ৌ˅
AXA-Minmetals Assurance Company, Ltd.
䞥ⲯҎ໑ֱ䱾᳝䰤݀ৌ
BoCommLife Insurance Company, Ltd. (formerly
China Life CMG Life Insurance Company, Ltd.)
Ѹ䡔ᒋ㙃Ҏ໑ֱ䱾᳝䰤݀ৌ
˄ࠡ䑿⚎Ёֱᒋ㙃Ҏ໑ֱ䱾᳝䰤݀ৌ˅
CITIC Prudential Life Insurance Company, Ltd.
ֵ䁴Ҏ໑ֱ
䱾᳝䰤݀ৌ
Sino Life Insurance Company, Ltd.
⫳ੑҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Taiping Life Insurance Company, Ltd.
໾ᑇҎ໑ֱ䱾᳝䰤݀ৌ
Tianan Life Insurance Company, Ltd. (formerly John
Hancock Tianan Life Insurance Company, Ltd.)
໽ᅝҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
˄ࠡ䑿⚎ᘚᒋ໽ᅝҎ໑ֱ䱾݀ৌ˅
Generali China Life Insurance Company, Ltd.
ЁᛣҎ໑ֱ䱾᳝䰤݀ৌ
Haier New York Life Insurance Company, Ltd.
⍋⠒㋤㋘Ҏ໑ֱ䱾᳝䰤
݀ৌ
ING Capital Life Insurance Company, Ltd.
佪ࡉᅝ⋄Ҏ໑ֱ䱾᳝䰤݀ৌ
Minsheng Life Insurance Company, Ltd.
⇥⫳Ҏ໑ֱ䱾᳝䰤݀ৌ
Sun Life Ever Bright Life Insurance Company, Ltd.
‫ܝ‬໻∌ᯢҎ໑ֱ䱾᳝䰤݀ৌ
Aegon-CNOOC Life Insurance Company, Ltd.
⍋ᒋҎ໑ֱ䱾᳝䰤݀ৌ
Aviva-COFCO Life Insurance Company, Ltd.
Ё㣅Ҏ໑ֱ䱾᳝䰤݀ৌ
CIGNA & CMC Life Insurance Company, Ltd.
᢯ଚֵ䃒Ҏ໑ֱ
䱾᳝䰤
݀ৌ
Year of
Founding
Location of
or Entry
Headquarters
into China Ownership in China
1999
SinoGerman
1999
Sino-French Shanghai
2000
SinoAustralian
2000
Sino-British Guangzhou
2001
Domestic
2001
Domestic
2001
Domestic
Shanghai
(formerly
SinoAmerican)
Sino-Italian Beijing
2002
2002
Shanghai
Shanghai
Shenzhen
(formerly
Shanghai)
Shanghai
2002
SinoShanghai
American
Sino-Dutch Dalian
2002
Domestic
2002
2003
SinoTianjin
Canadian
Sino-Dutch Shanghai
2003
Sino-British Beijing
2003
SinoAmerican
Beijing
Shenzhen
(continued)
Appendix B
Company Name as of 2009
Heng An Standard Life Insurance Company, Ltd.
ᘚᅝ῭⑪Ҏ໑ֱ䱾᳝䰤݀ৌ
Nissay-Greatwall Life Insurance Company, Ltd. (formerly Nissay-SVA Life Insurance Company, Ltd.)
䭋⫳Ҏ໑ֱ䱾᳝䰤݀ৌ
(ࠡ䑿⚎ᒷ䳏᮹⫳Ҏ໑ֱ䱾᳝䰤݀ৌ)
Cathay Life Insurance Company, Ltd.
೟⋄Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Greatwall Life Insurance Company, Ltd.
䭋ජҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Jiahe Life Insurance Company, Ltd.
ৌ
௝⾒Ҏ໑ֱ䱾㙵ӑ᳝䰤
݀
Sino-US MetLife Insurance Company, Ltd.
Ё㕢໻䛑᳗Ҏ໑ֱ䱾݀ৌ
Skandia-BSAM Life Insurance Company, Ltd.
⨲⋄Ҏ໑ֱ䱾᳝䰤݀ৌ
Huatai Life Insurance Company, Ltd.
㧃⋄Ҏ໑ֱ䱾݀ৌ
PICC Life Insurance Company, Ltd.*
Ё೟Ҏֱ໑䱾᳝䰤݀ৌ
Samsung Air China Life Insurance Company, Ltd.
Ё㟾ϝ᯳Ҏ໑ֱ䱾᳝䰤݀ৌ
Sino-French Life Insurance Company, Ltd.
Ё⊩Ҏ໑ֱ䱾᳝䰤䊀ӏ݀ৌ
United MetLife Insurance Company, Ltd. (formerly
Citiinsurance Life Insurance Company, Ltd.)
㙃
⋄໻䛑᳗Ҏ໑ֱ䱾᳝䰤݀ৌ ࠡ䑿⚎㢅
᮫
Ҏ໑ֱ䱾᳝䰤݀ৌ)
Dragon Life Insurance Company, Ltd.
ℷᖋҎ໑ֱ䱾᳝
䰤݀ৌ
Great Eastern Life Assurance (China) Company,
Ltd.
Ёᮄ໻ᵅᮍҎ໑ֱ䱾᳝䰤݀ৌ
Huaxia Life Insurance Company, Ltd.
㧃໣Ҏ໑ֱ䱾᳝䰤݀ৌ
Guo Hua Life Insurance Company, Ltd.
೟㧃Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
229
Year of
Founding
Location of
or Entry
Headquarters
into China Ownership in China
2003
Sino-British Tianjin
2003
SinoJapanese
Shanghai
2004
Shanghai
2004
SinoTaiwanese
Domestic
2004
Domestic
Beijing
2004
2004
SinoBeijing
American
Sino-British Beijing
2005
Domestic
Beijing
2005
Domestic
Beijing
2005
SinoBeijing
Korean
Sino-French Beijing
2005
Beijing
2005
SinoAmerican
Shanghai
2006
Domestic
Beijing
2006
SinoChongqing
Singaporean
2006
Domestic
Beijing
2007
Domestic
Shanghai
(continued)
230
Appendix B
Company Name as of 2009
Happy Life Insurance Company, Ltd.
ᑌ⽣Ҏ໑ֱ䱾݀ৌ
Sinatay Life Insurance Company, Ltd.
ֵ⋄Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Sunshine Life Insurance Corporation Ltd.
䱑‫ܝ‬Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
Yingda Taihe Life Insurance Company, Ltd.
㣅໻⋄੠Ҏ໑ֱ䱾᳝䰤݀ৌ
King Dragon Life Insurance Company, Ltd.
৯啡Ҏ໑ֱ䱾᳝䰤݀ৌ
Aeon Life Insurance Company, Ltd.
ⱒᑈҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
China Post Life Insurance Company, Ltd.
Ё䛉Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ
HSBC Life Insurance Company, Ltd.
⒭䈤Ҏ໑ֱ䱾᳝䰤݀ৌ
Shin Kong-HNA Life Insurance Company, Ltd.
ᮄ‫ܝ‬⍋㟾Ҏ໑ֱ䱾䊀ӏ᳝䰤݀ৌ
Year of
Founding
Location of
or Entry
Headquarters
into China Ownership in China
2007
Domestic
Beijing
2007
Domestic
Hanzhou
2007
Domestic
Beijing
2007
Domestic
Beijing
2008
Xiamen
2009
SinoTaiwanese
Domestic
Dalian
2009
Domestic
Beijing
2009
Sino-British Shanghai
2009
SinoTaiwanese
Beijing
Source: Almanac of China’s Insurance 1999–2010.
*In 1996, the state-owned People’s Insurance Company of China (PICC), first established in
1949, was renamed PICC Insurance (Group) Company. That year it also spun off business to
three independent share-holding companies: China Life Insurance Company, Ltd., PICC
Property Insurance Company, Ltd., and China Reinsurance Company, Ltd. PICC Property
later expanded the scope of its business and established subsidiaries, including PICC Life Insurance Company, Ltd. in 2005. PICC Property was renamed several times, most recently
returning to PICC Insurance (Group) Company in 2007.
** Ping An has changed its names several times. It was named Ping An Insurance Company in
its founding year 1988. In 1992, it became Ping An Insurance Company of China when it
began to expand its business nationwide. The company restructured its ownership into stock
shares and adopted the name Ping An Insurance Company of China, Ltd. in 1997. Then, in
2003, it was restructured into a holding company and began to prepare for public listing. Its
name was changed to Ping An Insurance (Group) Company of China, Ltd. The life business
sector was now taken over by one of the Group’s subsidiaries, Ping An Life Insurance Company
of China, Ltd., which was set up in December 2002.
Notes
I n t roduc t ion
1. “East Meets West: The Insurance Industry in China,” Life Association News,
Washington, April 1996.
2. “Cracking the Iron Rice Bowl,” Best’s Review, November 1998.
3. Newsweek, October 9, 2006, and Time, September 25, 2006. See also Newsweek
September 15, 2003, September 4, 2006, and September 18, 2006.
4. In China, insurance is divided into two broad categories: life and property. Life
insurance includes term life, whole life, variable life, participating, personal accident, hospital care, annuity, and endowment insurance. Property insurance refers
to general insurance that includes all non-life insurance, such as automobile
insurance, home insurance, and production-related insurance.
5. These figures are calculated by the author based on available data. Unless otherwise specified, data on the insurance business in China and Shanghai are referenced from the following sources throughout this book: Wang, Fei, and Li (2003)
for the pre-1997 data for China; Haier New York Life Insurance Company, Ltd.
in Shanghai for the pre-1997 data for Shanghai (though because of missing data
for 1993–1994, Haier New York Life estimated the figures for those two years
through interpolation); and the Almanac of China’s Insurance 1998–2010 and the
Almanac of Shanghai Insurance 2001–2010 for the data from 1997 on. Any scholars who are familiar with China’s statistics understand the inconsistencies that
are often found in their categorization system in different years. The statistics
reported in the almanacs suffer the same problem. The figures reported through
this text, therefore, are based on my best knowledge after exhausting the possible
sources, and they are mainly for illustrative purposes.
6. The Weberian legacy has been carried through a number of important works,
which all assert the pivotal role of systemic cultural orientation in patterns of
human action. The most notable is Talcott Parsons’s theory of action (see Parsons
and Shils 1951). Other representative examples of the Weberian legacy include
Robert Merton’s Puritanism and science, Robert Bellah’s sociology of religion,
and Clifford Geertz’s interpretation of culture (see Wuthnow 1987). See also
Stephen Kalberg (2009) on Protestantism and American democracy.
232
Notes to Pages 12–29
7. A minority of economists have begun to acknowledge the role of culture in shaping economic action. In Accounting for Tastes (1996), Gary Becker, Nobel Prize
laureate in economics, asserts the critical role of preferences and values in shaping
the choices of economic actors, bringing economists to a subject, or a variable,
that was previously considered off limits. Institutional economists, such as Arthur
Denzau and Douglass North (1994), strongly criticize the rational choice model
by arguing that shared mental models, ideologies, and belief structures not only
guide choices but are critical constraints on those making choices. However, as
DiMaggio (1994) has observed, economists, if they recognize the importance of
culture at all, pay attention primarily to its regulatory functions, focusing on how
culture constrains the individual pursuit of economic interests. Culture in this
sense is posited as being in conflict with economic interests and, therefore,
restraining purely economically driven behaviors.
8. Group life insurance, which is usually sold to employers as a fringe benefit for
employees and was restricted to domestic insurers prior to 2005, is not the concern of this project.
9. A few exemplary sociological pieces that examine how culture regulates or constitutes exchange and market formation can be found in Zelizer (1979, 1985, 2005a),
Dobbin (1994), and Mukerji (1983).
10. I follow the Chinese norm that puts surnames before given names. But for those
informants who identified themselves with English names, I follow the English
norm by putting their given names first.
Chapter 1
1. Bicentenary Chinese Insurance 1805–2005, edited by Insurance Institute of China
and China Insurance News. Beijing: Contemporary World Publishing House,
2005, 23.
2. Ibid., 169.
3. Ibid., 205.
4. Calculations based on available data from China Statistical Yearbook 1995.
5. China Statistical Yearbook 1995. Throughout this text, the U.S. dollar estimate is
based on the exchange rate for the period 1998–2004, which was US$1 = 8.277
yuan.
6. For example, Andrew Walder (1992) in 1986 found that 55 percent of state and
private enterprises provided medical clinic services to employees in Shanghai and
Tianjin. A similar survey in 1993 showed that only 28 percent of the enterprises
in these two cities still offered those services (Kwok 1999).
7. Anthropologists find that by the 1990s, even residents in rural areas began to rely
more on friendship than kinship for mutual help. See Yunxiang Yan (2003).
8. I was stunned to see the popularity of iron doors in Shanghai and Beijing.
Although Hong Kong is a city with a higher crime rate than Shanghai and Beijing,
Notes to Pages 29–40
9.
10.
11.
12.
13.
14.
15.
16.
233
I had never seen such defensive and prisonlike doors in a city’s residential buildings. With a population of 6.5 million, Hong Kong had 75,877 reported crimes in
2002, compared to 35,785 reported crimes in a population of over 13 million in
Shanghai and fewer than 40,000 reported crimes in a population of over 14 million in Beijing (Hong Kong Police Home page, Crime Statistics [www.police.gov.
hk]; Shanghai Daily, September 9, 2004; People’s Daily, December 18, 2002). It
seems to me that the iron doors were put up not only for security purposes but also
for drawing a fortified boundary between private and public spaces and for
expressing the need to protect one’s private property and privacy. It can be interpreted as a postcultural revolution syndrome.
Interview, Shanghai, January 2001.
The pamphlet probably paraphrased what the prime minister said. Therefore, the
quotation should not be read as a direct quote of the prime minister.
A number of furloughed workers in their 50s attended classes, usually two to
three evenings a week, learning how to invest in the stock market.
Xinmin Wanbao [New People’s Evening Press], July 15, 2001.
A number of popular television drama series in Hong Kong and Taiwan depicted
stories of the “18 levels of hell,” where punishments were applied to the dead
with bad karma, and of living in a dark world surrounded by ghosts. The punishments in hell were the cruelest tortures one could imagine: climbing naked up a
mountain full of knives, having tongues being cut, being fried naked in a pan
with boiling oil, lying naked in a bed full of needles, and so forth. I watched
a few of these drama series in Hong Kong during the 1970s and 1980s. For
Taiwan, see McCreery 1990.
Geoffrey Fowler, “SARS: Dying Alone,” Far East Economic Review, June 5, 2003,
which cites the Chinese concept of death from an interview with Joseph Bosco, a
professor of anthropology at the Chinese University of Hong Kong.
The cultural taboo on the topic of death has been so pervasive even in Hong Kong
that the Centre on Behavioral Health at the University of Hong Kong launched a
three-year program from 2007 to 2010 to educate the public of the “fearless” of
death. The program was initiated by Cecilia Chan, who as a professor of social
work, witnessed that too many family members were left with no wills or any
expressed wishes from the deceased regarding their funeral preferences and the
management of their properties. According to Chan, many terminally ill patients
and their family members avoided discussing the topic of death, and so drafting a
will was uncommon. The program aimed to break the taboo to openly narrate
death and to teach the public the skills of communicating with their family members about their preferred arrangements related to their death. See Chan and
Chow (2006) on the cultural taboo surrounding death in Hong Kong.
See also the advertisements in Newsweek cited in note 3 of the introduction to this
volume. To this day, to die with dignity in American society includes dying without debt. The idea that a “good death” means leaving the family debt free came
234
17.
18.
19.
20.
Notes to Pages 40–44
from the marketization and consumerism of American society. See Quinn (2008)
for an institutional account of the meaning of a good death toward the end of the
twentieth century.
In an April 2009 field trip to Chaozhou, a prefecture-level city in eastern Guangdong province (south China), with a population of 2.5 million, I observed a case
of handling the dying of an old woman that dramatized the unshakable obligations of the living and dead members to each other. The woman, more than 80
years of age, was a widow with six children (three sons and three daughters) and
more than a dozen grandchildren and great grandchildren. She was bedridden
and suffered dementia for almost two years before being hospitalized for a severe
respiratory problem that impaired her ability to breathe. She had been in the hospital for almost three weeks, treated with nasotracheal intubation that provided
her with oxygen to sustain her life. After learning from the doctor that her respiratory problem was incurable, her children thought that it would be too painful
for their mother live with the intubation. They decided that they better let her go.
As a usual practice, people prefer to die at home, not in the hospital. To prepare
for her death, her three sons argued over which home they should let her to go for
her last breath. All of them wanted their mother to die in their homes. I later realized that the place in which an aged person died was believed to be blessed. To be
fair to each other, the sons decided to take her back to the old, unkempt house in
which they were brought up. They renovated a room in this house and delivered
the bedridden old woman back to it on the same day. All of her children, some of
her sons- and daughters-in-law, and some of her grandchildren then gathered
around her bed. The daughters and granddaughters were weeping. By this time,
the old woman had begun to be treated as an ancestor and a saint. The youngest
son, owner of a small factory, said to her, “Mom, I have a small request. You don’t
have to make too much effort to do this, but in case you pass by my debtors . . .
well, just in case you pass by their places, would you please kindly remind them to
return money to me?” This request indicated that the dying mother would soon
take on some supernatural power, with which she would have the obligation to
help her descendants resolve some difficult but mundane problems. The woman
stared at him when he was speaking but was unable to give him any signal on
whether his request was taken. Seven days after the woman died, one of this son’s
debtors called him after almost 10 years with no contact. Although this debtor
was not calling to return money, he had a business proposal. The son was happy
and thought that his recently deceased mother must be helping him.
“A Survey of the World Economy,” The Economist, September 24–30, 2005.
China Statistical Yearbook 2005. The consumer price index growth rate was 17.1
percent in 1995 and 8.3 percent in 1996 due to currency devaluation.
These figures are calculated based on available data of the numbers of policies in
force and the population in Shanghai. Sources are referenced from Almanac of
Notes to Pages 44–53
21.
22.
23.
24.
25.
235
Shanghai Insurance 2003 and Shanghai Almanac of Population and Family Planning
2003. Unfortunately, the numbers of policies in force in China presented in Almanac of China’s Insurance are incomplete, so information about the entire country is
not available.
See, for example, Headey, Law, and Zhang (2002); Hwang (2003); and Wang, Fei,
and Li (2003).
“Ping An Gongsi Ma Mingzhe Dangxuan LIMRA Dongshi” [Ping An Company’s Ma Mingzhe Elected as a Member of LIMRA Board of Directors],
Fuwu Kuaixun [Service Express News], issue no. 24 of 2001, Sales Agent Service Division, Ping An Insurance Company of China, Ltd. Shanghai Branch
(Life), p. 2.
“Ping An Zhaogu, Zhongjian Dingjia” [Ping An Issues Shares and Prices are
set in the Middle], Singtao Daily, Hong Kong, June 18, 2004 ; “Ping An
Retail Portion Sees 50 Times Booking,” China Daily, June 18, 2004 ; “Pingbao A Gu Shoutian Sheng 38%; H Gu Beichi” [Ping An A Share Rose 38
Percent First Day, H Share Went the Other Way], Hong Kong Economic Journal , March 2, 2007.
It would be more valid to compare the sales volume of all money management
products (including endowment insurance, annuity insurance, child savings
insurance, unit linked, and dividend insurance) with the sales volume of all risk
management products (including term life, personal accident, whole life, hospitalization insurance, and critical disease insurance). However, these figures are
not available because, with the exception of unit linked, dividend, and personal
accident policies, premium income from other kinds are lumped together in official yearbooks.
The mean annual premium for personal accident insurance among clients that
I surveyed and interviewed was 495 yuan; dividend policies, 2,950 yuan; and
unit linked, 3,267 yuan. Although the means come from a nonrandom sample, the figures are likely representative considering the variety of the clientele
in the sample.
Chapter 2
1. According to Zelizer (1979), burial insurance was the first widely accepted life
policy in the United States in the mid-nineteenth century, prior to the popularity
of policies that carried savings and investment functions. Murphy (2010) documents that dividend policies issued by mutual companies were also popular in
mid-nineteenth century America but that those policies were appealing because
of the increased face value or lower future premiums. The main function of these
policies was to provide financial protection to dependents upon breadwinners’
early deaths. For the British life insurance market, four waves of popularity were
236
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Notes to Pages 53–65
recorded: (1) mortuary tontines in the first three-quarters of the eighteenth century with the primary motive of gambling (Clark 1999), (2) bonus scheme insurance in the last quarter of the eighteenth century for a share of interest earned in
addition to financial protection against premature death (Alborn 2002), (3) term
life policies and “other interest” life policies in the first half of the nineteenth
century for family protection and for protecting creditors and lending parties’
interests, respectively, in case of premature death (Pearson 1990; Alborn 2009),
and (4) term life with endowment in the second half of the nineteenth century for
a primary function of protecting family dependents in case of premature death
and a secondary function of savings (Alborn 2002, 2009).
For example, traditional whole life policies and term insurance accounted for 74.7
percent of the number of life policies sold in the United States in 1998. See 1999
Life Insurance Fact Book, Congressional Information Service Inc., American
Council of Life Insurance, 2000, 6.
Prospectus of Ping An’s Public Listing in Hong Kong, June 2004, 131.
Interview, Shanghai, January 2002.
Interview, Shanghai, August 2002.
It might not apply to the Euro-American markets in recent decades when traditional risk management products were yielding declining profits due to market
saturation and money management products were more profitable with the availability of diverse investment channels and relatively stable investment returns
(prior to the global financial crisis stemming from the United States in 2008–
2009).
Interview, Shanghai, August 2002.
Interview with a former PICC salesperson, Shanghai, October 2001.
Interview, Shanghai, August 2000.
Interview, Shanghai, March 2002.
“Ping An de Guojihua ‘Shenhua’” [The Myth of Ping An’s Being International],
Nanfeng Chuang [The Window of Southern Wind], February 2002 .
According to von Senger (2000), Chen (2000), and Stockman (2000), the meaning of the Chinese concept of fa or falu (both are literally translated as law) is
fundamentally distinct from the meaning of “law” in occidental contexts. Fa has
been traditionally associated with punishments for the sake of social order and
control. It stands in contrast to li (translated variously as “ritual,” “rite,” “propriety,” or “etiquette”), which refers to the appropriate demeanor and the bearing of
the body that instruct correct behavior within a social relationship. The enactment of li qualified one to be a gentleman, whereas fa was the enforcement of
correct behavior by the threat of punishments and was appropriate only for “mean
people.” Thus, law per se has no virtue.
Interview, Shanghai, April 2002.
Interview, Shanghai, February 2002.
Interview, Shanghai, March 2002.
Notes to Pages 66–72
237
16. “Insurers Lose on Rate Cuts,” South China Morning Post, September 13, 2000.
17. Interview, Shanghai, March 2002.
18. “Ping An Baofei Shouru Zengchang” [The Premium Income of Ping An
Increased], Jingrong Shibao [Financial News], January 17, 2002 .
19. From my interviews with the general managers of Allianz-Dazhong and ManulifeSinochem respectively. Both of them defended the traditional risk management
concept of life insurance during the interviews.
20. Participant observation at an agency office of Pacific-Aetna, Shanghai, October
2001.
21. Information obtained from an agency office manager of China Pacific, who
showed me a table with figures released by Shanghai Insurance Association, 2001.
22. Figures were drawn from Shanghai Stock Exchange Statistical Tables (1993–
2003) at www.chinainfobank.com.
23. There was a rumor circulating among some managerial staff and agents of
Ping An that Nanfang Zhoumo was bought out by AIA and that the article was
written by someone at AIA to hurt the reputation of Ping An. I did observe
that many sales agents of AIA used this article to show their prospects that
they were being cheated by Ping An. However, Nanfang Zhoumo, with its
headquarters in Guangzhou, belongs to Nanfang Ribao Baoye Jituan [Southern Daily News Group], later renamed to Nanfang Baoye Chuanmei Jituan
[Southern News and Media Group]. It is a state-owned enterprise in the
Guangdong province, though it is well known for its rather bold investigative
reporting.
24. “Ping An Touzilianjiexian Fuzhou Yuxian” [Ping An’s Unit Linked Insurance Is
in Danger in Fuzhou], Gongshang Shibao [Industrial and Commercial Press],
February 25, 2002 . According to Murphy (2010) and Ericson et al. (2003), insurance sales agents misleading potential buyers by exaggerating the returns of their
investment products was also common in the United States and Britain in the
early phase of their market development.
25. An observation of conversations among a few customers in a tailor shop in Shanghai in March 2002.
26. Interviews conducted in the United States, October 2002 and July 2003.
27. This internal conflict was reported by a deputy general manager of Ping An during an interview, Shanghai, August 2002.
28. Telephone interview with a senior sales agent of Ping An in Shanghai, January
2004.
29. “Ping An Retail Portion Sees 50 Times Booking,” China Daily, June 18, 2004;
“Ping An Zhaogu, Zhongjian Dingjia” [Ping An Issues Shares and Prices in the
Middle], Singtao Daily, Hong Kong, June 18, 2004.
30. The conversion from Hong Kong dollar to the U.S. dollar is estimated based on a
rate of HK$7.75 to US$1.
238
Notes to Pages 72–82
31. “Pingbao A Gu Shoutian Sheng 38%; H Gu Beichi” [Ping An A Share First Day
Rose 38 Percent, H Share Went the Other Way], Hong Kong Economic Journal,
March 2, 2007.
32. “China Life Shares Soar at Start of Hong Kong Debut,” China Daily, December
18, 2003. China Life listed simultaneously in Hong Kong and New York. The
listing in New York was dated December 17, 2003. But a few months later China
Life was accused of hiding information, which led to the U.S. security authority’s
investigation. See “Huaqijituan Zhi Tigong Xujia Ziliao; Zhao Ziyang Xifu Ren
Keying Bei Tingzhi” [Citigroup Pointed Out Fake Information; Zhao Ziyang’s
Daughter-in-Law Ren Keying Was Suspended from Her Job], Hong Kong Economic Journal, June 25, 2004.
33. “Goushou A Gu Jin Guapai; Gujia Liao Zhang Bacheng” [China Life A Share
Lists Today; Price Estimated to Increase 80 Percent], Hong Kong Economic Journal, January 9, 2007.
Chapter 3
1. In her studies of direct selling companies in China, Jeffery (2001) reports a similar discourse about xintai in their training of distributors.
2. Interview, Shanghai, January 2002.
3. Interview, Shanghai, January 2002.
4. Interview, Shanghai, October 2001.
5. For the isomorphic dynamics of the organizational practices of the life insurance
firms in Shanghai, see Chan (2011).
6. Today’s AIA Building was formerly the North China Daily News Building, which
was opened in 1924 to mark the 60th anniversary of a British newspaper, North
China Herald. The building was taken over by the Japanese during their occupation in 1941–1945. Soon after the Japanese’s withdrawal, North China Daily News
and AIA moved back in and stayed there until 1950. The structure was named the
Guilin Building after the Shanghai Municipal Government took over. In 1996,
AIA reached an exchange agreement with the Shanghai Municipal Government to
relocate its office to the building, and in 1998 it was renamed as the AIA Building.
7. Apart from its historical origin that gave it a special bond with China, there was a
publicly circulated rumor that a former AIG Chairman, Maurice Greenberg, had
made many efforts to lobby U.S. congressmen to grant a permanent status of Most
Favored Nation to China, especially when U.S.–China relations were in tension
after the crackdown on the pro-democratic movement in 1989. The granting of an
operational license for AIA was said to be the Chinese top officials’ repayment of
favors to Greenberg. This rumor was circulated among the sales agents in Shanghai, including those in AIA, Ping An, and Pacific-Aetna. Richard Madsen, a
scholar of China’s politics, in an informal conversation with me in 2007 suggested that this rumor was likely to be true.
Notes to Pages 85–97
239
8. There is no single system of romanizing Taiwanese names, as variations exist
between the local Taiwanese and the immigrants from mainland China and
between different generations. In romanizing Taiwanese names for this text, I
adopted the Mandarin system with reference to the standards provided by the
Taiwan’s Ministry of Foreign Affairs (http://www.boca.gov.tw). Therefore, these
names may not appear exactly the same as the informants’ official romanized
names.
9. Interview, Shanghai, February 2002.
10. Interview, Shanghai, January 2002.
11. Interview, Shanghai, February 2002.
12. “Zhan Shanghai ” [Battling Shanghai], Ershiyi Shiji Jingji Baodan [Twenty-first
Century Economic News], January 7, 2002 .
13. I observed that a small number of sales agents were allowed to enter the building
freely because they had won a particular sales contest and were rewarded with a
one-year “pass” (tongxingzheng). The “pass” was presented as a gift for the very top
sales agents.
14. For an interesting discussion of using the concept suzhi (quality) as value coding
in China’s neoliberal reform and as a discourse for class differentiation, see Hairong Yan (2003) and Amy Hanser (2005), respectively.
15. Nanfeng Chuang [The Window of Southern Wind], February 2002, 43. The term
“Eight-Power Allied Armies” (Baguo Lianjun) refers to the aggressive troops sent
by Britain, the United States, Germany, France, Russia, Japan, Italy, and Austria
to suppress the anti-imperialist movement (Yihetuan) in China in 1900. The leaders of the movement were prosecuted, and the Chinese government was forced to
sign an unequal treaty in 1901. The eight powers were considered imperialists,
and the attack was considered a humiliation to the nation of China.
16. Interview, Shanghai, August 2002.
17. Interview, Shanghai, February 2002.
18. Participant observations of some of the training sessions at Ping An, March–
April 2002.
19. This structure is very similar to the Falun Gong organization. See Chan (2004).
20. The morning assembly was more centralized during my second visit in 2004.
Instead of having the subteam managers host their own meetings, the assembly
was broadcast through a television installed in each room. In this way, all the sales
agents in all agency offices in Shanghai watched the same programs.
21. However, I also observed in another agency office of Ping An that the in-house
training manager treated the agents in a very friendly manner. A few agents in this
office told me that they were especially lucky and grateful to have this manager,
which implied that such friendly management was not common.
22. Participant observation at an agency office of Ping An, Shanghai, March 2002.
23. See Li (2001).
240
Notes to Pages 99–121
24. Zhou Huajian was indeed a very popular singer in Taiwan, Hong Kong, and parts
of China, so his price must have been high.
25. I did not have a chance to join the ceremony. Instead, I watched the videotape of
the entire ceremony and interviewed the agents who had attended it.
26. Participant observation at an agency office of Pacific-Aetna, Shanghai, July 2002.
27. Participant observation at an agency office of Pacific-Aetna, Shanghai, August
2000.
28. Another is a Sino-American joint venture, John Hancock Tianan Life Insurance
Company, Ltd. Founded in Shanghai in January 2001, it was headed by an American from the United States. In 2009, John Hancock International sold its 50
percent stake in this joint venture to four other Chinese companies, which transformed the ownership of this insurer to be wholly Chinese. It was then renamed
the Tianan Life Insurance Company, Ltd.
29. Dr. von Canstein stated his theory in Allianz-Dazhong Focus (Spring 2000), a
quarterly newsletter of Allianz-Dazhong.
30. Interview, Shanghai, September 2000.
31. The names of the sales teams presented in this chapter are fictitious.
32. This is according to the team manager of the Venus Team, though no official figure was available. The productivity rate is measured by the total first-year premium divided by the number of agents.
33. Participant observation at an agency office of Allianz-Dazhong, Shanghai, April
2002.
34. Interview, Shanghai, April 2002.
35. Interview, Shanghai, April 2002.
36. Interview, Shanghai, September 2000.
37. Interview, Shanghai, April 2002.
Chapter 4
1. Interview, Shanghai, February 2002.
2. The Path to Success: Life Insurance Professional Book, an AIA training kit, 22.
3. Ericson, Doyle, and Barry (2003) found that some life insurance firms in the
United States nowadays also urge their agents to exploit their social networks to
sell.
4. For interesting studies of how cultural schemas shape women’s choices between
career and family and how cultural schemas influence policy outcomes, see BlairLoy (2003) and Steensland (2006), respectively.
5. Interview, Shanghai, May 2002.
6. Interview, Shanghai, September 2000.
7. There were sales jobs in state-owned enterprises before the marketization of the
economy, but salespersons received fi xed salaries. If there were commissions, they
were given as extra “bonuses” on top of salaries.
Notes to Pages 122–145
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
241
Interview, Shanghai, September 2000.
Interview, Shanghai, August 2002.
Participant observation at an agency office of Ping An, Shanghai, March 2002.
On the other hand, in his studies of technology sales in the United States, Darr
(2006) finds that the salespersons used gifts to induce a sense of obligation to
reciprocate and offered personal favors to blur the line between friendship and
business relationships.
Participant observation at the prospect’s workplace, Shanghai, March 2002.
Participant observation at an agency office of Ping An, Shanghai, April 2002, in
which the agent, Chang, shared with other agents in a morning assembly her
experience in establishing guanxi with clients and prospects.
Participant observation at an agency office of Ping An, Shanghai, April 2002.
The agent, Zhang, shared her successful story with other agents in a small group
meeting in an agency office of Allianz-Dazhong in May 2002. The annual premium US$3,625 was ten times more than most policies sold in Shanghai.
Interview, Shanghai, July 2002.
Participant observation at an agency office of Ping An, Shanghai, November
2001.
Participant observation at the shop, Shanghai, January 2002.
Zhang is a unit of length used by the Chinese for centuries until Communist
China. Yizhang refers to one zhang, which equals 3.33 meters. As one meter is
approximately three feet, I use ten feet to represent one zhang.
Participant observation at the prospect’s residence, Shanghai, January 2002.
Participant observation at the prospects’ workplace, Shanghai, November 2001.
Participant observation at the prospect’s residence, Shanghai, March 2002.
Interview, Shanghai, August 2002.
Interview, Shanghai, March 2002.
Participant observation at the prospect’s workplace, Shanghai, October 2001.
Participant observation at the client’s residence, Shanghai, January 2002.
For discussions of what kinds of cultural elements have higher potency to be
drawn upon, see Fine (1979) and Schudson (1989).
Chapter 5
1. For a classic discussion of the concepts of motive, reason, and meaning and the
relations between them, see Schutz ([1932] 1967).
2. When someone adds the word xiao or lao to a person’s last name, it means someone feels the person is quite a close friend. Xiao, meaning “junior,” is used when
the person is younger than or about the same age, and lao, meaning “senior,” is
used when the person is older.
3. Interview, Shanghai, August 2000.
4. Interview, Shanghai, April 2002.
242
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Notes to Pages 146–157
Interview, Shanghai, December 2004.
Interview, Shanghai, December 2004.
Interview, Shanghai, April 2002.
It is a Chinese tradition that parents and married uncles and aunts give “New Year
money” to children (and unmarried adults). The “New Year money” is put in a red
packet to signify “fortune and good luck” when it is delivered. In Hong Kong, the
“New Year money” is called “fortune money” (lishi). This tradition is still a common practice in all Chinese societies, including Hong Kong and Taiwan.
The number 9 is a fortune number for the Chinese, because its pronunciations,
“jiu” in Mandarin and “gau” in Cantonese, both mean “lasting” or “forever.”
Interview, Shanghai, December 2004.
Interview, Shanghai, October 2001.
The average annual income in Shanghai in 2001–2002 was around 24,000 yuan
(~ US$2,900), according to Shanghai Statistical Yearbook 2002, 2003 .
Interview, Shanghai, October 2001.
Many sources of information report that Manulife-Sinochem was the first life insurer
in Shanghai that offered dividend products. The policy offered by China Life in 1996
might not actually have been a dividend product. It is likely that this domestic insurer
simply called the interests “dividends” to make their product seem appealing.
Interview, Shanghai, October 2001.
Interview, Shanghai, October 2001.
Interview, Shanghai, March 2002.
Interview, Shanghai, March 2002.
Interview, Shanghai, August 2002.
Interview, Shanghai, January 2002.
Figures drawn from Shanghai Stock Exchange Statistical Tables (1993–2003)
from www.chinainfobank.com.
See Guseva (2008) and Bandelj (2008) for the postsocialist sociocultural changes
in Russia and Eastern Europe, respectively.
On July 23, 2011, a deadly crash between two high-speed trains took at least 40 lives
and injured nearly 200 passengers in Wenzhou, South China. This incident aroused
a series debates about the state’s priority: human lives or speedy technological and
economic development. On August 1, 2008, China was proud to present to the world
the fastest high-speed rail on earth, able to reach a speed of 350 kilometers (~ 218
miles) per hour. The country took pride for spending less than 10 years to catch up
with and even surpass the high-speed rails in Europe and Japan that took 40 years of
development. The “-est” (zuei) became the utopian goal of China at the turn of the
twenty-first century, and phrases like “the biggest or the largest” (zuei da), “the highest” (zuei gao), “the fastest” (zuei kuai), and “the longest” (zuei chang) are heard everywhere from the central state to municipal governments and to private corporations.
It was not until 2004 during my follow-up research that I saw Ping An and China
Life begin to offer the kind of health insurance that the local people wanted.
Interview, Shanghai, July 2002.
Notes to Pages 161–179
243
26. Data are for 128 clients: 63 from the surveys and 65 from the interviews in 2000–
2002. Clients interviewed in 2004 are not included because I did not ask them to
list all the products they bought.
27. Guojian Han, “Insurance Boom,” Beijing Review, June 1996.
28. The survey was conducted by TC Marketing Research & Consultancy Lt. in
Shanghai in March 2003. The distribution of the respondents regarding the reasons for savings is: 51 percent for “meeting unexpected contingencies,” 49 percent
for “child’s education,” 36 percent for “buying house(s),” 13 percent for “temporarily put in the bank,” 9 percent for “running business,” 9 percent for “taking care of
the elderly,” and 9 percent for “earning the interests.”
29. In fact, Shanghai had the highest ratio of lung cancer patients to the total population in the early 2000s. See “Benshi Feiai Fabinglu ju Quanguo Bangshou” [The
Rate of Lung Cancer in This City Ranks Number One in the Country], Dazhong
Weisheng Bao [Public Health Press], March 21, 2003.
30. Interview, Shanghai, September 2000.
31. Conversations in an informal gathering, Shanghai, November 2001.
32. Interview, Shanghai, January 2002.
33. In his insightful analysis of the political cultures in the Philippines and Puerto
Rico during U.S. colonialism, Julian Go (2008) asserts a similar position: that
cultural systems delimit the possibilities of instrumental usage of cultural
schemas.
Chapter 6
1. Lamont (1992, 2000) takes a similar position.
2. Accordingly, the verb bricoler applies to ball games and billiards, to hunting, to
shooting, and to riding but is always used with reference to some extraneous
movement, such as a ball rebounding, a dog straying, or a horse swerving from its
direct course to avoid an obstacle. See Levi-Strauss (1966, esp. 16).
3. There is an increasing volume of insightful works that treat institutions as a variable in theorizing their relation to culture. See, for example, FourcadeGourinchas and Babb (2002), Eliasoph and Lichterman (2003), Zhou (2005),
Healy (2000, 2006), Dobbin (1994), Steensland (2006), Fligstein and MaraDrita (1996), Binder (2007), Hallett and Ventresca (2006), Guseva and Rona-Tas
(2001), and Quinn (2008).
4. For some exemplary works on the use of cultural frames to legitimate new actions,
see Snow et al. (1986) on social movement mobilization; Dobbin (1994) on forging industrial policies; Binder (2002) on education curricular; and Hirsch (1986)
and Fiss and Zajac (2006) on business and management strategies. For a theoretical elaboration of how a shared cultural frame constitutes individual interests to a
cultural object, see Schudson (1989).
5. They were clients of Haier New York Life, AIA, Allianz-Dazhong, Ping An, or
Manulife-Sinochem.
244
Notes to Pages 179–193
6. I was careful not to stir up painful memories and therefore was rather restrained
when probing into their feelings.
7. Unless otherwise specified, the figures presented in this paragraph are calculated
based on the available data from the Insurance Yearbook, the Republic of China, for
the years 1997, 2002, and 2007, for the case of Taiwan, and the Annual Report for
1992–2007, Office of Commissioner of Insurance, Hong Kong, for the case of
Hong Kong.
8. In June 2004, Citigroup Inc.’s subsidiary, Travelers Insurance Company, was
granted permission to launch a joint venture life insurer named Citiinsurance
Life Insurance Company, Ltd. (Citiinsurance) with domestic partner, Shanghai
Alliance Investment Ltd. However, in January 2005, Citiinsurance sold its insurance business to the New York-based Metropolitan Life Insurance Company.
When the joint venture was inaugurated in October 2005, it still adopted the
name Citiinsurance until January 2006, when it became United MetLife Insurance Company, Ltd. See “Banking Giants extend China Rivalry to Insurance,”
South China Morning Post, June 5, 2004; “Huaqi Renshou Hushang Kaizhang
Yinhanbaoxian Weiqizhuyao Yingxiao Moshi [Citiinsurance Inaugurated in
Shanghai with Bankinsurance Its Main Sales Model], Guoji Jinrong Bao [International Finance News], October 19, 2005.
9. This information was obtained from Allianz China Life’s official website (www.
allianz.com.cn) as of February 2008, and from my e-mail communication with a
sales agent of this insurer in Shanghai.
10. The figures about the life insurance business in Shanghai and mainland China in
this section are calculated based on the available data from Almanac of Shanghai
Insurance 2002–2003, 2007–2010, Almanac of China’s Insurance 2002, 2008–2010,
Shanghai Statistical Yearbook 2007–2010, and China Statistical Yearbook 2008–
2010.
11. Calculation based on available data from the Insurance Yearbook, the Republic of
China for the years 1991 and 2004.
12. Calculation based on available data from the Annual Report for the years 2000
and 2007, Office of Commissioner of Insurance, Hong Kong.
13. Changes in Life Insurance Products in Japan, Life Insurance Association of Japan,
2006.
Glossary
Annuity Yearly or monthly payments to policyholders starting on the maturity date,
with a fixed face value as determined by a fixed return rate.
Cash value or cash surrender value The amount available in cash upon termination of
a policy by the policyholder before it becomes payable by maturity or before occurrence of the circumstance insured against. Normally a penalty is imposed in terms
of administration fees.
Endowment A lump-sum payable to policyholders upon maturity, with a fixed face
value as determined by a fixed return rate.
Insured amount, face value, or face amount The amount stated by the policy that will
be paid in case of occurrence of the circumstance insured against or at maturity.
Main policy A policy that can be sold independently.
Participating policy or dividend insurance Insurance that entitles the policyholder to
share in the surplus earnings of the company through dividends.
Rider A policy that can be sold only as an attachment to a main policy and not independently.
Term life A policy that is payable at death during a certain number of years but expires
without policy cash value if the insured survives the stated period.
Unit linked A variant of variable life insurance, common in Britain, in which each unit
of the premium paid is linked to an investment return.
Variable life Insurance in which the amount payable may fluctuate during the term of
the policy, subject to the investment returns of the premiums.
Whole life Payable at death of the insured, with cash surrender value upon termination
of the policy by the policyholder before it becomes payable by maturity.
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Index
AAU. See American Asiatic
Underwriters
accident insurance policies, 22, 49f, 54,
136–37, 161t, 235n25. See also
integrated personal accident
coverage
AIA’s, 59, 65, 157
clients on, 55, 163
commission rates for, 88
estimated number of, 48–49, 49f
Manulife-Sinochem’s, 150–51
Pacific-Aetna’s, 138–39
Ping An’s, 62
premiums for, 48
Accounting for Tastes (Becker), 232n7
action
buying life insurance with culture,
institution and, 167–68
economic, 232n7, 232n9
theories of, 231n6
Adler, Patricia, 201
Adler, Peter, 201
advertisements, 4, 32, 35, 116, 121–22,
233n16
Aetna Inc., 76, 187, 196–97
agency management, 108–14
AIA. See American International
Assurance Company, Ltd.
AIA Building , 82, 89, 238n7
AIG. See American International
Group, Inc.
AIU. See American International
Underwriters Insurance
Company
Alborn, Timothy, 3, 9, 116, 178
Alford, Robert R., 56
Allianz AG, 76, 102, 107, 112, 189
Allianz China Life Insurance
Company, Ltd., 228, 244n9
Allianz-Dazhong Life Insurance
Company, Ltd., 4, 13, 65,
198–201, 237n19
agency management and
managers’ cultural capital at,
109–14
as foreign masculine man, 102–8
different from other insurers studied,
83t–84t
frustrations of in-house managers
and sales agents at, 106–8
German-headed management
at, 102–3
market share, 76
premium income of, 76
products, 68–69
sales agents as elites and commoners
at, 103–6
sales agents’ morale at, 77, 81
268
Index
American Asiatic Underwriters
(AAU), 82
American International Assurance
Company, Ltd. (AIA), 3, 13,
21–22, 23, 196–97, 201, 227,
238n6
accident insurance with, 59, 65, 157
as proud big brother, 82–90
changes, 184–86
critical disease policy, 135–36
different from other insurers studied,
83t–84t
dividend insurance, 60
Hong Kong and Taiwanese management teams at, 85–86
market setback, 65–66
market share, 61–62
Ping An’s conflicts with, 51–52
professionals and standardized scripts
at, 116–18
risk management as new concept and
pioneering role of, 59–61
sales agents as independent
professionals and missionaries at,
86–89
sales agents’ morale at, 89
tensions between in-house
management and sales agents,
89–90
term life with, 60, 88
whole life policy with, 60, 68,
88, 140
American International Group, Inc.
(AIG), 3, 23, 82, 238n6
American International Underwriters
Insurance Company (AIU), 23
ancestors, 39, 40, 234
annuity insurance, 54, 63, 101, 221, 231,
235, 245. See also endowment
insurance
Aries, Philippe, 37
assemblies, morning , 33, 87, 95–96, 99,
105, 195, 198, 200, 203t, 207,
239n20
AXA Group, 23
AXA-Minmetals Assurance Company,
Ltd., 65, 86, 195, 198, 228
Baker, Tom, 163–64
baoxian (insurance), 59–60, 200
Baoxianxue (insurance handbook), 20
battle between foreign and domestic
camps, 59–65
explanation of, 58–59
life insurance concept and market
setback, 65–66
product lines converging and
concept of life insurance,
71–73
unit-link crisis and Ping An’s lessons,
69–71
unit-link fad, Ping An’s miracle and
new definition, 66–69
Becker, Gary, 232n7
Bellah, Robert, 231n6
Betting on Lives (Clark), 8
Biggart, Nicole, 80, 131, 177–78, 189,
198
bonuses, 89, 97, 106, 137, 240n7. See also
salaries
bonus scheme insurance, 235n1
Bosco, Joseph, 233n14
bosses, sales agents as, 97–101
Bourdieu, Pierre, 10, 78, 111
Brantley, Peter, 109
bricoler (extraneous movement), 175,
243n2
Britain, 20, 34, 53, 91, 116, 136,
235n1
Buddhism, 37, 39, 192
Burawoy, Michael, 196
burial insurance, 235n1
Index
capitalism, 10, 53, 155, 181–84
varieties of, 192
cash value, 59, 60, 71, 136, 245
Castanias, Richard, 131
catching up, social psychology of,
154–56
CCP. See Chinese Communist Party
Chan, Cecilia, 233n15
chance, life insurance purchased by,
149–50
changes
in AIA, Ping An and Pacific-Aetna,
185–89
in interest rates and cultural values,
153–54
in names, 22–23, 230
in pensions and population structure,
153–54
with culture, 184–89
Chaozhou, 234n17
child-centered ethos, 31, 34–35, 58, 153,
171
children
insurance, 64–65, 146, 153, 161–66
one-child policy, 28–29, 35, 40, 42,
49, 141
China
cultural obstacles in, 36–42
economic and institutional conditions
in urban, 24–31
historical background of commercial
insurance in, 19–21
insurance industry’s reappearance in,
22–24
life insurance companies in, 227–30
life insurance penetration in U.S
compared to Shanghai and, 6f
population, 24
projections of life insurance in,
190–93
savings of city households in, 41
269
societal conditions, market and other
puzzles with, 19–50
China Insurance Regulatory
Commission (CIRC), 31, 54,
66, 70–71, 211
China Life Insurance (Group) Company,
227, 238n32
China Life Insurance Company, Ltd.
(China Life), 23, 47, 65, 121–22,
148, 243n24
as publicly traded company, 72
term life with, 137
China Pacific Insurance Company, Ltd.,
65, 68, 76, 195, 237n21
China Reinsurance Company, Ltd., 23
Chinese Communist Party (CCP), 21,
30, 34, 42
choices,
and meanings, 15, 17, 77, 143
between market share and profits, 56,
16, 63–65, 73–75
cultural logics of preferences and, 16,
163–67
firms’ microlevel strategic, 16, 77–78,
83–84, 108–14
from cultural tool kit, 174–75, 167,
176
ideologies and shared mentalities
guiding , 16–17, 77, 153–57,
163–67, 232n7
institutional logic guiding , 56
intentions of, 17, 143
interpretations of, 17, 143,
152–57
managers’ strategic, 85–108, 113
of economic actors, 232n7
of foreign and domestic insurers in
strategies, 16, 52, 56, 57–60,
62–65, 73–75, 77–78, 93–97
of life insurance products, 9, 17, 144,
157–63, 168
270
Index
choices (continued)
of role in market structure, 52
sales agents’ strategic, 17, 123–30,
132–40, 177
Christianity, 37, 39, 116, 173
CIRC. See China Insurance Regulatory
Commission
Citigroup Inc., 244n8
Citiinsurance, 244n8. See also
Metropolitan Life Insurance
Company
Clark, Geoffrey, 8
Clients. See also life insurance buyers
interview questions (2000–2002) for,
211–13
interview questions (2004) for,
213–14
perceived functions of life insurance
by, 157–63, 158t
questionnaire for, 217–19
rural migrants excluded as potential,
27–28
types of life insurance purchased by,
160–63, 161t
coding statements, 222–25
cognition. See also cultural schemas
automatic, 140–41, 164–65
deliberative, 140–41, 166
cold calls. See stranger visits
commercial insurance, 6, 22, 27, 30, 61
historical background of China’s,
19–21
post-1949 period, 21
pre-1949 period, 19–21
commissions, 71, 87–88, 92, 98, 119,
121–23
commodities, 32–34, 43, 143
commoners, 37, 99, 103–6, 155
comparative, 17, 37, 77, 108, 181
Confucianism, 37, 39, 42, 130, 177, 192
consumers, negotiation with insurers, 13,
14, 15, 123–40
consumer goods. See commodities
consumer price index, growth rate, 45f,
234n19
consumer society, 31–32, 41
Croll, Elisabeth, 42
cultural capital, 10
management strategies impacted by,
76–114, 111f
of managers and agency management,
108–14
cultural constitution
of consumption, 144, 143
of economic behaviors, 144–45
cultural elements as congenial to life
insurance, 31–36
cultural logics, Chinese, 55–56, 163,
164, 170, 171, 174
cultural objects, 143, 243,
cultural obstacles, 4–5, 8, 9, 11, 12, 16,
36, 45, 52, 74, 169
existing risk management practices as,
7, 24, 41–42, 49
explanation of, 16, 35–41
“good life and death,” moral obligation
and risk perception, 7–8, 39–41,
138–41
in China, 36–42
life, death, and taboo on premature
death, 7, 37–39, 41, 44,
52–53, 63, 116–17, 135–36,
140–41, 163–64, 168, 171–72,
183–84, 236n1
cultural schemas, 39, 118–20,
122, 141, 153, 164, 176,
240n4
cultural resistance, 4, 7, 11, 15, 73, 116,
170, 173
to risk management concept
of life insurance, 59–60, 133–36,
171
to risk management products, 59,
163–67
Index
cultural resources, 10, 115, 174
cultural symbols, 17, 110, 116, 138,
141, 167–68, 173, 176,
182
cultural taboo. See taboo
cultural values, 5, 8, 10–12, 16, 153–54,
171, 173–74
culture
as constitutive agent, 12, 143–44, 167,
177–78
as regulatory force, 12
as repertoire, 10–11, 44, 50,
114–15, 118, 141, 167–69, 172,
174–75, 178, 182, 192
as switchmen, 10–11
changes with, 184–89
Chinese, 4, 12, 31, 32, 56, 177
circumventing resistance, 11–12, 172f,
173–76, 181
classical view of, 10–11, 44–45, 50,
144, 168, 175, 231n6
coherent view of, 10–12, 17, 44,
175–77
composing resistance, 4, 7, 11–12,
15, 17, 37–42, 132–36, 171–74,
172f
contemporary view of, 10–12.
“dead” form of, 14
fragmented view of, 10–12, 17, 151,
174, 176,
globalization of modern capitalism
with, 32–34, 181–84
in buying life insurance, with
institution and action, 167–68
in sales discourse, with institutions,
140–42
interactive multiple-process model of,
12, 169–78, 172f
life insurance in making of, 178–81
“living” form of, 14
logic of preferences and choices with,
163–67
271
organizational or corporate, 15,
17, 75, 82–108, 112–13,
189–90, 198
practical dimension of, 175, 176
predispositions, 12, 154, 167, 168
shared ideas or shared beliefs or shared
values, as, 10–12, 17, 168, 172–73,
176–78, 181
structure and agency with, 12,
174–78
theory of, 10, 167–68
tool kit approach to, 10–12, 16–17,
44–45, 50, 174–77, 181
with motives for buying life insurance,
152–57
“Culture in Action” (Swidler), 10
danwei (work unit) system, 26, 28
Darr, Asaf, 241n11
data collection, 195–202
Davis, Deborah, 26, 33, 35
death
as cultural taboo, 3–4, 5–9, 16,
37–41, 43–44, 79, 116, 136, 140,
168, 177, 183–84, 233n15
Chinese concept of, 4, 7, 9, 11, 16–17,
36–41, 43–44, 52, 59, 63, 73, 79,
117, 135–36, 141, 163–64,
167–68, 170–73, 179, 181,
183–84, 233nn14–15
early, 38, 138, 140, 166, 235
evasive answers to questions about, 9
folklore about, 37–39, 171
good, 7–8, 39–41, 43–44,
52, 167–68, 171, 172f,
233n16
life and death concepts with taboo on
premature, 7, 37–39
premature, 7, 36–39, 41, 44, 52, 53,
63, 116, 117, 135–36, 140–41,
163–64, 168, 171–72, 183–84,
236n1
272
Index
death (continued)
supernatural powers in, 40, 234n17
taboo and puzzle of marketing , 5–8
debt, 33, 38, 233n16
Deng Xiaoping , 5, 19, 31
Denzau, Arthur, 77, 232n7
DiMaggio, Paul, 10–11, 119, 143,
232n7
dirty money, 8, 180
dirty work, 78–80
discourses. See sales discourses
divergence
explaining pattern of, 73–75
in institutional logics, 56–58
of life insurance and product
development, 51–75
in sales agents’ images, 80–82
dividend insurance (fenhong xian), 68,
136–37, 154. See also participating
policy
local preference for, 48, 49,
61–69, 76
market growth with, 69, 190–91
with money management market,
48–49, 65–67
Dobbin, Frank, 168, 232n9
domestic insurers
battle between foreign and, 58–73
contribution to market growth,
22–23, 47, 61–65, 66–69
creating money management market,
61–71, 171–73
dealing with cultural resistance,
57–58, 62–64, 66–68
financial losses, 66
in post-1949 period, 21
in pre-1949 period, 20
in response to local preferences,
62–64, 66–68
local interpretation of life insurance,
61–65
market share, 61, 66, 72
market-share operation of, 57–58, 61,
63–65
product development of,
61–68, 71
public listing , 72
revival of, 22–23
sales discourses, 133, 136–38, 140
doors, iron, 29, 232n8
dramaturgical
interaction, 123–30
performance, 17, 110, 125,
123–30
strategies, 123–30
dual-process model of culture, 177
economic action, culture shaping ,
232n7, 232n9
economic calculation, 143,
economic conditions, 5, 8, 24, 160,
25–26, 31–34
birth of new middle class, 24–25,
32
growth and rising purchasing power,
24
job insecurity, 25–26
economic immortality, 40. See also good
death
18 levels of hell, 37, 233n13
Eight-Power Allied Armies,
239n15
employment, 25–26
endowment insurance, 21, 54, 57,
63, 68, 183, 192–93, 235n1,
245. See also annuity insurance
enterprises. See companies; state-owned
enterprises
Ericson, Richard, 237n24
the “-est” (zuei), 242n23
ethnography or ethnographic, 12–13,
15–16, 33, 43, 52, 73, 95, 169, 174,
182, 195–203
ethos. See child-centered ethos
Index
etiquette
li (ritual, rite, propriety), 236n12
of renqing. See renqing
evil, necessary, 78–80
fa or falu (law), 236n12. See also li
face amount or face value, 245
face
definition, 120
giving , 22, 93, 120–21, 144–45, 152,
223
losing , 120
fads
stock market, 154–56
unit linked, 58, 66–69
Falun Gong , 239n19
family, 29
centered ethos, 34–35
obligations of living and dead
members in, 40, 234n17
Pacific-Aetna as warm, 96–101
size, 6, 27–28, 43, 141
urbanization influencing , 28
Farrer, James, 34
fatal
accident(s), 41, 164
misfortune(s), 4, 41, 117, 173
fate, 150. See also predestination
favors, 144–45. See also renqing
Fei Xiaotong , 35
fictive kin, 130–32
fieldwork, summary of (2000–2004),
203t
profiles of interviewees, 203–5
Fine, Gary, 167
flattery, 101
Fligstein, Neil, 74, 77–78, 109
foreign insurers
battle between domestic and,
58–73
bringing new sales and marketing
methods, 58–60
273
creating risk management market,
59–60, 65–66, 191–92
dealing with cultural resistance, 16, 52
in post-1949 period, 21
in pre-1949 period, 19–21
institutional logics and profit-oriented
operation of, 56–57
market share, 60–61, 65
product development of, 16, 59–60,
68–69, 71, 185–86, 191–92
reentry of, 23–24
risk management as new concept,
introducing 59–61
sales discourses, 133–35
with AIA’s pioneer role, 59–61
fortune money (lishi), 242n8
Fourcade, Marion, 192
Fowler, Geoffrey, 233n14
Friedland, Roger, 56
friendships
business relationships blurring line
between, 241n11
cultural schemas of, 118–20,
122, 164
help from, 42, 119–20, 124–25,
232n7
GDP. See gross domestic product
Geertz, Clifford, 231n6
Gemeinschaft (community), 28
gender roles, 130–32, 174
Germany, 102–3, 176. See also
Allianz-Dazhong Life Insurance
Company, Ltd.
Gesellschaft (society), 28
gifts, 147, 153
globalization
culture and market with, 169–93
global-local dynamics, 13–15, 156,
181–84
of modern capitalism with culture,
181–84
274
Index
Go, Julian, 243
Goffman, Erving , 120
Goldman Sachs, 72, 90
good death, 7–8, 43–44, 52, 167–68,
171, 172f
as cultural obstacle, 39–41
without debt in U.S., 233n16
good life, 39–44, 52, 55, 154, 167–68,
171, 172f, 177, 213
Gorer, Geoffrey, 37
Gouldner, Alvin, 36
government, supportive attitude of,
30–31
Greenberg, Maurice, 238n6
gross domestic product (GDP), 4, 24,
42, 44, 182
growth
consumer price index and rate of,
234n19
dividend insurance, 69, 190–91
in Hong Kong with life insurance,
183
in Japan with life insurance, 192–93
in Taiwan with life insurance, 182–84
life insurance premium income
and real rate of, 4–6, 45–46, 69,
73, 191
of life insurance in relation to GDP
and per capita disposable income,
46f
of property insurance, 4
of unit linked insurance, 66–69
of whole life policies, 184, 191–93,
236n2
patterns of life insurance, 190–93
guanxi (interpersonal relationships), 31,
63, 92, 115, 132, 197, 241n13
and interpersonal trust, 35–36,
119–21
and renqing, 17, 22, 35–36, 64, 92–93,
118–21, 123, 130–32, 144–45,
152–54, 167, 171–72
in economic transactions, 36, 118–19,
121
in life insurance sales, 118–19,
121–27
reciprocity, fictive kin and gender roles
in making , 130–32
renqing’s decline and limits of,
121–23
selling self and making , 123–30
Guillen, Mauro, 77
Haier New York Life Insurance
Company, Ltd., 201, 228
Hamilton, Gary, 177–78, 189
Hanser, Amy, 239n14
Healy, Kieran, 192
hell, 37–40, 233n13
help
difficulties of informal mutual, 27–29
from friendships, 42, 119–20,
124–25, 232n7
Hertz, Ellen, 33, 67
Hong Kong
AIA management teams from, 85–86
crime rate in, 232n8
exchange rate, 237n30
life insurance market’s growth in,
184
managers compared to Taiwanese
managers, 113–14
population, 232n8
stock market, 187
housing , 26, 28, 33
HSBC Group, 71–72, 187
Huber, Richard, 4
Huebner, Soloman, 42
huibao (returns), 51, 55, 136–37
huikou (rebates), 122
human life, sacredness or priceless of,
8, 173, 179
hypothesis or hypotheses, 9, 19 41,
43–50, 52, 74, 82, 179, 189
Index
ideas
new and foreign, 32–34
shared, 171, 172f, 176, 181,
with values and beliefs, 171, 172f,
174, 175, 176, 182, 232n7
ideology, 77, 80, 232n7
images
of insurers, 82–85, 90–91, 96, 102
of professionals, 87
sales agents’ divergent, 80–82
indebtedness, 36, 125. See also renqing
indigenization. See localization
inflation rates, 42
ING Group, 187–89
in-house management. See management
institutional conditions, 24, 26–27,
30–31, 50, 116, 141, 154, 167–68,
170, 176, 178, 192–93. See also
economic conditions
China’s economic and, 24–31
government’s attitude and legalization,
30–31
urbanization and difficulties of
informal mutual help, 27–29
welfare and eroding state provisions,
26–27
institutional logics
divergent, 16, 52, 56–58
of life insurance, 52–54
of profitability, 52–54, 56–57, 74
institutionalization, 14
institutions, 17, 54, 140–42, 153–54,
167–68, 175–76, 181, 243n3
instrumental rational, 13, 31, 77, 108,
113, 170
insurance. See life insurance
insurance handbook, first in China, 20
insurance industry
domestic insurance’s revival in, 22–23
foreign insurance’s reentry in, 23–24
reappearance in China, 22–24
U.S., 7–8
275
Insurance Yearbook, the Republic
of China, 244n7
insured amount, 22, 48, 55, 59–60, 63,
135–37, 163, 180, 245
insurers. See domestic insurers, foreign
insurers, and life insurance
companies
interest rates, 55, 64, 66, 120, 133, 146,
153–55, 167
interpersonal obligation. See renqing
interpersonal relationships. See guanxi
interviewees
socioeconomic profiles of clients and
prospects, 204t–205t
socioeconomic profiles of insurance
practitioners, 204t
interview questions
clients (2000–2002), 211–13
clients (2004), 213–14
managerial staff, 209–11
prospects, 214–15
sales agents, 205–8
investment
for profit, 154–56
insurance. See life insurance products
meaning of, 154–56
premiums yielding profits from,
54, 57
IPA coverage. See integrated personal
accident coverage
iron rice bowl system, 25, 168
Japan, 20, 192–93, 242n23
Jeffery, Lyn, 33, 238n1
Jepperson, Ronald, 177
John Hancock Tianan Life Insurance
Company, Ltd, 240n28.
See also Tianan Life Insurance
Company, Ltd.
Kahneman, Daniel, 74
Kalberg, Stephen, 231
276
Index
karma, punishments for bad, 37–38,
233n13
kinship, 28–29, 34, 42, 119–20, 124–25,
232n7
Lamont, Michele, 141, 174–75
law, 113. See also fa; falu
as without virtue, 236n12
first formal insurance, 30–31
natural, 38, 39, 40
leaflets, insurance product, 118, 124,
129, 140
Lee, Ching Kwan, 27
legalization of life insurance business,
30–31
Leidner, Robin, 79, 80, 116–17, 123,
202
LES policy, 60, 68
Levi-Strauss, Claude, 175
Li, Hongmei, 111–12
life
Chinese concept(s) of, 7, 37–40, 42,
43, 44, 52, 55, 154, 167, 168, 171,
172f, 177,
good, 39–44, 52, 55, 154, 167–68,
171, 172f, 177
retirement and quality of, 41
taboo on premature death with
concepts of, 7, 37–39
life insurance
battle over concept of, 58–66
benevolent meanings imbued in, 135
cultural resistance to, 4, 7, 11, 15,
59–60, 73, 116, 133–36, 163–67,
170–71, 173
foreign concept of, 11, 16, 20, 59–61,
65–66, 88, 119, 140, 173, 175, 183,
237
group, 22, 59–61, 232n8
in Britain, 8, 34, 53, 116, 143,
235–36n1
in Britain, 34, 53, 116, 235n1, 237n24
in China and historical background of,
19–21
in Hong Kong , 17, 52, 56, 60, 74, 112,
183–84, 192
in Japan, 192–93
in making of culture, 178–81
in Taiwan, 8, 17, 52, 74, 96, 97,
182–84, 191
in U.S., 7–8, 24, 35, 53, 67–68, 79,
116, 143, 173, 235n1
individual, 13, 48f, 60, 67, 75, 183
institutional logic of, 53–55
local interpretation of, 61–65, 163,
167
main policy 163, 245
penetration, 4, 6f, 44
premium income of, 4–6, 44, 45–46,
48–49, 54–55, 61, 67, 76, 103,
183–85, 187, 189–91, 235n24
product development of, 57, 59–73
profitability of, 53–55
life insurance buyers. See also clients
meaning construction, 143, 144, 167
perceived functions of life insurance,
158t, 158–60
preferences and choices of products,
55–56, 144–63
subjectivities, 144, 154, 178
life insurance, buying
by chance or misunderstanding ,
149–50
cultural logics of preferences, 163–67
culture, institution and action with,
167–68
explanation of, 143–44
for multiple reasons, 150–52
for savings, 150–51, 153–54
for yanglao (retirement), 148–49, 151–52
gifts, 147, 162
as investment, 148
Index
motives for, 17, 144–57, 167–68, 171
peers influence and showing off,
145–47
preferences, perceived functions and
choices of products, 157–63
rationale(s), 152–57
renqing and favors, 118–21, 144–45,
150
life insurance companies.
battle between foreign and domestic
camps, 58–73
domestic. See domestic insurers
foreign or transnational. See foreign
insurers.
in China up to 2009, 227–30
Sino-foreign joint ventures, 4, 11,
13, 16, 21–23, 58–59, 65–66,
73, 76–77, 85–86, 96–97, 102–3,
107, 126, 149, 170, 187–88,
190, 198, 209, 219, 222, 240n28,
244n8
life insurance products, 21, 68–69,
71–73
annuity, 54, 63, 101, 221, 231, 235,
245
critical disease policy, 71, 135–36,
151, 156–57, 179
divergent pattern between foreign and
domestic camps in developing ,
73–75
endowment, 21, 54, 57, 63, 68, 183,
192–93
hospital care insurance, 133, 137, 150,
157, 161t, 162–63, 168, 231n4,
235n24
integrated personal accident (IPA)
coverage, 157, 162
local preferences and choices of, 16,
52–57, 61–65, 74, 76, 101,
157–63, 170, 171, 173, 184–85
money management, 17, 49, 53–57,
74, 93, 101, 120, 133, 150, 156,
277
158, 161t, 161, 168, 170–71, 183,
185–87, 190–92, 235n24, 236n6
participating policy (dividend
insurance), 54, 68, 145
profitability and conflict with local
preferences, 53–56
rider, 137, 150, 163, 245
risk management, 49, 50, 55–57, 71,
137, 157, 162, 168, 171, 183–84,
235n24, 236n6
term life, 22, 53, 54, 60, 88, 137,
163, 193, 231n4, 235, n24,
236n1, 245
unit linked, 48, 49t, 49, 58, 66,
67–72, 145–46, 148,
151–52, 154, 156, 161t,
161, 185–87, 190–92,
235n24, 235n25
whole life, 22, 53, 54, 60, 63, 68, 71,
72, 88, 135, 140, 147, 150, 161,
183, 191, 192, 193, 231n4,
235n24, 236n2, 245
life insurance, selling. See selling
strategies
local preferences, 10, 16, 52–53,
55–57, 74, 76, 101, 170–71, 173,
184–85
cultural logics of choices and,
163–67
with perceived functions and choices
of products, 157–63
local resistance. See cultural resistance
localization, 70, 73, 77, 81, 85, 97, 102,
102–3, 111, 181–82, 184, 186,
189–90, 192, 198
Mackenzie, Donald, 178
Madsen, Richard, 238n6
Ma Mingzhe, 47, 61, 91
management
Allianz-Dazhong’s German-headed,
102–3
278
Index
frustrations of Allianz-Dazhong’s
in-house, 106–8
influence of managers’ cultural capital
on, 108–14
mutual flattering between
Pacific-Aetna sales agents and
in-house, 101
Pacific-Aetna’s Taiwanese-headed,
96–97
Ping An with local Chinese and
Taiwanese in, 91–92
Ping An’s submissive sales agents with
authoritative in-house, 94–96
strategies in relation to cultural
capital, 76–114
teams at AIA, 85–86
tensions between AIA’s sales agents
and in-house, 89–90
Manulife-Sinochem Insurance Company,
Ltd., 65, 86, 183, 195, 198, 227,
237n19, 242n14
accident insurance with, 150–51
participating policy with, 68
whole life policy with, 147, 150
Mao Zedong , 21, 27, 31
market
culture and globalization with,
169–93
emergent life insurance, 44–45, 50
formation, 14, 19, 43, 53, 171, 172f,
232n9
growth of life insurance, 45–50, 69,
190–91
money management, 47–50, 172f,
173
money-cum-risk management, 11,
173, 191, 193
reforms, 22, 26
risk management, 11, 50, 53, 173, 183,
190, 193
risk-cum-money management, 11, 53,
192
setback, 65–66, 184–85
social construction of, 14, 172–76
marketization, intensified, 31–32
market share
domestic insurers’, 47, 48f, 61, 62f,
65–68, 72, 76, 187, 191
foreign insurers’, 48f, 61, 62f, 65,
189–90
of individual life insurance business in
Shanghai, 48f
of life insurance business in Shanghai,
61, 62f
market share model, 73, 170
medical care, 26, 30, 71, 138, 139,
141, 157, 160, 162, 167, 168,
232n6
medical reform, 30, 71, 141, 157, 162,
167
Meldrum, Stephen, 91, 136
Merton, Robert, 231n6
methods
coding and sample statements,
222–25
ethnography and data collection,
195–202
fieldwork and profiles of interviewees,
203–5
interview questions and
questionnaires, 205–22
Metropolitan Life Insurance Company,
244n8
Meyer, John, 189
Microprocesses
of economic practice, 12
of transaction(s), 115
with macroforces, 12
middle class, birth of new, 24–25, 32
migrants, rural, 27–28
Millo, Yuval, 178
misunderstanding, life insurance
purchased through, 149–50
money, 55, 93, 163, 242n8
Index
commissions as begging for, 121–23
dirty, 8
exchange rates, 237n30
meaning of, in relation to misfortunes,
179–80
premiums as waste of, 136–37, 151,
162–64, 171
money management
as perceived functions of buying
life insurance, 55–56, 63–65,
222–23
insurance products, 54, 63–64, 66–69,
235n24
local definition of life insurance as,
55–56, 63–64, 157–67
market, 47–50, 172f, 173
sales discourse, 93, 133, 136–38, 223
morale of sales agents
AIA’s, 89, 184, 77, 89
Allianz-Dazhong’s, 77, 81, 170, 77, 81,
104, 106–7
Pacific-Aetna’s, 16, 77, 81, 98, 100,
113, 185, 87, 188
Ping An’s, 77, 93, 170, 186
moral obligation, 34, 39–41, 116, 117,
143, 174
Morals and Markets (Zelizer), 7–8, 115,
173
Morgan Stanley, 72, 90
mortuary tontines, 235n1
motives
and meanings, 144, 153
change of, 153–57
for buying life insurance,
152–57
Murphy, Sharon, 237n24
mutual help, 27–29
Nan Shan Life Insurance Company, Ltd,
97
National Mutual Life Association, Ltd.,
183
279
need
a feeling of, 9, 139, 140, 152
a sense of, 115, 117, 118
neoliberal reforms, 239n14
New Year money, 242n8
North, Douglass, 74, 77, 232n7
numbers, symbology of 9, 242n8
Oakes, Guy, 80, 116–17, 123,
202
obligations, 40, 234n17. See also renqing
interpersonal, 17, 22, 36, 64, 92, 120,
121, 145, 171
moral, 34, 39, 116, 117, 143, 174
obstacles. See cultural obstacles
one-child policy, 28–29, 35, 40, 42, 49,
141
organizational culture, 15, 17, 75, 82, 96,
102, 189, 190, 198
of AIA, 82–90
of Allianz-Dazhong , 102–8
of Pacific-Aetna, 96–101
of Ping An, 90–96
organizational strategies, 15–16, 72, 111
of domestic insurers, 15, 57–58,
61–73, 90–96
of foreign insurers, 15, 56–57, 59–61,
65–66, 82–90, 96–108
Orru, Marco, 178, 189
Pacific-Aetna Life Insurance Company,
Ltd., 13, 57, 65, 170, 196–200,
238n6
accident insurance with, 138–39
agency management and managers’
cultural capital at, 109–14
caring angels at, 101
changes in 2004, 187–89
commission rates, 98
different from other insurers studied,
83t–84t
market share, 76
280
Index
Pacific-Aetna (continued)
mutual flattering between in-house
managers and sales agents at, 101
premium income of, 76
products, 69
sales agents as family members and
bosses at, 96–101
sales agents’ morale at, 77, 81,
98, 185
sales agents’ psychological attitude at,
100
Taiwanese-headed management at,
96–97
Parsons, Talcott, 231n6
participating policy, 68, 245. See also
dividend insurance
Pellow, Deborah, 28
penetration, life insurance, 4, 6f, 44
pension scheme, 26–27, 30, 34, 63,
90, 97, 141, 146, 153–54, 162,
167–68
pensions, 26–27, 153–54
People’s Bank of China, 22, 31
People’s Insurance Company of China
(PICC), 21–23, 59, 60–61,
62f, 82
People’s Republic of China (PRC),
21–23, 82
PICC Life Insurance Company, Ltd.,
229
PICC Property Insurance Company,
Ltd., 23, 230
Ping An Insurance Company of China,
Ltd. (Ping An), 144, 170,
198–202, 237n23, 238n6, 239n21,
243n24
accident insurance with, 62
AIA’s conflicts with, 51–52
as authoritative parent, 90–96
as publicly traded company, 72
changes in 2004, 186–87
critical disease policy, 71, 151
different from other insurers studied,
83t–84t
guanxi and renqing at, 118–21
local Chinese and Taiwanese in
management at, 91–92
market share, 47, 61, 67
market-share operation of, 58–59
name change, 22–23, 230
property insurance at, 22, 61
punishment-oriented system at,
95–96
retirement insurance with, 63, 120
sales agents and in-house management
at, 94–96
sales agents as money-making crowds
at, 92–94
sales agents’ morale at, 77
unit linked crisis and lessons of,
69–71
unit linked fad and miracle of,
66–69
whole life policy with, 63, 72
with local interpretation of life
insurance, 61–65
with shrinking market, 184–85
Ping An Insurance (Group) Company of
China, Ltd., 23, 47, 227, 230.
See also Ping An Insurance
Company of China, Ltd.
Ping An Life Insurance Company of
China, Ltd. (Ping An), 13, 23, 230.
See also Ping An Insurance
Company of China, Ltd.
policies. See also life insurance products
estimated numbers of, 49f
in force in China, 234–35n20
in force in Hong Kong , 183, 192
in force in Shanghai, 44, 234n20
in force in Taiwan, 183–84, 191
population
changes in structure of, 153–54
Chaozhou, 234n17
Index
China, 24
Hong Kong , 232n8
positive mental attitude, 79–80
predisposition(s), 12, 154, 167, 168
privatization
of medical care, 71, 141, 157, 162
of pension scheme, 154, 167
PRC. See People’s Republic of China
predestination, 10, 150
preferences. See local preferences
premature death. See death
premium income, 4–6, 44, 45–46,
48–49, 54–55, 61, 67, 76,
103, 183–85, 187, 189–91,
235n24
premiums, 122, 150
as percentage of GDP, 182
as waste of money, clients
perceiving , 136–37, 151, 162–64,
171
for accident insurance, 48
increase in, 146
personal accident insurance and mean
annual, 235n25
profits from investment returns of, 54,
57
rural migrants and inability to pay for,
27–28
priests, 110, 116
principal
nonreturning , 55, 168, 186
returning , 55, 69, 145, 168
product development
battle between foreign and domestic
camps in, 58–73
conflict between profits and local
preferences with, 53–56
divergent institutional logics with,
56–58
pattern of divergence explained with,
73–75
production market, 52
281
professionals
AIA model of standardized scripts
and, 116–18
AIA’s sales agents as independent,
86–89
image of, 87
profit-oriented model, 53, 170
foreign insurers’, 56–57
profits
conflict between local preferences
and, 53–56
from investment returns of premiums,
54, 57
investing for, 154–56
of life insurance, 53–55
projections of market, 184–85, 190–93
property insurance, 23, 231n4
at Ping An, 22, 61
growth of, 4
prospects, life insurance
interview questions for, 214–15
questionnaire for, 219–22
The Protestant Ethic and the Spirit of
Capitalism (Weber), 10
psychological attitudes (xintai), 238n1
as key to success, 79
at Pacific-Aetna, 100
of sales agents, 77, 80, 97, 109
punishments
at Ping An, 95–96
for bad karma, 37–38, 233n13
with social order and control with fa,
236n12
puzzles
of market growth and characteristics,
19, 43–50
of market growth with taboo on death,
5–8
quality. See suzhi
questionnaires, 195
for clients, 217–19
282
Index
for prospects, 219–22
for sales agents, 215–17
interview questions and, 205–22
questions
about death and evasive answers, 9
interview questionnaires and, 205–22
rebates. See huikou
reciprocity, 17, 31, 36, 40, 44, 64, 92,
115, 119, 123, 130–32, 153
reforms
economic, 19–21
era, 26
management, 91, 103, 187, 189
market, 22, 26
medical, 30
neoliberal, 239n14
pension, 26–27
social insurance, 156–57
relationships, interpersonal. See guanxi
renhai zhanshu (human-sea strategy),
63
renqing (interpersonal obligation), 22,
64, 92, 118
baodan, 120–21, 123, 132, 145
favors and, 144–45
motives for buying life insurance,
118–21, 144–45, 150
perceived functions of buying life
insurance, 223
with trust and gifts, 153
retirement, 223. See also yanglao
benefits, 26
concerns about, 58, 101, 141, 152,
160
fund, 136–37
good life with, 154
male and female respondents on, 160
pension fund, 27
quality of life after, 41, 156
retirement insurance, 63, 120
returns. See huibao
rhetoric
business, 110, 225
familial, 96–101, 225
missionary, 86–89, 116, 224
money, 224
professional, 224
risk
avoidance, 57, 74, 157
managing , 131, 153, 156
selective attention to, 41, 44, 168,
172f
taking , 58, 70, 74–75, 143, 155,
187
risk management
a new concept of, 59–61
existing practices through savings,
41–42
perceived functions of buying life
insurance, 156–57, 223
products, 137, 236n6, 237n19
products with sales volume, 235n24
sales discourse, 223–24
through interpersonal care, 42
risk perception, 39–41, 52, 156
as cultural obstacle, 39–41
with fate, 150
with social insurance reforms,
156–57
with unit linked insurance, 60–70
Rowan, Brian, 189
Sahlins, Marshall, 144
salaries, 59, 87, 148, 179, 240n7
sales agents
assemblies for, 13, 87, 95–96, 99, 105,
195, 198, 200, 203t,
at AIA, 86–90
at Allianz-Dazhong , 103–8
at Pacific-Aetna, 97–101
at Ping An, 92–96
Index
divergent images of, 80–82
dropout rate of, 78–79
interview questions for, 205–8
management of, 108–14
productivity rate for, 240n32
psychological attitudes of, 77, 79–80,
80, 97, 109
questionnaire for, 215–17
training , 13, 22, 54, 88, 89, 90, 93, 95,
98, 103, 104, 107, 117, 133, 134,
195, 198, 199, 200, 203t, 204,
238n1, 239n21
with dirty work and necessary evil,
78–80
sales discourses
AIA model with standardized scripts
and, 116–18
explanation of, 132–33
on need for life insurance, 132–40
selling strategies and, 115–42
successful, 136–38
switching from unsuccessful to
successful, 138–40
unsuccessful, 133–36
salesman, knowledgeable, 127–28
sales talks. See sales discourses
sales teams, productivity rate for, 240n32
sales volume, 63, 65, 76, 86, 88, 89,
100, 129, 170, 185, 186, 189,
235n24
saleswoman, professional, 128–30
sample statements, coding and, 222–25
savings, 150–51
as a cultural practice, 41–42
for yanglao and managing risks,
153–54, 156–57
of city households, 24, 41–42
rates in China as compared to other
countries, 41, 154
scripts, standardized, 116–18. See also
sales discourses
283
security deposits, 94
Self-Strengthening Movement, 20
selling strategies
cultures, institutions and sales
discourse with, 140–42
discourses on need for life insurance,
132–40
getting started, 116–21
guanxi’s limits and decline of renqing
with, 121–23
linguistic framing , 60
money as motivator, 93
reciprocity, fictive kin, and gender
roles in making guanxi, 130–32
sales discourses, 17, 115, 132–40, 182
with self and making guanxi, 123–30
Sensenbrenner, Julia, 33, 35
Sewell, William, 175
Shanghai
annual premium cost in, 241n15
as a case study, 12–13, 43
as insurance hub of China, 12–13
as international settlement, 12
crime rate in, 232n8
household size, 28
market growth in, 45–47, 49, 58, 66,
69, 71, 73, 190–91
market share of individual life
insurance business in, 48f
market share of insurance business in, 62f
modern identity, 12, 32–34
mortgage, 33
policies in force in, 234n20
ratio of lung cancer patients in,
243n29
savings of city households in, 24
spending on children, 35
stock market, 6, 33, 47, 72, 154–55,
187
Shanghai Insurance Association, 237n21
showing off, for peers, 145–47
284
Index
Siegelman, Peter, 163–64
Simmel, Georg , 6
Simple Life Insurance, 22, 59
sister, naive little, 126–27
social insurance reforms, 156–57
social order, 236n12
socio-economic status, functions of life
insurance by, 159t–160t
SOEs. See state-owned enterprises
statements, coding and sample
renqing functions of buying life
insurance, 223
with money management, 222–23
with rhetoric, 224, 225
with risk management, 223–24
state-owned enterprises (SOEs), 79, 91
bankruptcy for, 25
companies and, 195, 237n23
PICC, 21–22
statistics, inconsistencies with, 231n5
stock fever (gupiao re), 33, 43, 67,
154–55
Stockman, Norman, 236n12
stock market
classes, 233n9
fad, 154–56
Hong Kong , 187
Index, 69, 155, 167
losses, 69–70
Shanghai, 6, 33, 47, 72, 154–55, 187
stranger visits (cold calls), 117, 118, 202
strategic interaction(s), 115, 126–27,
130, 142, 200
strategies
of insurers, 16, 52, 57–58, 59–60,
61–69, 71
of managers, 87–88, 92–95, 97–99,
101–3
of sales agents, 123–30, 132–40
subjective immunity, 39, 141
success
psychological attitude as key to, 79
with sales discourses, 136–40
supernatural powers, 40,
234n17
suzhi (quality), 239n14
Swidler, Ann, 10, 144, 167–68, 173, 174,
176, 177
taboo
death as cultural, 3–4, 7, 9, 16, 37, 43,
44, 79, 116, 136, 140, 168, 177,
183, 184, 233n15
impact on selling strategies, 128,
133–41
of death as marketing puzzle, 5–8
on premature death, 7, 37–39
Taiwan, 239n8
AIA management teams from,
85–86
growth of life insurance market in,
182–84
Hong Kong managers compared to
managers from, 113–14
Pacific-Aetna’s management from,
96–97
Ping An’s management from, 91–92
Tang, Wenfang , 36
Taoism, 38, 39, 110
TC Marketing Research & Consultancy
Lt., 243n28
term life insurance, 22, 137, 231n4,
236n2, 245
AIA’s, 60, 88
as waste of money, 137, 163
China Life’s, 137
in U.S., 53
with endowment, 193, 235n1
theories
of action, 231n6
of culture, 10, 167–68, 171–78
Thevenot, Laurent, 141
Tianan Life Insurance Company, Ltd.,
228, 240n28
Index
tool kit approach, to culture, 10–12,
16–17, 44–45, 50, 174–77, 181
top executives. See top managers
top managers
cultural capital of, 17, 78, 91, 107,
108, 109, 111t, 111, 112, 113, 114,
170, 171, 188, 189
institutional entrepreneurs, 77, 108,
110
labor management, 78, 87–106, 113,
170
transactions, making , 115–42
Travelers Insurance Company, 244n8
trust, 103, 115, 130–31
guanxi, renqing and interpersonal,
35–36
with renqing and gifts, 153
tu (old-fashioned), 33
Tversky, Amos, 74
United States (U.S.)
annual premium cost in, 241n15
burial insurance as first widely
accepted policy in, 235n1
cultural resistance to life insurance in,
7–8
dying without debt as good death in,
233n16
exchange rate, 237n30
household savings rate in, 41–42
insurance industry in, 7–8
life insurance in, 4, 7–8, 24, 29, 35, 53,
116, 143, 173
market trajectory, 11, 53
penetration in China and Shanghai
compared to, 6f
sales agents exploiting social networks
in, 240n4
societal cultural values, 7–8
term life in, 53
unit linked. See also life insurance
products
285
crisis and Ping An’s lessons, 69–71
definition, 245
fad, 58, 66–69
urbanization, 6, 7, 27–29, 40, 42, 43, 49
Vaisey, Stephen, 177
Vander Starr, Cornelius, 82
variable life, 66, 70, 245
variable universal life, 68, 185–87,
191
virtue
frugality as, 42
law as without, 236n12
von Senger, Herro, 236n12
Walder, Andrew, 232n6
Wank, David, 35
Weber, Max, 10
Weberian
concept of culture, 10, 44, 45, 50, 144,
168, 175, 231n6
legacy, 44, 45, 50, 144, 168, 231n6
welfare, 35, 40–43, 99, 166, 168
eroding , 6, 26–27, 29
White, Harrison, 52
whole life policy, 22, 53, 161
AIA’s, 60, 68, 88, 140
definition, 245
growth of, 183, 191–93, 236n2
Manulife-Sinochem’s, 147, 150
Ping An’s, 63, 72
Whyte, Martin, 38
wills, 233n15
Wolf, Arthur, 38
women
as sales agents, 63, 79, 83t, 97, 104, 132
career or family as choice for, 240n4
in professional sales, 128–30
work, dirty, 78–80
World Trade Organization (WTO), 23
Wuthnow, Robert, 196
Wu Yuxiao, 199
286
Index
xincun (new villages), 28–29
xintai. See psychological attitude
Yan, Hairong , 239n14
yang (modern), 33, 34, 40
Yang, Der-Ruey, 110
yanglao (support for elderly), 40, 58, 92,
120, 136, 137, 141. See also
retirement; retirement insurance
insurance, 65–66, 152
investment and, 148–49
saving for managing risks and, 156–57
savings and, 153–54
Zelizer, Viviana, 3, 9, 24, 87, 115, 143,
173, 177, 179
on burial insurance in U.S.,
235n1
on child insurance, 162
on imbuing life insurance with
benevolent meanings, 135
on sales agents as priests and missionaries, 116
with “cultural values matter” argument, 7–8, 10
Zerubavel, Eviatar, 202
Zhou Huajian, 99, 240n24