Article
Divorcing localization from
the divergence paradigm:
Localization of Chinese life
insurance practice and its
implications
International Sociology
26(3) 346–363
© The Author(s) 2011
Reprints and permission: sagepub.
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DOI: 10.1177/0268580910392261
iss.sagepub.com
Cheris Shun-ching Chan
University of Hong Kong
Abstract
This article challenges conventional assumptions associating localization with cultural divergence.
Based on ethnographic research of the life insurance business in China, it explores how
localization may intertwine with homogenization, and why it may not subvert cultural hegemony.
The data illustrate how transnational life insurers disseminated new practices and new ideas to
the Chinese population; how they localized their practices according to local conditions; and how
the newly emerged domestic insurers imitated and deviated from the organizational practices of
the transnational firms. Borrowing insights from institutional theories, the article analyses why an
initial divergence of product lines and marketing strategies between transnational and domestic
life insurers soon disappeared, and why homogenizing dynamics took place.The article argues that
localization is by no means a guarantee, nor an indicator, of divergence, and the so-called ‘two-way
street’ of cultural flows between the global and the local are far from balanced.
Keywords
China, convergence, divergence, globalization, institutional isomorphism, localization, world culture
Introduction
Over the past two decades, descriptions of the cultural implications of globalization have
shifted from ‘imperialism’, ‘hegemony’, ‘synchronization’ and ‘homogenization’, to
‘hybridization’, ‘planetarization’, ‘creolization’ and ‘heterogenization’. Despite variations
in exact meanings, the former cluster of terms can be categorized under the rubric of a
Corresponding author:
Cheris Shun-ching Chan, Rm 1217, KK Leung Building, Department of Sociology, University of Hong Kong,
Pokfulam Road, Hong Kong.
Email: cherisch@hku.hk
Chan
347
convergence paradigm, and the latter under a divergence paradigm. The divergence paradigm has been gaining popularity in communication studies, journalism, anthropology
and sociology. However, proliferating arguments for this paradigm are often based on
the premise that localization is evidence of cultural divergence: journalists describe the
operation of fast-food chains in China and Mexico ‘the “glocalization” of cuisine’,1 and
anthropologists use indigenized practices and local resistance as indicators of antihomogenization and anti-imperialism (Anderson-Levitt, 2003; Robbins, 2001; Watson,
1997). This article raises two questions: To what extent can localization of global business challenge the cultural convergence hypothesis about globalization? Furthermore, to
what extent can localization de-centre cultural power and dissolve cultural domination?
These questions are addressed through an ethnographic study of the global diffusion
of life insurance into the People’s Republic of China (PRC). I conducted 14 months of
research on four different life insurance companies in Shanghai between 2000 and 2004.
They included a wholly foreign insurer, American International Assurance Company,
Ltd (AIA); a rapidly growing domestic private insurer, Ping An Insurance Company, Ltd
(Ping An); a highly localized Sino-American joint-venture, Pacific-Aetna Life Insurance
Company, Ltd (Pacific-Aetna), and the least localized, a Sino-German joint-venture,
Allianz-Dazhong Life Insurance Company, Ltd (Allianz-Dazhong). To capture the localization dynamics on the ground, I participated in each company’s activities on a routine
basis and interviewed a number of people in the field. From 2000 to 2004, I participated
in a total of 46 morning assemblies, 48 group meetings and 28 training sessions for sales
agents. I also observed 43 occasions of agent–client or agent–prospect interactions, and
interviewed a total of 99 sales agents, 44 managerial staff, 96 clients and 35 prospects.
The findings suggest that the transnational life insurers brought a number of new
practices and ideas to the local context. However, as the topic of premature death is a
taboo subject to the Chinese, localizing insurance products and marketing strategies to
avert this cultural taboo is crucial for creating a market. The Chinese life insurance market, consequently, emerged first as a money-management market and displayed characteristics markedly distinct from that in Euro-America (Chan, 2009a). This localized
market, however, has been simultaneously accompanied by converging organizational
practices of life insurers through isomorphism at the local level. Meanwhile, a concurrent process of acculturation towards perceived superior western cultures was evident in
the everyday practices of the life insurance practitioners. Based on these findings, I argue
that it is problematic to take localization as an indicator of cultural divergence.
Furthermore, localization does not necessarily subvert global cultural hierarchy, nor does
it soften cultural hegemony.
The problem with taking localization as an indicator of cultural divergence stems
from a lack of analytical definitions of ‘localization’, ‘heterogenization’ and ‘homogenization’. In the sections that follow, I first provide analytical definitions of these key
concepts. Borrowing insights from institutional isomorphism (DiMaggio and Powell,
1983), theories of institutional logics (Friedland and Alford, 1991) and world culture
theories (Meyer et al., 1997), I conceptualize possible relations between localization and
heterogenization or homogenization. After describing the development of commercial
life insurance in China, I present empirical data about the organizational practices of
both transnational and domestic life insurance firms, illustrating why localization does
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not necessarily result in cultural heterogenization. Finally, I explain why localization
does not secure ‘two-way street’ cultural flows, even in a context with a strong local
cultural heritage.
Definitions of localization, heterogenization and
homogenization
Localization, by definition, is a way of modifying practices according to the specific
conditions of a locale. Modifications may be initiated by transnational entities as part of
their strategies to disseminate their practices, or alternatively, they may occur due to
local resistance or constraints. Measuring the extent of localization requires a comparison of the transnational entity’s practices in the host region with those in its home region.
The greater the differences, the more it is localized.
Heterogenization, on the other hand, is defined as a process by which either (1) the
practices of a sphere of life in a locale become more diverse over time; or (2) the practices of a sphere of life in two or more locales become more distinct over time. The first
process refers to heterogenization at a local level. An increase in types of entertainment
in a specific locale is an example. The second process refers to heterogenization at a
trans-local, or global, level. An example would be the types of entertainment in two different locales becoming increasingly different. Following the same logic, homogenization is defined as the opposite of heterogenization (i.e. a process by which the practices
of a sphere of life in a locale become more similar over time; or the practices of a sphere
of life in two or more locales become more similar over time).
To determine whether a sphere of life is experiencing a process of heterogenization or
homogenization requires a comparison of the degree of diversity of that sphere over
time. Different practices in different locales cannot be used as evidence of heterogenization without temporal comparisons. Likewise, similar practices in different locales cannot be taken as evidence of homogenization without comparisons. Heterogenization and
homogenization both refer to processes. The crux of the matter is the direction of changes
(Anderson-Levitt, 2003).2
It is also important to distinguish between homogenization and cultural imperialism.
Homogenization is supposed to be a neutral concept that describes a process by which
actions, ideas, or commodities become more similar. It does not necessarily imply domination. It is best described as a ‘melting pot’, with no particular element being identifiable as dominant. Cultural imperialism, on the other hand, refers to hegemonic domination
of a particular form of culture. Rooted in Wallerstein’s world system theory, cultural
imperialism portends a presence of the universal in the particular. The mechanisms by
which the universal claims legitimacy and supremacy over the particular are well theorized by the world culture perspective (Boli and Elliott, 2008; Meyer and Hannan, 1992;
Meyer et al., 1997). This perspective hypothesizes that a set of world culture principles,
conforming to rationalized models of societal order originating from the power centre of
the occidental countries, are increasingly assuming authority over the construction of
local realities. Although world culture theorists avoid using the term ‘imperialism’, their
analyses imply cultural domination and hegemony.
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Possible relations of localization to heterogenization and
homogenization
According to the above definitions, localization and heterogenization do not directly correlate with each other: they are two independent processes. At a local level, a transnational enterprise might have brought something new to a local community. If this adds to
the diversity of a sphere of life in that community, it represents heterogenization.
However, if it replaces a number of existing practices, then it does not contribute to an
increase in diversity, but rather may result in homogenization. On a global scale, whether
a corporation’s diverse practices in different locales contribute to heterogenizing a particular sphere of life depends on whether the practices have increased variety from a
global perspective. Again, if the practices of a transnational entity in different locales
have undermined existing practices, and the overall variety has been diminished, this
transnational entity has homogenized the practices of a particular sphere of life at the
global level.
Therefore, localization cannot be taken as an indicator of heterogenization. Transnational
corporations can be highly localized, and yet they can elicit homogenizing dynamics at
the targeted locales or at the global level. Institutionalist theories provide two sets of
theoretical grounds for this hypothesis. First, institutional isomorphism highlights the
possibilities of highly localized and, yet, homogenized organizational strategies within
an industry at a locale. Isomorphism, by definition, is a ‘constraining process that forces
one unit in a population to resemble other units that face the same set of environmental
conditions’ (DiMaggio and Powell, 1983: 149). Transnational corporations with different origins may have diverse organizational practices initially. However, they are
expected to resemble each other over time when they face the same local conditions.
Apart from market competition, three institutional mechanisms of isomorphism are identified by DiMaggio and Powell (1983: 150–3): mimetic processes encourage imitation
among firms in response to uncertainties; normative pressures facilitate normative and
structural homogenization through professionalization and education; and coercive pressures homogenize organizational behaviours through laws and regulations. As these isomorphic mechanisms are all constituted by the institutional specificities of a locale, the
homogenized outcomes naturally bear certain localized characteristics.
Second, Friedland and Alford’s (1991) insights about the institutional logic of capitalism, namely the accumulation of capital and the commodification of human activities,
hypothesize homogenization at the trans-local level. As institutional logic is constituted
by both material practices and symbolic meanings, the globalization of modern capitalism and the institutional logic that makes it work are likely to result in a global diffusion
of certain material practices and symbolic meanings. Third, world culture theories further hypothesize parallel processes of localization and homogenization at the trans-local
level. They hypothesize that a trans-local world level of social reality is being constructed
as culturally transcendent and causally important (Meyer et al., 1997). The legitimacy of
the constructed models rests on claims to universality. These models, which derived from
instrumental rationality principles and assumptions, through the work of ideologies, are
taken as ‘the way things work’ (Meyer et al., 1997: 149). Explicit, rationalized, differentiated organizational forms are expected to spread worldwide, and alternative models are
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expected to have difficulty competing with their legitimacy. Nonetheless, as the world
society models bear numerous external elements that are incompatible with local practices, decoupling formal models and observable practices is inevitable. Decoupling enables organizations to maintain their standardized structures to claim legitimacy and yet
modify their activities in response to practical considerations (Meyer and Rowan, 1991).
As a result, localized practices at different locales are expected, but they all share the
same source of legitimacy and the same set of principles (Ramirez, 2003).
Based on the theoretical propositions above, we would expect to observe homogenization between insurance firms in China, largely due to institutional isomorphism.
Furthermore, we expect to see formal, rationalized organizational forms gain legitimacy
and be taken as the ‘ideal model’ by Chinese insurance practitioners, despite their deviations from the ideal in actual practices.
Background on commercial life insurance in China
Commercial insurance is an imported concept on Chinese soil. Two distinctive waves of
importation can be identified. The first one was brought by the British during their imperialist reign in China in the 19th century. The second wave was brought by transnational
insurance corporations, led by American International Group, Inc. (AIG), during the globalization era starting in the last two decades of the 20th century.
Insurance companies first appeared in China in the 1800s, and the development of the
insurance industry reached its climax in the late 1920s–1930s. During this period, the market was dominated by foreign players, who controlled over 80 percent of the business (Wu
and Zheng, 1993). By 1935, there were over 160 foreign insurers coming from 16 countries
(Xu et al., 2001). However, life insurance was far less developed than property insurance.
Only one-fifth of the companies carried life insurance policies, and life insurance premium
income accounted for only a small proportion of the business (Huebner, 1930).
With the outbreak of the Sino-Japanese War, followed by the Second World War,
many insurers shut down their operations in China. When the Chinese Communist Party
(CCP) took over in 1949, it founded the People’s Insurance Company of China (PICC),
China’s first national insurance company. The operation of the PICC was based on a
state-owned enterprise (SOE) model, instead of a commercial or profit-oriented model.
The growth of the PICC ceased in 1958 with the beginning of a number of political campaigns. During the Chinese Cultural Revolution (1966–76), insurance all but disappeared
(Xu et al., 2001). As part of Deng Xiaoping’s economic reforms, the state-run PICC
resumed operations in 1979, using its same SOE organizational practices. Two private
insurance companies, including Ping An, were subsequently founded, with their operations comparable to PICC.
Beginning in 1992, an entirely new scenario emerged. New ideas and practices were
first brought in by AIG’s subsidiary, AIA. Between 1993 and 2000, another six foreign
life insurers arrived to operate as joint-ventures with domestic partners. At the same
time, four domestic private life insurance companies were founded. By the end of 2004,
the number of life insurance firms reached 34, of which 20 were foreign-owned or jointventures. (As all the joint-ventures were headed and operated by the foreign partners,
they were categorized as ‘foreign’ companies in official publications and by the general
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public.) In this second wave of insurance development in China at the turn of the 21st
century, life insurance became the dominant business. The average annual real growth of
life premium income from 1995 to 2004 reached 30.7 percent, compared to 9.1 percent
growth for property insurance. Industry-wide, the proportion of revenue coming from life
insurance sales increased from 34 percent in 1995 to 75 percent in 2004 (Chan, 2009a).
Globalization and localization of life insurance in China: An
ethnographic account
Upon AIA’s entrance, it introduced an operation model entirely different from the one
adopted by PICC. This model embraces a differentiated organizational structure, a riskmanagement concept of life insurance, actuarial-based product development, an agencydriven sales system and risk-related sales discourses. AIA’s operation was largely adopted
by other insurers, including locally founded ones. Nonetheless, transnational insurers in
China also localized their practices, some of which were active strategies to achieve effective management; whereas others were the result of pressure from local competitors.
Organizational structure and practice
Chinese locals labelled AIA’s operation a ‘western model’. This model was based on a
legal-rational archetype. Before the appearance of AIA, the division of labour at domestic insurance firms was less distinct. A unit often served a number of different functions,
carrying out a number of different tasks. The organizational structure of AIA, on the
other hand, rested on a highly specialized, systematic division of units and labour. The
organizational management was divided into internal and external affairs. Product development, investment management, agency training and advertising all belonged to internal affairs (so-called in-house management). In-house management was divided into 24
highly specialized departments and functional units. The management of the sales force
and sales activities belonged to external affairs. The sales force was divided into a
number of sales teams, distributed over different agency sites. A hierarchical system of
sales agents with multi-rank was established. Criteria for promotion, measured in terms
of sales volumes and recruitment of new members, was set unambiguously.
Placing expatriate Chinese in top managerial positions was the most obvious localized
strategy of AIA. Taiwanese and Hong Kong natives sat at the top levels while mainland
Chinese, mostly Shanghainese, occupied middle and lower level managerial positions.
Only a few Caucasian expatriates were found at the upper-middle level of management.
‘The management strategy of AIA is “using the Chinese to manage the Chinese” ’, a senior agent of AIA said.3 Taiwanese managers were mainly in charge of the agency system
and sales; whereas Hong Kong managers were in charge of in-house management.
According to senior agents of AIA, this division of labour between the Taiwanese and
Hong Kong teams was well justified because of their cultural differences. In their words,
‘the Taiwanese know better the local [mainland Chinese] cultures and, so, they are better
[than the Hong Kong people] at sales and marketing’. On the other hand, ‘Hong Kong
people are very rule-abiding and, so, they are good at setting up the administrative body
of the company’.4
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Despite the localized personnel of AIA, its rational, formal organizational form served
as a model for domestic insurers to follow. The Chinese insurers all attempted to shed
their SOE characteristics and take on AIA’s legal-rational standards. Ping An has been
most proactive in modernizing its organizational structure. In 1995, its director hired a
number of experienced life insurance managers from Taiwan to advise on how to restructure the organization and professionalize the functions of various units. The organizational image of Ping An, nonetheless, was still far less institutionalized and systematic
than that of the transnational insurers. Then, in 1997, it hired a global business consultancy, McKinsey & Company, to evaluate its organizational operation. McKinsey pointed
out that Ping An’s organizational structure was too rudimentary and ambiguous. They
advised the top management on how to build a more specialized and regulated model of
organizational management. Open to this advice, Ping An refined its organizational
structure accordingly. Between 1999 and 2001, it sought Caucasian and Chinese expatriates from all over the world. The expatriates then headed various departments, including
strategic planning, actuarial and investments, human resources, advertising and technology. By the end of 2001, there were 27 expatriates occupying half the top managerial
positions at Ping An. A local magazine ironically described the managerial body of Ping
An as ‘Eight-Power Allied Armies’.5
With the emergence of domestic private insurers and the advent of foreign insurers,
PICC was under pressure to revolutionize its organization. In 1996, it was restructured
into three independent share-holding companies, each specializing in life, property, or
reinsurance business. The life insurance business was named China Life Insurance
Company, Ltd (China Life). Both AIA and Ping An became the model for China Life to
follow in establishing its organizational structure.
Ping An and other Chinese insurers valiantly attempted to live up to the legal-rational
organizational template, because such a template lent them legitimacy and earned them
the public’s confidence. However, given their unique historical and cultural origins, it
was often easier for them to mimic the form than adopt the substance of the world culture
(Meyer and Rowan, 1991). As a result, decoupling practices from the formal organizational form was more conspicuous in domestic insurance firms than in foreign firms. In
spite of this, the ‘rational appearance’ of local insurance firms made them appear comparable to the transnational corporations.
Concept and product development
Before AIA’s arrival, PICC concentrated on property and group life insurance, though it
also carried an individual life policy called Simple Life. Without actuaries or underwriters, the premiums and insured amounts of PICC’s products were derived by convenience. For example, Simple Life cost 1 yuan (US$0.12) a month for a return of 1 yuan a
day at the end of a 20-year term. This policy was sold to employees in state-owned or
collective enterprises as a kind of savings plan.
It was not until AIA’s entrance that life insurance took on a risk management definition. Facing a population with no concept of life insurance, AIA aimed to educate the
public. It defined life insurance as a ‘protection against misfortunes’, and offered two
personal accident policies. To sell these products, the agents were given sales scripts
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353
much like those documented by Zelizer (1979) in America. These scripts imbued the
meanings of life insurance with moral obligations for the family, emphasizing ‘protection’,
‘love’, ‘respect’, ‘self-reliance’, ‘family responsibility’ and ‘human values’.
As an inexperienced domestic insurer, Ping An modelled its first product on AIA’s,
but set a much lower premium. However, Ping An soon found that accident insurance
was not well received by the public, due to the Chinese taboo on talking about premature
death and fatal misfortunes (Chan, 2009a). It stopped imitating AIA’s product development and, instead, launched three policies that served primarily a savings function. They
included a whole life endowment policy, a whole life annuity policy and a child endowmentannuity policy. The first two policies, called ‘retirement insurance’, were designed to
appeal to the local penchant for savings and concern about life during retirement. The
child policy, on the other hand, was offered to capitalize on the emerging child-centred
way of life. Between 1995 and 1997, these three products boosted Ping An’s market
share from 14 percent to 35 percent.6
In response to the popularity of Ping An’s products, China Life (the former PICC) and
other domestic insurers quickly launched a few similar products. AIA, on the other hand,
refused to offer comparable savings policies. Consequently, it suffered a severe setback,
with market share dropping from 23 percent in 1995 to a mere 8 percent in 1997.7 It was
not until 1998 that AIA finally yielded to the pressure of competition by localizing its
products to cater to the local preference for money management. It launched a retirement
insurance policy, and its sales began to slowly revive.
All other foreign insurers likewise refused to simply adopt the local definition of life
insurance at first. Even when they later (reluctantly) offered savings products, they still
insisted on the risk management concept of insurance. Why? An actuary of Pacific-Aetna
explained:
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.8
Thus, it was the profit structure of life insurance that deterred transnational firms’ fullfledged localization of their product line. Their reluctance to offer competitive savings
products made them lose market share to domestic players, but it saved them from financial losses. To capture the market, the domestic insurers sold a large volume of products
bearing high interest returns. With a series of reductions in interest rates starting in 1996,
these sales consequently induced severe financial losses for the domestic insurers. By
June 2000, Ping An lost 10 billion yuan (US$1.2 billion) from sales of unprofitable products. China Life suffered from the same problem.9
Capitalizing on the stock performance and the popularity of stock exchanges in
Shanghai (Hertz, 1998), Ping An continued to present life insurance as money management. It introduced unit-link as a profitable investment policy. In unit-link, each unit of
the premium paid is linked to an investment return and, so, the amount payable may fluctuate during the term of the policy. This new concept of insurance as a means of investment received a feverish response from the public. The unit-link brought another surge in
Ping An’s sales, bringing its market share to a peak of 49 percent at the end of 2001.10
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Foreign insurers’ response to the unit-link fad was rather ambivalent. On one hand,
they introduced a para-investment policy called ‘dividend insurance’ (with a dividend
rate dependent upon the profitability of the insurer’s investment) to compete with the
domestic players. On the other hand, these foreign insurers were frustrated by the unitlink fad, and blamed Ping An for misleading the public and distorting the concept of
insurance. ‘Insurance is supposed to reduce risk, not to add risk to our clients’, the general managers of the foreign insurers reiterated.11 They consolidated training for their
sales agents, emphasizing the risk management functions of insurance.
Salient disparities between transnational and domestic insurers were observed before
2001, as they fought over definitions of life insurance and sales discourses. However, an
intensified homogenization of products and sales discourses soon took place. In 2001,
the popularity of the investment product unit-link began to sink, as the stock index fell
and unit-link clients found themselves losing. Because the Chinese clients were not fully
aware of the risk involved in this product, they blamed Ping An’s sales agents for misleading them. A number of policyholders filed complaints with the China Insurance
Regulatory Commission (CIRC), accusing Ping An of cheating them. This resulted in a
‘unit-link crisis’. Consequently, Ping An and other domestic insurers began to follow
more closely the product lines of their foreign counterparts. Starting in 2002, they
switched to selling critical diseases products that served mainly a risk management
function.
Agency management and marketing strategies
Making a living based on commissions was new to the people in the PRC. PICC’s Simple
Life was sold by staff who received salaries rather than commissions. AIA replaced
PICC’s passive sales method with a progressive, door-to-door marketing strategy. The
sales agents were structured in a pyramid, and their income depended entirely on the
volume of their own sales and of their down line agents. This agency-driven, commissionbased, pyramidal structured sales system then became the primary model on which the
domestic insurers developed their sales teams.
At the same time, AIA strove to establish a professional image of the company and
its sales agents. It targeted young university graduates as in-house staff and sales agents,
making them look professional. Their sales agents were among the tiny number of
locals wearing ‘western suits and ties’ in the early 1990s. They were taught the importance of physical appearance and a professional demeanour. Meanwhile, they were
instructed to follow a standardized sales process that included seven steps. The multiphased sales process was almost exactly the same as what Oakes (1990) and Leidner
(1993) found in the marketing of life insurance in the United States. AIA’s sales manuals contained detailed instructions teaching the agents what to do at each step, including
how to debate with prospects, what to say, what not to say, and how to catch prospects’
impulses to close a sale.
To manage the Chinese agents’ emotions and ways of thinking, a ‘desired psychological attitude’ was first introduced by AIA to its agents (Chan, 2007). Such an attitude
embodies a set of specific framing and feeling rules (Hochschild, 1979): a belief in the
value of life insurance, an indomitable work ethic, a proactive character, a habit of
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reaching out, a desire to win and an ability to maintain positive thoughts in the face of
rejection and meagre income. Although some modifications are made according to the
local context, these rules are comparable to the ‘positive mental attitude’, the ‘selftransformation agenda’ and the ‘vocation of sales’ that Leidner (1993) and Oakes (1990)
described in America. During my research in Shanghai, advice on how to maintain a
‘desired psychological attitude’ was part of everyday conversations among sales agents
from all the different insurers.
While AIA brought in its agency sales system and various sociopsychological techniques to manage the sales agents, its marketing strategies were, to a large extent, under
the influence of Ping An. Ping An deployed a marketing strategy called ‘human-sea strategy’ by recruiting a large number of sales agents, mostly women in their mid-thirties to
forties, to approach as many people as possible. The agents were encouraged to mobilize
their guanxi (interpersonal relationship) network to sell life insurance to friends and relatives. Due to the high level of trust and the etiquette of renqing (interpersonal obligation)
that governs pre-existing guanxi, Ping An’s marketing strategy proved to be effective.
Many people were willing to buy an insurance policy in order to maintain their relationships with the sales agents. To compete for business, AIA soon followed Ping An’s model
by quickly expanding its sales force. As a result, all sales agents in the period of 1995–8
intensively and extensively exploited their guanxi and renqing to achieve insurance sales
(Chan, 2009b).
When it comes to the sales scripts, however, the sales agents from foreign insurers
differed from those from domestic firms. Their divergence was especially obvious in the
beginning when foreign and domestic firms offered dissimilar products. In order to sell
risk management products, the agents from the foreign camp talked about ‘risk’, ‘protection’,
‘dignity’ and ‘responsibility’. In contrast, the agents from the domestic camp talked
about ‘savings’, ‘returns’, ‘dividends’ and ‘investment’. The divergence in sales discourse, however, subsided when the product lines of both foreign and domestic insurers
later became more alike.
Why no divergence?
As Hefner (1998: 30) puts it, ‘there is no capitalism without local articulation’. Even for
an artefact as commodified as life insurance that puts human life into a statistical formula, creating a market must be localized. Localization, however, does not guarantee a
divergence of economic practices or cultural heterogenization at either the local or global
level. Why not? I shed light on this question by borrowing some theoretical tools from
institutional theories.
Before the arrival of AIA in the early 1990s, insurance practices in China exhibited a
high degree of homogeneity. The state-run PICC monopolized the market in the 1980s,
and the newly emergent domestic private insurers more or less followed the model of the
PICC. AIA’s promotion of individual life insurance did bring about heterogenization of
insurance practices in the early phases of market development, and it brought in a new
operation model substantially different from the PICC model. The domestic insurers
eagerly imitated AIA’s model, but they invented their own products and sales discourses
based on local preferences. A high degree of diversity was found in product lines and
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selling practices between the foreign and domestic insurance firms, particularly from
1995 to 1997.
However, the diversification process did not last long. By 1998, isomorphic dynamics
had set in. The products of the transnational and domestic insurers, as well as their marketing strategies, were moving closer to each other, due to market competition, mimesis,
normative pressure, legal enforcement and the profit-oriented institutional logic of insurance. Mimesis was the most salient process of isomorphism in the life insurance field in
China, as three waves were observed. First, the inexperienced domestic insurers imitated
their experienced foreign counterparts in organizational structure and practice, though
decoupling was inevitable. Subsequently, when domestic players’ deviation from their
foreign counterparts in product designs and marketing strategies proved effective, they
led the mimetic process. Foreign insurers followed the domestic players’ retirement
insurance product lines and strategies of capitalizing on guanxi to market these products.
Finally, when the products sold by the domestic insurers suffered from financial losses
and Ping An’s unit-link ran into a crisis, all insurers concentrated on promoting risk management products.
Another isomorphic dynamic was driven by normative practices in the field, namely,
through formal education and the transfers of employees. Upon its entry, AIA immediately sponsored a professional actuarial training programme for local candidates.
Subsequently, a number of degree programmes in insurance and related majors were
launched in several universities. The programmes included finance and insurance, insurance actuarial studies, insurance law and insurance company management. In 2000, over
2000 students were enrolled in these programmes. Except for insurance law, which may
vary from place to place, the general and technical knowledge of insurance – based on an
instrumental, statistical model of rationality – is disseminated rather universally across
different locales and cultures.
Furthermore, transfers of employees among insurance firms were common, as the
newcomers recruited managers and sales agents from existing insurers. For instance, the
Sino-American John Hancock-Tianan life insurer recruited personnel from AIA and Ping
An to start its operation in 2001. A number of Ping An top managers were hired by the newly
formed domestic insurer, New China Life Insurance Co. Ltd, and by an existing competitor,
China Life. AIA and Ping An have become two big pools of experienced personnel from
which new insurers draw to form their own staff. As a result, an increase in the number of
insurers did not bring an increase in variations among firms’ practices and cultures.
Increasing legal enforcement, at the same time, contributed to homogenizing product
development and organizational practices. Prior to 1998, the Chinese life insurance market was described as ‘anarchy’. Without many legal and regulatory constraints, insurers
could fully utilize their imaginations to compete with each other. Since 1998, however,
with the establishment of CIRC to formulate and enforce insurance law and regulations,
insurers have faced limitations on diversifying their products. For instance, in 1999, an
upper and a lower limit on interest rates (4 percent to 2.5) was set for all life insurance
products, which eventually limited the range of variations in product designs.
The initial disparity between the transnational and domestic insurers, I suggest, stems
from the fact that the transnational players quite rigorously followed the profit-oriented
institutional logic of life insurance; whereas the domestic players tended to yield to the
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local resistance in order to capture a large market share (Chan, 2009a). However, the
market-share approach later proved to be unsustainable, and the domestic players were
left with little choice but to converge with the transnational players’ model. This convergence was driven by an underlying driving force, namely the profit-oriented institutional
logic of life insurance.
Insurance belongs to a category of commodities requiring a specific logic of operation
to make profits and capital accumulation possible. The basic principle on which insurance operates is a probabilistic calculation of risk. 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, endowment or annuity insurance, participating policy and variable life), profits principally
come from the investment returns of premiums. Thus, the profitability of money management products relies more on the investment environment, which is often less predictable. According to the profit-oriented principle, it is in the best interest of the 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 for insurers’ profitability to sell risk management products, because the state
imposed a number of restrictions on the investment options of life insurers, making their
investment returns highly susceptible to local interest rates.
From the second half of 2002, when the products of the domestic insurers were no
longer different from those of the transnational insurers, their battle over the concept of
life insurance became unnecessary. Instead, insurers from both camps collaborated with
each other, in an attempt to raise the sense of risk in the general public to sell protective
products. By the end of 2002, the total number of products available in Shanghai was
over 100. Nonetheless, the products became more similar across different providers.
In a review article on ‘market society’, Fourcade and Healy (2007: 27) allude to the
limits of ‘heterodoxies’ by highlighting the fact that market society’s formulation, transposition and implementation are constrained by existing institutions and ‘rules of the
game’. In this case study, despite the domestic insurers’ daring heterodox practice in the
early phase of market development, they finally more closely followed the foreign, conventional, profit-making model, in order to stay in the ‘game’. The limits of ‘heterodoxies’
hint at a possible convergence at the global level, when modern capitalism is increasingly taken on as the most legitimate game.
The uneven cultural flows
For more than a decade, anthropologists have unanimously advocated replacing the concept of ‘cultural domination’ with the concept of ‘cultural flows’, specifically ‘two-way
street’ cultural flows (Watson, 1997) or ‘fluid, irregular shapes’ of flows (Appadurai,
1996). Intriguingly, this unidirectional movement seems to be a compromise within the
disciplinary conventions of anthropology. As Tsing (2000: 339) bluntly puts it, ‘no
anthropologist I know argues that the global future will be culturally homogeneous’. The
unanimous position of the second generation of social and cultural anthropologists
against the homogenization hypothesis, ironically, expresses homogeneity in itself. The
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result, Tsing (2000: 340) comments, is a ‘ “freeing up” variety of globalism’, celebrating
the subversive power and innovative imaginations of the locals. The empirical evidence
they have provided for this intellectual movement, however, is chiefly ‘resistance’ and
‘tension’ when the local meets the global. In this section, I analyse the flows between the
global and the local, and ask if the convergence of life insurance practices in China signifies the domination of a particular form of modern capitalist culture.
We do see that the local actors in China were not passive receivers of transnational
practices and ideas. Instead, they resisted accepting the transnational players’ intentions.
To a certain extent, they forced the transnational players to localize their practices and
products. Nonetheless, a concurrent process of acculturation towards western cultures is
evident. Such an acculturation process rests on the legitimacy of certain universal claims
hypothesized by the world culture perspective, such as instrumental rationality, individualism, and occidental superiority.
First, corporate models and insurance markets in the West, particularly in the United
States, were always used as the ideal standards for Chinese corporations and markets.
The inferiority of the SOE model and the higher social authority of AIA’s legal-rational
model were obvious, when the domestic insurers all strove to imitate AIA or western
organizational forms. Meanwhile, the premium income, the penetration rate and the density of insurance in the United States were often cited to illustrate how far the Chinese
market was lagging behind.12 The financial assets of the European and American insurance corporations were set as the goals that the domestic insurers should pursue.13
More importantly, the promotion of certain cultural values and the condemnation of
others demonstrate that cultural elements have been flowing in a certain direction, and
those elements are not confined to ‘form’, but include ‘content’ as well. Transnational
insurers in China strove to get rid of what they called ‘the locals’ SOE mentalities and
habits’, which were considered unfavourable to the development of the life insurance
industry. Those mentalities and habits, bred by Communism in the Maoist regime, were
said to show a ‘lazy’, ‘dependent’ and ‘non-competitive’ attitude in both the sales agents
and the prospects. As a result, agents did not work as hard and aggressively as insurers
wanted; and instead of buying life insurance, prospects expected the state or someone to
take care of them. To eradicate these mentalities and habits, the agents who were neither
aggressive nor competitive enough were denounced. People who expected help from
relatives or the state were condemned. Only certain attitudes were acceptable and respectable. These attitudes seem to be the normative standards in America, such as being
aggressive, competitive, independent, self-reliant and even workaholic. To quote a senior
sales agent of AIA who spoke in a sales team meeting:
Ten years ago, I wore grey clothes and a pair of shabby sandals. I earned 36 yuan per month.
My neighbours wore the same and earned the same. … Today, I am wearing a western suit and
tie. I am earning thousands a month. I am confident every day when I walk out the door of my
home. When my neighbours are back home and rest in the evenings, I am still working. But
now my pocket has a different amount of money from theirs. My value as a person is different
from theirs!14
Hence, the new labour logic of unequal payment, based on differential labour values
and working around the clock to prove one’s worth, was endorsed by many of the
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sales agents who stayed in the industry (Chan, 2007). A moral classification, in this
case, was working through celebrating a particular order and condemning alternatives
(Bourdieu, 1977).
Indeed, certain values became institutionalized in the sales agents’ routines and companies’ ritualized activities. In my observation, the trainers and the sales agents often used
stories and metaphors to demonstrate the desirability of being American, or the superiority of western civilization. For instance, the agents of AIA described their own insurance
policy as similar to a ‘green card’, while an insurance policy from a domestic insurer was
a Chinese identity card. The use of these metaphors was intended to show the difference
between products from an internationally recognized firm vs those from a locally recognized company.15 Even domestic companies used morality tales to attribute superior signification to western civilization. For example, a trainer at Ping An told a story of how
‘civilized people’ taught tribal people of the need to wear shoes, as a metaphor to show
that the insurance agents bore the mission of teaching local Chinese the need to buy life
insurance. Insurers and their agents who understood the importance of life insurance were
the ‘civilized people’, whereas the general public which had not recognized the need for
insurance were the ‘tribal people’, ignorant of basic civilized needs.16
Thus, it is obvious that there exists a repertoire of cultural hierarchy. The western
prototype was not imposed through physical or psychological coercion, but through the
receiving party’s active perception of western supremacy. Tomlinson (1991) rebuts the
cultural imperialism thesis by arguing that indigenous people’s adoption of some foreign
practices – watching television, for example – cannot be deemed as being imposed, nor
is their intention to accept western values and habits. Of course, local people’s practices
are not ‘imposed’ upon them, and it would be amusing to hear someone saying that ‘I
watch television, or I do X, in order to accept western cultures and to abandon my own’.
My contention is that subjectivity is produced and reproduced through a wide range of
(localized) practices, and cultural domination is exercised through local people’s active
glorification of a set of foreign cultural genres, and disparagement of the native ones.
Tomlinson (1991) qualifies cultural domination as ‘cultural imposition’ through coercion. I argue that it is precisely the lack of a feeling of cultural imposition, as there is no
need to impose a foreign culture through coercion, that, borrowing Herzfeld’s (1997:
157) phrase, ‘hegemony appears to have done its work too well’.
Concluding remarks
The divergence hypothesis first emerged when a group of scholars became critical of the
modernization paradigm. Its merits include the proposal that alternative models and multiple paths to modernities are not only possible but culturally preferred. However, in the
discussion of the cultural impacts of globalization today, the divergence paradigm tends
to ignore, undermine, or neutralize power dynamics in global–local interactions. Terms
like ‘intercultural osmosis’, ‘global mélange’ and ‘cultural hybridity’ represent all cultures as sharing the same degree of power in shaping the global culture, as if there were
no cultural hierarchy. The risk of such a celebratory depiction of the global–local dynamics, in Shohat’s (1992: 109) words, is ‘to sanctify the fait accompli of colonial violence’,
and more recently according to Tsing (2000: 339), to ‘naturalize[d] globalist ideologies
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of the global’. Thus, even Pieterse (1994: 180) remarks that ‘the hybridization perspective remains meaningful only as a critique of essentialism’ (emphasis added).
Based on an empirical case study, this article presents two major arguments. First, it
is problematic to use localization as an indicator of divergence. Selective localization, I
argue, is a necessary step to reconcile local cultures and global imperatives, and it can be
intertwined intimately with the process of homogenization. Second, it is too early to
abandon the concept of cultural domination by assuming a ‘hundred flowers blooming’
dynamic of the global–local interactions. Given the history and the size of China, its
local culture can hardly be classified as ‘periphery’. Nonetheless, when it encounters
modern capitalism and the culture associated with it, China’s resistance has its limits. As
a case in point, the Chinese insurers have been moving more towards the foreign models
than vice versa. Furthermore, a hierarchy of meanings shaping and reshaping local
actors’ subjectivities, with varying degrees of success, has been operating at the ideological level for the life insurance industry’s development in China. These arguments, however, do not preclude the possibility of divergence. If we recognize localization as a
constitutive force of globalization, then the questions of our research are not whether
localization takes place, but how, by whom and based on what metrics.17
Funding
This article is derived from a larger project funded by the Social Science Research Council, the
Center for International and Comparative Studies at Northwestern University, the University
Center for International Studies and the Asian Studies Center at the University of Pittsburgh.
Notes
1. ‘When eat meets west’, Time, 28 January 2008, pp. 44–6. For the concept of ‘glocalization’,
see Robertson (1995).
2. Exemplars of divergence arguments based on temporal and spatial comparisons can be found
in Mills et al.’s (2008) comparative studies of the impact of globalization on industrial relations and employment, and Frank and Stollberg’s (2004) studies of the globalization of Asian
medical practices in Europe.
3. Interview, Shanghai, February 2002.
4. Interview, Shanghai, January 2002.
5. Nanfeng Chuang [The Window of Southern Wind], February 2002, p. 43. The term ‘EightPower 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 eight powers were considered imperialists and the
attack was considered a humiliation to the nation of China.
6. Twenty-First Century Economic News [Ershiyi Shiji Jingji Baodao], 7 January 2002.
7. Twenty-First Century Economic News [Ershiyi Shiji Jingji Baodao], 7 January 2002.
8. Interview, Shanghai, August 2002.
9. ‘Insurers lose on rate cuts’, South China Morning Post, Hong Kong, 13 September 2000.
10. Almanac of Shanghai Insurance 2002. Shanghai: Editorial Board of Almanac of Shanghai
Insurance, China Insurance Regulatory Commission Shanghai Office.
11. Interviews, Shanghai, August 2002.
12. For example, see ‘Kan yangbaoxian yingxiao zhaoshu’ [Looking at the selling strategies of
western insurance], Zhongguo Jingying Bao [China Business Management Press], 19 June
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2001; ‘Shanghai baoxianye chaju zai nali’ [How far the insurance industry in Shanghai is
behind], Shanghai Baoxian [Shanghai Insurance], December 2001.
13. ‘Waizi baoxian jiasu jinru yiwei zhe shenme’ [What are the implications of the increasing pace
of foreign insurers’ entrance?], Zhongguo Baoxian Bao [China Insurance], November 2001.
14. Participant observation at the meeting, Shanghai, May 2002.
15. Participant observation at AIA’s training and group meetings, Shanghai, February 2002.
16. Participant observation at the training session, Shanghai, April 2002.
17. Thanks to a reviewer’s suggestion for this concluding remark.
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Biographical note
Cheris Shun-ching Chan is an Assistant Professor of Sociology at the University of Hong Kong.
She received her PhD in sociology from Northwestern University and held a postdoctoral fellowship at UCLA’s International Institute. Her primary research interests include culture, economic
practices, Chinese medicine, globalization and China’s sociocultural changes. She is the author of
Marketing Death: Culture and the Making of a Life Insurance Market in China (forthcoming,
Oxford University Press), and has published in American Journal of Sociology, Theory and Society
and China Quarterly.
Résumé
Le présent article vise à interroger le lien habituellement établi entre la localisation et la divergence
culturelle. Basé sur une enquête ethnographique auprès d’entreprises d’assurance vie en Chine,
il explore la manière dont la localisation et l’homogénéisation culturelle s’articulent, de manière
à expliquer pourquoi la localisation ne correspond pas nécessairement à une subversion de
l’hégémonie culturelle. Les données permettent de voir comment les entreprises internationales
d’assurance vie ont disséminé de nouvelles idées auprès de la population chinoise ; comment
elles ont localisé leurs agences en fonction des conditions locales et comment les entreprises
nationales ont simultanément imité et détourné les pratiques organisationnelles des entreprises
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transnationales. A l’appui des théories institutionnalistes, l’article analyse la disparition progressive
d’une divergence initiale en matière de produits et de stratégies de marketing entre les entreprises
nationales et transnationales, en expliquant la raison de ces dynamiques d’homogénéisation. Il
s’agit de montrer que la localisation ne garantie pas la divergence et ne peut nullement en constituer
un indicateur fiable. La soi-disant « route à double flux » des circulations culturelles entre le niveau
global et le niveau local n’est nullement fréquentée de manière équilibrée dans les deux sens.
Mots clés: Mondialisation, convergence, divergence, localisation, culture globalisée
Resúmen
Este artículo analiza la relación entre el comportamiento ambiental de un individuo y su contexto
social. Tomando como punto de partida la literatura sobre movimientos sociales y sociedad global,
se parte del supuesto de que el medio ambiente tiene a la vez una dimensión nacional y global.
Usamos la encuesta del ISSP de 2000-2001 sobre medio ambiente para testar nuestras hipótesis
y distinguimos dos tipos de comportamiento: públicos y privados. Los comportamientos públicos
incluyen acciones como participar en manifestaciones. Los comportamientos privados consisten
en actividades como la separación de basuras. A nivel contextual consideramos los vínculos con la
sociedad mundial, la estructura nacional de las oportunidades políticas y los recursos. Un modelo
de regresión jerárquica que incluye 23 países y alrededor de 24.000 entrevistados muestra que los
comportamientos públicos son bastante similares entre países, mientras que los comportamientos
privados están más influidos por los contextos locales. Por lo que se refiere a los factores
contextuales, la estructura de las oportunidades políticas tiene el mayor impacto tanto sobre los
comportamientos públicos como sobre los comportamientos privados. Los factores de la sociedad
global también ofrecen explicaciones adicionales.
Palabras clave: Globalización, movimientos ecologistas, sociedad mundial, oportunidad política,
comportamiento ambiental