Olin Life in China

PY
Third Edition

A U.S. Insurance Company Enters China

O
C
A role-play simulation designed to teach
cross-cultural negotiation strategies

U.S. ROLE: ERIN SOLOMON

T
By
Maureen Maguire Lewis
O

Senior Editors
N

Dr. Oded Shenkar and Dr. Roy Lewicki

The Ohio State University
Fisher School of Business
O

Funded by the Ohio State University

CENTER FOR INTERNATIONAL BUSINESS EDUCATION AND RESEARCH
©2011, 2006 2002, Maureen Maguire Lewis and Ohio State University.
D

All rights reserved.

 1. Advice for U.S. Role Players

For most of us, role-playing, like acting, does not come naturally. It can make
us uncomfortable, self-conscious and awkward. But in this exercise, you will
not be standing alone before a judgmental audience. You’ll be working
alongside several other people and you won’t have to memorize a script.

PY
The best way to play your role in this simulation is to read, re-read, and
immerse yourself in the background material, country information, character
descriptions and suggestions provided in your role chapter.

You should read the pages once without underlining anything. Then, after a
day or so, read through them again. This time, underline important points;
write comments and annotations in the margins. You may even find it useful to

O
outline your character role and his or her goals and motivations.

Your role chapter contains an abundance of useful and useable information;

every fact and detail can matter and can help in your negotiations. Thus, the

C
better you know your role packet, the more prepared you will be during the
simulation.

In terms of what you want to achieve, this is up to your team. You will be
meeting together twice: the first meeting will occur with your U.S. team
members in order to establish a working strategy and a set of goals for your
T
company. The second meeting will be with the Chinese representatives in
Shanghai, China.
O
N
O
D

2
 2. Company & Context for the U.S Team: Olin Life Insurance Company

Olin Life’s History. Founded in 1977 by David Louis Olin, Olin Life Insurance
Company (Olin) is a financial services company, providing a portfolio of savings,
retirement, pension, health and life insurance products and services to

PY
individual and corporate customers. From its headquarters in Columbus, Ohio,
Olin operates almost everywhere in the United States and has two overseas
outposts in the Philippines and Indonesia. In all these geographic areas, Olin’s
business is primarily life and health insurance products.

Olin’s current CEO is James Terence, a 67-year-old dynamo. Terence has

worked in the insurance business since he graduated with honors from Ohio

O
Wesleyan University. He is responsible for expanding Olin’s operations into 47
states, Puerto Rico, the Philippines, and Indonesia. His success has resulted in
Olin’s healthy bottom line over the last ten years, and its reputation as a solid
and reliable insurance company.

C
Now Terence has ambitious goals for his company: He wants to lay the
groundwork for expanding into Asia, particularly India, Vietnam, and China.
Some colleagues are against further Asian expansion; the global economy in
2011 remains fragile and uncertain. But Terence claims these countries are
fast-growing economies with enormous populations, huge ambitions, and
unlimited potential for strong middle classes in the next decade.
T
Terence is excited about entering the Chinese life insurance market. He likes to
quote a number and an acronym—1.3 billion and WTO. The number, of course,
refers to China’s population. Even with the one-child policy established in
O
1980, China continues to grow. It has the largest population on earth; in fact,
China is home to 20 percent of the world’s population. The acronym, WTO,
refers to the World Trade Organization, the Geneva-based international
organization that regulates how global trade is governed. The World Trade
N

Organization (WTO) is the only global international organization dealing with

the rules of trade between nations. At its heart are the WTO agreements,
negotiated and signed by most of the world’s trading nations and ratified in
their parliaments. The goal is to help producers of goods and services,
exporters, and importers conduct their business. 1
O

For nearly fifteen years, China tried to join, first, the General Agreement on
Tariffs and Trade (GATT). When GATT became the World Trade Organization
(WTO), China was denied entry because its markets were considered too closed.
However, in February 2000, The People’s Republic of China and the United
States reached an agreement on important issues related to entry. Regarding
D

the insurance industry, the countries agreed that after China officially joined
the WTO, it would

1
http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm

3
 • Award insurance companies operating licenses solely on the basis
of reasonable and equitable criteria. Companies established for
over 30 years with at least $5 billion in assets could apply for a
license from the China Insurance Regulatory Commission (CIRC),
the industry’s watchdog organization in China.

PY
Eliminate all geographic limitations for foreign insurance
companies by 2004. In 2006, foreign insurance companies would
be able to set up branches and offices anywhere in China.

• Expand the scope of products that foreign insurers can sell,

including group, health and pension lines of insurance, by 2004.

• Allow 50 percent or more for foreign ownership of life insurance

O
joint ventures with Chinese companies.

• Allow life insurers to select their own joint venture partners.

Now, in 2011, all these obligations have reportedly been met by the Chinese

C
government. Today James Terence believes that 1.3 billion plus WTO equals
endless opportunity. Olin’s profits from both the Philippines and Indonesia
have been acceptable, with slow but steady growth. He claims, “This area of the
world shall help us grow for decades.” He assigned the Vietnamese and Indian
markets to separate teams of Olin researchers, but Terence wants to deal with
China himself.
T
Terence visits China. Terence’s first trip to China took place in 2005 when he
accompanied his wife, Marilyn, to China. She owned a small import store in
O
Columbus, and had always wanted to visit East Asia. To his surprise, this
paradoxical land of Confucian values, Communist government, industrious
workers, and extraordinary history and culture captivated him. He was amazed
at how huge areas of the country, especially the coastal cities, were changing so
quickly. Construction was going on everywhere, even though most buildings
N

were still unoccupied. One tour guide joked that “the national bird of China is
the building crane.” 2

His second trip occurred in 2010. He was invited as a member of a select group
of American business leaders to visit multinational companies in China,
including Coca Cola and Proctor & Gamble. They also visited a few successful
O

joint ventures between U.S. firms and state-owned companies. The American
group was given royal treatment. The group stayed at luxurious hotels in
Beijing and Shanghai, dining lavishly and frequently at banquets, and even met
with the Premier. At one of the banquets, the Premier declared, with great
D

animation, that the U.S. and China were “true friends.” He encouraged
American companies to invest in China.

Terence found the Chinese business representatives intelligent, charming, and

2 Smith, Kennedy

4
 remarkably friendly to the Americans. They talked continually of forging
stronger U.S.-Sino business ties, and actively urged the business leaders to
arrange future visits.

One evening over drinks, Terence met and spoke with Chen Ji Ping, a manager
of the China Insurance Regulatory Commission (CIRC), the governing and
decision-making body responsible for issuing insurance licenses. Mr. Chen and

PY
Terence got along so well that Chen invited Terence for a return visit to
Shanghai. Terence immediately accepted and suggested a date in the near
future. Chen beamed, exclaiming, “We will have an enduring friendship.”

Just to verify that Chen’s invitation was sincere, Terence called Chen’s office
the next day. Terence asked if, indeed, Chen would welcome a return visit by
Terence and his staff to discuss the possibilities of opening an insurance

O
branch in Shanghai. Chen assured Terence that he was very serious and would
consider it an honor to again host his new friend.

During the 2010 trip, Terence often had tried discreetly to find out the process
for obtaining a license to sell life insurance. None of the Chinese were

C
forthcoming, however, not even Chen. Terence decided to extend his tour
another week so that he could explore Shanghai, which hosts “…hundreds of
financial institutions, including commercial banks, securities companies,
insurance companies, fund management companies, trust companies, futures
companies and financial leasing companies. At that time, there were 787
financial institutions, of which 170 were foreign-invested.” 3 Chen was not
T
available that week, so Terence instead arranged for courtesy calls at several
U.S. and British offices.

Terence spoke with many people about the licensing process to sell life
O
insurance in China. He met with American Chamber of Commerce
representatives in Shanghai. He again met with officials from the China
Insurance Regulatory Committee (CIRC), and referred to his recent friendship
with their colleague, Chen Ji Ping. The Chinese responses were hopeful yet
N

ambiguous: “This can be done; the process is hard, but for good friends of
China, it can be done.”

The more research Terence did, the more excited he became. He read in the
International Insurance News blog of July 18, 2011, where CIRC claimed
“…that the Chinese market is fast becoming one of the most lucrative in the
O

world and will continue to present distinct business opportunities. 4 ”

Everyone Terence spoke with assured him that China will be a “growth engine
for every multinational insurer for the next few decades.” 5 He discovered that a
Swiss Reinsurance Company (one of the world’s largest reinsurers) study
D

determined that “…China represents the sixth largest insurance market in the
world and will become the second largest, behind America, within the next ten

3 http://en.wikipedia.org/wiki/Shanghai
4 www.globalinsurance.com/blog/circ-post-chinese-insurance-profits-395120.html
5 Smith, Kennedy

5
 years.” 6

By the CIRC’s latest documentation, in 2011 “a total of 121 insurance

companies are active in China, including eight group companies and 10 asset-
management firms. Of these 121 insurance companies, 69 are completely
Chinese owned and 52 incorporate foreign investment. The Chinese companies
include … 32 life insurers and three reinsurance businesses. The foreign

PY
venture companies meanwhile involve 18 property and casualty insurers, 28 life
insurers and six reinsurance firms.” 7

With so few foreign insurers established in China, Terence believed that

opportunities still existed for Olin Life Insurance to write business in China. In
2011, “insurance penetration is just over 3.8 percent [in China].” 8 That left
ample room to penetrate the Chinese insurance market.

O
Through his research, he also discovered any foreign life insurance company
that wanted to open a branch office in China would probably be required to
participate in a joint venture operation. In the American Chamber of Commerce
study, Terence read that “…over half of companies responding [to the study]

C
said foreign enterprises cannot obtain the same licenses as domestic
competitors or the process is more complicated or takes longer…..The chamber
said banking, insurance and finance are heavily restricted, and foreign
companies are allowed little access.” 9 Apparently, Western companies cannot
get a license to establish a wholly-owned office.
T
He spoke with AIA managers in Shanghai, who were friendly but not
encouraging. AIA is an offshoot of AIG, the first Western company to sell
insurance in China. They insisted that entering China would take a long time
because that was the nature of doing business with the Chinese. They pointed
O
out, “AIA’s success is not only attributed to its good management and
operations, but to its persistence and longtime presence in China.” 10 In fact,
AIG has been in China since 1919. As a result, its “life insurance operations
have the largest market share of any foreign firm…a trivial-sounding one
N

percent.” 11

Terence also found out dozens of foreign-owned insurance companies were

doing business in China as unlicensed operators. If a company is unlicensed, it
must use a licensed insurance company, whether Chinese or foreign, through
which to sell its products. This arrangement is certainly not optimal because it
O

requires paying a commission to the licensed company and involves other

transactional costs. Of course, these unlicensed companies are learning
valuable information about the Chinese market. When they become licensed,
they’ll be a step ahead of other entering insurance companies.
D

6 www.globalinsurance.com/blog/circ-post-chinese-insurance-profits-395120.html
7 Ibid
8 Ibid
9 MacDonald http://www.chinapost.com.tw
10 Adler
11 “Where the state…”

6
 Terence convinces his colleagues. On his return to Ohio, Terence explained
his China proposal to his senior staff: May Terence, his daughter and Senior
Vice President of Olin Life; Erin Solomon, the Director of Marketing; and
Thomas Taylor, Chief Corporate Counsel.

May completely agreed with him about China; Solomon and Taylor needed
convincing. Neither one had been enthusiastic about entering the Philippines

PY
and Indonesia; they considered those areas too politically and economically
volatile, and saw a possible drain on company resources. Yet they were both
pleasantly surprised at the results of the last six years, especially that growth at
least had been steady. They were also glad to see many management positions
filled by indigenous Filipinos and Indonesians in the last year. But, as everyone
knew, China was different.

O
Finally, Solomon and Taylor tentatively agreed to the project, but Taylor
remained particularly skeptical. Having secured the agreement of the senior
staff, Terence then outlined solid evidence regarding the Chinese market to
Olin’s Board of Directors. During his presentation, Terence provided the
following facts:

•
interviews with

C
PricewaterhouseCoopers completed “a survey based on 1,200
[insurance] chief executives in 69
countries…China tops the list of attractive markets, followed
closely by Brazil and India.” 12
T
• Insurance growth in the U.S. is becoming saturated in some areas,
with over 1,700 companies selling just life insurance alone.

•
O
“China’s current insurance penetration rate (as a percentage of
GDP) is only around 3.8 percent and is expected to increase by 18
percent within the next five years.” 13

• China has 1.34 billion people who live long (average 74.68 years).
N

• Unlike Americans, the Chinese save a lot. “The gross savings rate
[the percentage of GDP that is not consumed immediately] is
around 50 percent. By contrast…the savings rate in the U.S. is
the lowest of any major country --roughly 10 percent of GDP.” 14
The U.S. personal savings rate as a percentage of disposable
O

income stood at about 4% at the end of 2009. The last time the
savings rate exceeded 10% was in 1984. Compared to most other
countries, the US has the lowest personal savings rate in the
world 15
D

12 Belz
13 www.globalinsurance.com/blog/circ-post-chinese-insurance-profits-395120.html
14 Shiller
15 http://seekingalpha.com/article/200676-household-debt-gross-domestic-savings-china-vs-other-countries

7
 • China “has a mind-boggling 960,000 millionaires…[which] was a
jump from 825,000 millionaires two years back [2009]. The China
Daily reported that 960,000 millionaires have personal wealth of
10 million yuan ($1.5 million) or more. 16

• Less than 3 percent of the entire Chinese population holds private

PY
insurance. But evidence shows that the middle classes are
increasingly spending more on insurance. 17

• Since opening its markets to the western world in the early 1980s,
China has grown at a healthy annual rate of 8-10 percent. Unlike
other East and Southeast Asian countries, China is less
dependent on exports and information technology, and its
domestic demand remains strong.

O
• China’s low life insurance rate combined with the high savings
rate creates what Yale economist Robert Shiller calls a “virtuous
circle: rapid economic growth leads to high savings, which in turn
sustains rapid growth.” 18

C
Terence made his position clear to the Board: If Olin can make headway earlier
than other European and American insurance companies trying to obtain
insurance licenses, it could capture a good-sized chunk of the Chinese market.
T
He also warned the Board that Olin would have to seriously compete for this
business. Other American insurance companies, including New York Life,
MetLife, and John Hancock, are already in China. Additionally, Canadian and
O
European insurance companies were competing daily to enter the huge Chinese
market.

China’s state-owned enterprises (SOEs). Terence described to the Board

how China was dramatically changing. In order to join the WTO, China agreed
N

to progressively open its markets. To do so, the old state-owned enterprises

(SOEs) are systematically dismantled and privatized. SOEs have been a huge
problem for modern China because they were so dysfunctional. The Board
wanted to know: What are SOEs?

State-owned enterprises were created by the centralized government in China.

O

Thousands of employees, even hundreds of thousands in some areas, have

worked for a state-owned and state-managed company, usually some sort of
manufacturing factory. Terence explained that these business enterprises
operate as “largely autonomous communities.” 19 The communities include
everything from housing to health clinics to daycare and schools for the
D

workers’ children.

16 http://www.ndtv.com/article/world/china-has-960-000-millionaires-and-still-counting-
17 Cui 2001
18 Shiller
19 Quanyu 3

8
 For decades, the system has been called the “iron rice bowl.” This phrase
means that the arrangements for taking care of all aspects of people’s lives were
provided by these SOEs. The “iron” connoted that the system was unbreakable
and lasting. When a person began work for a company, that job came with a
host of amenities, including housing, access to health services and retirement
pensions. This “cradle-to-grave” system was run by the government, and

PY
workers could rely on this system.

Granted, the SOE jobs were not easy, and the amenities were spartan compared
to anything offered in the United States or Europe. Yet under this system,
unemployment had been almost nonexistent in China. When the “iron rice
bowl” was the norm, it offered security and stability to Chinese families. That all
began to change after Mao Zedong died in 1976.

O
Decades of Mao Zedong’s policies had resulted in economic disaster. “The
political madness of [Mao’s] Great Leap Forward in 1958 and the decade-long
Cultural Revolution…begun in 1966…destroyed the country’s economy and tore
apart the fabric of Chinese society.” 20 Millions of Chinese died from famine or
were executed.

C
In 1980 China was backward, hungry, and totally uncompetitive. Instead of
providing the overall economy with stability and steady prosperity, the SOEs
had created an unstable, uncompetitive, and bloated system of corruption.
China lacked materials, energy sources, transportation and communication
T
infrastructure, and human capital needed for steady growth.

Thus, in 1980, China’s new President, Deng Xiaoping, proclaimed that

socialism meant eliminating poverty. Being poor is not socialism, nor is it
O
communism, he said, adding, “To be rich is glorious.” Those dramatic words
marked the beginning of his campaign to dramatically alter how China
functioned. Deng changed the landscape of China, not just for the 20th but the
21st century as well. His plan was to remodel the economy, improve the
N

Chinese standard of living, and benefit from the wealth being generated in the
West. Deng wanted to incorporate the principles of a market economy while
gradually moving away from the centrally planned economy established by Mao
Zedong.

Deng further announced that encouraging foreign direct investment into China
O

was good; slowly dismantling the huge, uncompetitive state-owned enterprises

(SOEs) would strengthen the Chinese economy. According to Deng, opening the
closed door to the outside Western world would be a policy worth trying.

The dramatic result has been an incredibly reinvigorated and booming China.
D

As Fortune correspondent Bill Powell observed in a September 2001 article:

China is a country being transformed in little more than a

generation; it is, quite literally, a (rapidly) moving picture, with

20 McGregor 33

9
 living standards rising for hundreds of millions of people at a rate
that is unprecedented; it is a country that still, more than 20
years after Deng said getting rich was glorious, has extraordinary
momentum. China is growing at eight percent a year, on the back
of vibrant exports and strong domestic demand. It is inhaling
foreign direct investment--$66 billion last year alone. After years
of hype about the riches to be earned in a nation of 1.3 billion

PY
people, the conviction has taken hold in executive suites that
China’s economic traction will endure. 21

Even further proof that entering China was a no-brainer came from some
“attention-getting raw numbers.” 22 For example, China has more internet
users than the entire population of Japan, but that only amounts to a
penetration rate of 10.5 percent. 23

O
Terence wins approval. The Board approved his plan. Exhausted, Terence
walked back to his office. He felt slightly dizzy, so he sat down, turned off his
phone, and shut his laptop. He told his secretary not to bother him for an hour
so he could nap. Instead of sleeping, though, he recalled another incident from
his group trip to China.

C
During his week alone in Shanghai, Terence lunched with a woman from the
American Chamber of Commerce. She sketched a slowly unfolding, but bright
picture of the current Chinese insurance market. With fewer and fewer state-
owned enterprises (SOEs), the Chinese government must reduce those “cradle-
T
to-grave” social benefits. But the Chinese people still need health insurance,
life insurance, property insurance, and private pension systems. Indeed, the
social security net in China is almost bankrupt. 24 Chinese workers and
families affected by these dramatic actions desperately need some sort of safety
O
net. And since China is still relatively new at developing sophisticated
insurance products, foreign insurers will be able to help them create that
expertise.
N

She told him that a few state-owned insurance companies control nearly all of
the current Chinese insurance market—close to 93 percent. Although half of
all insurance firms in China are foreign, their penetration in the market is less
than three percent.

Under the WTO regulations, China will grant licenses to operate insurance
O

companies based according to standards that are more reasonable than in the
past. These standards, called “prudential criteria” in insurance circles, state
that a company must have been operating for at least 30 years as an insurer
and hold a minimum of US$5 billion in total assets. It also eliminated all
geographic restrictions for foreign insurers throughout the country, so a
D

company, if approved, could open up a branch anywhere in China. Olin Life

21 Powell 132
22 Plafker 10
23 Ibid
24 Lauffs

10
 met the 30-year criterion in 2007.

The AmCham woman told Terence that joint venture requirements in life
insurance are being liberalized. Government standards for foreign life
insurance joint ventures (jvs) will now allow a 50 percent partnership; non-life
insurers, such as automobile, disability, property and pensions, are allowed a
51 percent partnership.

PY
Too good to be true? “There’s got to be a dark side to this picture,” Terence
had said aloud to the AmCham rep. She had responded with a hearty laugh.
“Oh yes, there is. Just hire the best attorneys you can afford before you come
over here, and prepare for a long march!”

“Nothing is transparent in China,” she continued. “Corruption is rampant.

O
Business people aren’t allowed to have input into drafting business laws, even
when they know precisely what their industry needs. No one really knows the
rationales for what laws do exist. There are multiple levels of government rules
and regulations in China; some aren’t consistent between levels; some are
redundant, but worded differently. Defining terms can be expensive and time-

C
consuming, and it takes more time and more money than most foreign
companies can afford to commit. There’s a lot of risk involved because you
can’t predict or anticipate the changes in personnel, laws, or policies. You can
develop good guanxi with people in a certain department, and then, whoosh,
they’re gone!”
T
She went on, “It’s a completely natural phenomenon in China to over- inflate
growth rates and stock values. It is a well-known fact that statistics lie in
China. There’s so much more to be gained, both personally and collectively, by
falsifying figures.” 25
O

“What’s gwanshee?” asked Terence. She looked at him for a moment, and then
leaned forward, close to his face. “In China guanxi to business is like water to
life…you cannot live without it.” Terence had listened intently for hours that
N

night. When he returned to his hotel, he stayed up until almost dawn, writing
down notes of everything he learned that day.

After reflecting on this conversation, Terence decided his excitement about the
Chinese market was absolutely justified and the Board’s decision was correct.
Now he and his team would begin this exciting “long march!”
O
D

25 “How” 45

11
 3. Background Information: U.S. Team

Each of the three characters on the U.S. team has a specific chapter to be read
by that individual character only. However, this section provides the common
background for all team members, including 1) a brief description of each Olin

PY
team member, 2) the time frame within which your visit and goals should be
accomplished, and 3) the primary points you will negotiate with the China
Regulatory Insurance Commission (CIRC) representatives in Shanghai.

Olin Life CEO James Terence had planned to travel to Shanghai and initiate
this meeting and negotiation himself, but health matters have kept him in
Columbus. He’s been having dizzy spells recently. His doctor diagnosed an
inner ear problem. His wife and daughter refuse to let him drive or travel until

O
he can have further tests, and hopefully some treatment, to end these spells.
The doctor banned flying because of possible damaging effects on inner ear
conditions.

C
In unusual circumstances, your team might be able to extend your trip, but no
one expects to need the extra time and the possibility has not been seriously
discussed. In fact, once Terence realized he could not go, he extended the
team’s trip from a week to ten days.

Team Members. Your team will consist of three members—May Terence,

T
Senior Vice-President of Olin Life and daughter of James Terence; Erin
Solomon, Director of Marketing; and Thomas Rainey Taylor, Chief Corporate
Counsel for Olin Life.
O
Senior Vice President May Terence is the only child of James and Marilyn
Terence. She is married to a Classics Professor at The Ohio State University.
They have one son, a fourth grader at a year-round Catholic school.

The insurance business is in her blood. As a teen, May worked for her father
N

during summers and holidays. She graduated from Boston College with a
degree in Business Administration, and then completed her MBA at Babson
College while her husband completed his doctorate at Harvard University.
While living in Cambridge, Massachusetts during their graduate school years,
May worked at John Hancock Insurance Company in Boston. When she and
her husband moved back to Columbus, she began working for Olin Life. She
O

has progressed rapidly in the organization, landing the position of Senior Vice
President in 1998.

While whispers of “nepotism” have occurred within the company, May hasn’t
D

paid any attention. She knows her father would never have promoted her
unless she was absolutely qualified; no, more than that, overqualified, for the
position. Terence demands high standards from his management staff. She
always works hard, just like her father. A major difference, however, is that
May is quieter than her father. Her demeanor is usually serious, and she is
known as a good listener with colleagues.

12
 Terence relies on his daughter as a sounding board and close advisor. Like her
father, she loves challenges and tasks that appear, at first glance, impossible.
She is 100 percent behind Terence’s ambition of expanding into China. She
has never traveled there, but has been to the Philippines several times.

Director of Marketing Erin Solomon is a single mother of two daughters, aged 12

PY
and 16. She is a woman of great energy, discipline, and strong opinions. She
received her B.S. in Political Science from Rutgers University and her MBA from
the Stern School of Business at New York University. Solomon worked for years
at New York Life Insurance Company until she was lured away by Olin Life in
1999. Solomon figured the lifestyle in Columbus, Ohio would be less difficult
than Manhattan’s, and she was right.

O
One year after moving there, she asked her mother, a retired widow, to move in
with her and the girls. The move has worked out well for everyone. The girls
have their beloved grandmother-- who loves organizing, cooking and taking care
of her only grandchildren--at home. Erin feels secure in knowing the three
people she loves most in the world are together and safe.

C
This arrangement also frees her to concentrate more intently on work, where
she thrives. In seven years at Olin Life, Erin has advanced steadily, finally
serving as Director of Marketing for the life insurance division. Her genius is
looking at a situation and a marketing concept from a cool distance; she can
listen to a specific idea, mentally map out its weak points and strengths, and
T
then develop a balanced analysis. She expresses her opinions bluntly. Even
though colleagues often dislike Erin’s straightforward assertions, she never
takes it personally. She believes deeply that her candor is the real value she
adds to the company. James Terence and Solomon get along very well; he
O
values her judgment highly.

Solomon’s work habits are efficient. Although her work hours are long, she
feels no guilt because her kids have their grandmother when they return from
N

school. Her mother does most of the cooking, so when Erin comes home, she
can focus exclusively on her family.

Chief Corporate Counsel Thomas Rainey Taylor graduated from Pepperdine Law
School. He is an easygoing man with a penchant for irony and fine wines. He
prefers to be called Thomas rather than Tom by friends and associates. “People
O

who dislike me call me Tom,” he tells new acquaintances. After law school,
Taylor worked for several years as a bank attorney in Seattle. He grew tired of
the dreary weather in Seattle, however, and longed to return to California.
Instead, one of his old law professors at Pepperdine called, telling him of an
ideal position at Olin Life in Columbus, Ohio. He applied and was hired after
D

his first interview. Five years later, he became Chief Corporate Counsel.

Taylor doesn’t like the Ohio weather either, but this job has placed him on a
first-rate career track. He knows he will eventually return to California, if only
at retirement. He envisions one day buying a vineyard in Sonoma County and
engaging full time in viticulture. He is unmarried, but has an active social life.

13
 Taylor is a habitual crossword puzzler, anagram and Scrabble player. Known
as a highly articulate man, he borders at times on eloquence. He can draft a
legal document that is flawless in capturing nuances and shadings. This
ability to use language makes him a formidable negotiator.

Taylor has traveled a great deal with Terence, who has marveled at another of
Taylor’s gifts: he rarely seems to need more than three or four hours of sleep at

PY
a time. Jet lag does not affect him, even on excessively long flights on which he
indulges in reading and crossword puzzles.

Time Frame. Your team will arrive in Shanghai, China on June 2nd. Your
return flight leaves Shanghai on June 12. You will have 10 days to conclude
negotiations and obtain some kind of signed agreement. James Terence believes
this is enough time to accomplish your goals.

O
Primary negotiation points. In the order listed below, your team will begin the
negotiation process with representatives of the China Insurance Regulatory
Commission. You wish to obtain a contract covering most, if not all, of the four
stipulations.

C
1. A license to open a wholly-owned branch office of Olin Life
Insurance Company in Shanghai. (The precedent is AIG, which
has been allowed to wholly own their operations in Shanghai for
decades.) If CIRC refuses to agree on a wholly-owned license, then
a joint venture with either a state-owned or a small private
T
company would be acceptable. There are benefits to either a state-
owned or a privately owned company. For example, with the
latter, you assume that Olin would have quicker access to the
Chinese market and a more experienced management team with
O
which to work.

On the other hand, a state-owned enterprise (SOE) would have the

protection of the Chinese government. The assumption here is
N

that the government would not want the company to immediately

fail, thus it would help keep it alive. This would give Olin
breathing room and valuable time to learn as much as possible
about the market and the industry. 26
O

2. If CIRC insists on a joint venture (jv), you will request a 51

percent ownership of the jv. Research indicates that if a foreign
owner has dominant control, everything, from managing personnel
to generating and repatriating profits to the U.S., will be less
difficult. You’re aware that 50 percent is the legal norm in China,
D

but why not push for more? It cannot hurt to try.

3. For the first five years, you will insist that Olin Life maintain

26 Lauffs

14
 management control over all aspects of the company’s operations.
During those first five years, Olin will set up a training center
whereby promising Chinese candidates will be extensively trained
in all aspects of managing the operations. This will demonstrate
good will toward the Chinese and convince them that Olin is in
China for the long term. This is the same way you set up
operations in the Philippines and Indonesia.

PY
4. A Chinese contribution of land and a building in the Pudong
area of Shanghai. The Pudong area is essential because of its
prime location and proximity to other multinational corporation
headquarters. The building should be capable of providing office
space for at least 15 people initially, and up to 60 over the next

O
five years.

C
T
O
N
O
D

15
 4. Strategy Session: U.S. Team

Your team will have 90 minutes (more or less, depending on what the facilitator
has told you) during which you will

¾ Clarify your company’s goals and negotiating points for the

PY
upcoming Shanghai meeting: what is the minimum that you can
return home with?

¾ Educate each other on your areas of expertise: the proper etiquette

and negotiating methods to assume in Shanghai, the marketing
environment in China, and the Chinese legal system.

¾ Prepare thoroughly for questions you believe the Chinese will ask.

O
The most obvious question: What’s in it for China?

When the actual negotiation session begins, May Terence will perform the
introductions and the closing statements of appreciation and gratitude. One

C
member of your team should take notes and prepare a working draft to use at
the negotiation session in Shanghai. Use your time in this session efficiently.

Olin Life’s first geographic choice to set up operations is Shanghai. The reasons
are fairly obvious, but you all need to be able to explain them in case
representatives want to know why you selected this city over the many other
T
large cities in China.

First of all, a larger percentage of the new Chinese millionaires are located in
Shanghai. And Shanghai is fast becoming not just a wealthy city, but also a
O
place of the future. According to Doug Guthrie, author of Dragon in a Three-
Piece Suit: The Emergence of Capitalism in China,

Shanghai is exceptional in a number of ways…In terms of

population density, Shanghai is the most densely populated city
N

overall [in China]...has landed more foreign contracts and has had
more foreign capital…invested [in it] than any of the other major
[Chinese] cities…Shanghai’s GDP [is] significantly higher than that
of other major cities…[with] the highest rate of consumption and
the highest average annual salaries…[The] legal system is
probably more developed here than anywhere else in China..[It is]
O

the best place for cultured and educated people, for economic
development…an excellent place for doing business. 27

You all agree on Shanghai as Olin’s first site choice. The challenges Olin Life
D

faces as an organization--the need for educating the Chinese public, the need
for adapting to different provincial cultures, and the ability to use traditional
means of advertising--all these factors would be far easier and less risky in an

27 Guthrie 13-14

16
 established and modern city like Shanghai.

Certainly, other cities might offer some of the benefits of Shanghai, such as
Beijing or Tianjin. However, your goal is to focus on Shanghai since it would
offer the least risks for Olin Life. You do not want to locate in any other
Chinese city. James Terence has been adamant about this point.

PY
The population of Shanghai is about 22.3 million people. Other major industrial
cities in China include Beijing (pop. nearly 20 million), Tianjin (pop. 12 million),
Guangzhou (pop. 15 million), Chengdu (pop. 10 million), and Chongqing (pop.
30 million). You should all be able to locate these cities on a map of China. 28

O
C
T
O
N
O
D

28 http://en.wikipedia.org/wiki/List_of_cities_in_the_People%27s_Republic_of_China_by_population

17
 5. U.S. Roles: Erin Solomon, Director of Marketing at Olin Life
(for her eyes only)

You are excited about this trip, not only because it’s a great opportunity for Olin

PY
Life, but because you’ve always wanted to see China. Since his return from
China, Jim Terence has been obsessed with establishing a branch office there,
and you share his enthusiasm. You do feel some dismay that he has appointed
his daughter, May, as the leader of your group. It’s understandable and she’s
obviously smart, but you sense a feeling of insecurity from her, as if she isn’t
quite as confident as she acts. You’ve never been close to May and you wonder
to yourself (not out loud) whether she can be effective in Shanghai.
First, the important points your group will attempt to secure in a legal contract

O
while in Shanghai: Olin Life wishes to obtain some kind of signed agreement
covering most, if not all, of the following four stipulations:

1. A license to open a wholly-owned branch office of Olin Life

C
Insurance Company in Shanghai. (The precedent is AIG, which
has been allowed to wholly own their operations in Shanghai for
decades.) If CIRC refuses to budge on a wholly-owned license, then
a joint venture with either a state-owned or a small private
company would be acceptable. There are benefits to either a state-
owned or a privately owned company. For example, with the
T
latter, you assume that Olin would have quicker access to the
Chinese market and a more experienced management team with
which to work.
O
On the other hand, a state-owned enterprise (SOE) would have the
protection of the Chinese government. The assumption here is
that the government would not want the company to immediately
fail, thus it would help keep it alive. This would give Olin
N

breathing room and valuable time to learn as much as possible

about the market and the industry. 29

2. If CIRC insists on a joint venture, you will request a 51 percent

ownership of the jv. Research indicates that if a foreign owner has
dominant control, everything, from managing personnel to
O

generating and repatriating profits to the U.S., will be less difficult.

You’re aware that 50 percent is the legal norm in China, but why
not push for more? It cannot hurt to try.

3. For the first five years, you will insist that Olin Life maintain
D

management control over all aspects of the company’s operations.

During those first five years, Olin will set up a training center
whereby promising Chinese candidates will be extensively trained

29 Lauffs

18
 in all aspects of managing the operations. This will demonstrate
good will toward the Chinese and convince them that Olin is in
China for the long term. This is the same way you set up
operations in the Philippines and Indonesia.

4. A Chinese contribution of land and a building in the Pudong

area of Shanghai. The Pudong area is essential because of its

PY
prime location and proximity to other multinational corporation
headquarters. The building should be capable of providing office
space for at least 15 people initially, and up to 60 over the next
five years.

May also asked you for a SWOT (strengths, weaknesses, opportunities, and
threats) analysis of the China insurance industry. It certainly has significant

O
strengths. According to the China Insurance Report Q3 2011,
• The size of the insurance sector is huge.
• The key growth driver of the life segment—huge personal savings and few
attractive alternatives—will be in place for the foreseeable future.
•

•
C
The number of older people is increasing, which should increase the
need and demand for retirement income products. 30
China’s GDP has been growing at 8-10 percent annually for the past 20
years. The population of China’s “economically able” 31 groups—those
who can invest in products like life insurance—exceeds 300 million (close
T
to our entire population in the U.S.!) By economists’ accounts, this
number will most likely double in the next ten years.
The weaknesses and threats all involve the unpredictable actions of the
O
government and the non-transparent regulatory environment. But the
opportunities remain enormous. 32
You also have been asked to summarize the Chinese marketing environment
and landscape, especially in Shanghai. Where to start? First of all, the richest
N

cities in China are Shanghai, Beijing, and Guangzhou. For now, the population
is relatively young. These young people are far more consumer-oriented than
their parents.
Television advertising heavily influences the population in Shanghai, so that
can be a useful tool to use when you set up offices. Television is the preferred
medium through which Olin Life has advertised for decades. Virtually everyone
O

in Shanghai owns a television. Indeed, “advertising spending in China jumped

19 percent to approximately $120 billion in 2009 based on current exchange
rates. China is now projected to become the fourth-largest global ad market in
2010. TV took the lead with a 20 percent increase.” 33
D

You’ve also found out that multinational corporations like Olin Life can succeed

30 China Insurance Report Q3 2011, p.7

31 Tse 125
32 Ibid
33 http://www.adweek.com/news/television/chinas-ad-spending-hits-120-bil-101570

19
 in a place like Shanghai, whether or not they adapt to the specific culture or
maintain standardized marketing practices. 34 That’s good news. In 2006, more
than 330,000 foreign investment projects were operating in Shanghai. In fact,
some estimates indicate approximately 80 million “middle class” consumers
exist, mostly in cities like Shanghai, Beijing, and the other big cities. 35
Of these “middle class” consumers, more than half use credit cards. “They’re at

PY
the beginning of a credit cycle, not the end” 36 of one like the U.S. They spend a
great deal of their income on nonessential items such as fashionable clothing,
travel, leisure activities, and private insurance. Most of them wish to live a
good life, working hard, but also playing hard. They have a lot of faith in the
future; most want to ensure they have enough savings (and insurance coverage)
to deal with difficulties they may encounter as more and more state-provided
benefits disappear. 37
So, those at the top of the economic ladder are a growing and substantial target

O
market, all of which is good news for Olin.
May asked you and Thomas to figure out the minimum you think you can
return to Ohio with… the minimum that Olin can return with after negotiating
in Shanghai is an equity joint venture (ejv) with a small private insurance

C
company. You also want to push for 51 percent ownership.

Sure, there are pitfalls to ejvs: “unrealistic expectations, poor communication,

mismatched goals, misreading the reliability or integrity of a potential partner,”
according to Plafker. 38 Achieving this might be tough, but you are confident
you can both be clear and persuasive with the Chinese representatives.
T
Another article in the 2001Journal of Business Research, by Chadee and Qui,
states equity joint ventures and wholly foreign-owned enterprises (wfoes) are the
O
two most common structures that foreign direct investment uses in China.

[An] EJV has a separate legal status…Chinese and foreign

partners contribute to the registered capital and share risks,
profits, and losses according to their contributions…[The]
N

foreigner gets immediate access to the Chinese market together

with valuable local knowledge of the Chinese partner…
Contributions from both partners may be in the form of cash,
intellectual property, [or land, labor, and materials… 39
Perhaps Olin Life could enter into a joint venture with a Chinese automobile
O

insurance company. It would provide access to a huge customer base, which

Olin could use as a starting point. You also want management control for the
first four years. You’re pretty sure that the land and building contribution will
be fairly easy for the Chinese to provide in terms of contribution because of the
glut of vacant office space in Pudong, Shanghai.
D

34 Cui
35 Ibid
36 Belz
37 Ibid
38 Plafker 63
39 Chadee and Qui 133

20
 6. Negotiation Session in Shanghai: U.S. Team
(for their eyes only)

You’ve been in Shanghai for three days now. A pair of English-speaking tour
guides has taken you on sightseeing tours of the famous cultural and historical
places in the city. You’ve seen the Yu Yuan Gardens, the Temple of the Jade

PY
Buddha, the old Shanghai neighborhoods, the Jade Carving Factory, the Art
and History Museum, even the Carpet Factory and the Children’s Museum.
You have been taken to multiple brand new shopping malls. You’ve all eaten so
much that you each feel like you’ve gained five pounds. Thomas is suffering
because the air is so polluted, the humidity is so high, and his allergy medicine
isn’t working. All of you are fatigued and anxious to sit down, not in a minivan,
but at a table, so you can begin the work you came to do.

O
You’ve met about four or five different China Insurance Regulatory Commission
(CIRC) and Shanghai city officials at the banquets you’ve attended the last two
nights. Yet you still have not met Chen Ji Ping, or the principal negotiators of
CIRC. Before you left Ohio, May faxed a polite list of the points you’d all like to

C
accomplish on this trip to the CIRC secretary who’s arranging the talks. The fax
was simplified from your list of points because you obviously don’t want them
to know all your thoughts before you even meet them. The fax as sent is below:

1. Life Insurance Company, of Columbus, Ohio, respectfully requests a

T
license to establish a wholly- owned branch office of Olin Life
Insurance Company in Shanghai.
2. Olin Life respectfully agrees to arrange and pay for the operation of a
O
unique and exclusive training center whereby promising Chinese
candidates will be extensively trained in all aspects of managing
insurance operations for Olin Life. This operation will be set up
within six months of Olin Life establishing a branch office in
Shanghai.
N

3. Olin Life respectfully requests that the China Insurance Regulatory

Commission arrange for a contribution of land and a building in the
Pudong area of Shanghai. The building should be capable of
providing office space for at least 15 people initially, and up to 60
over the next five years.
O

You each have a copy of your objectives as listed in the four points. What
follows are some arguments you can use when you discuss these points with
the Chinese CIRC representatives.
D

Point 1. You know that American International Group (AIG) has established the
only wholly-owned foreign operation. Of course, AIG is unique in its history
with China, having been there since 1919. But your argument will be that Olin
Life is, like AIG, a company with a solid financial history that wishes to embrace
opportunities in Asia. While China still has a limited number of foreign

21
 insurance companies, the entire industry will need all the help it can get in
order to cover the huge population of China. Olin Life can offer such assistance
and is more than willing to do so. Fast tracking Olin Life is what your team will
push for with the CIRC officials. Whether or not the Chinese officials will see
this as too aggressive—well, as a team, you will have to gauge that carefully and
adjust accordingly. Jim Terence has put his trust in your collective instincts.

PY
You will also point out how well Olin Life’s outposts are doing in the Philippines
and Indonesia. (You cannot go into more detail than those general assurances,
on the orders of Jim Terence.)

This is your opening position, and although it would be nice to win a wholly-
owned branch, the likelihood is remote. After arguing this point as hard as you
can, you can bargain your way back to a position more likely to succeed; i.e. an

O
equity joint venture (ejv) with either a state-owned or a private insurance
company. You’re aware that a foreign company may choose its own partner
with CIRC’s approval. You suggest that Olin Life partner with an automobile
insurance company.

C
Point 2. If Olin cannot get a license for a wholly-owned operation in Shanghai,
you would like a list of references of reliable Chinese automobile insurance
companies with whom you could establish an equity joint venture. An ejv has
substantial benefits for both the U.S. and China. With an ejv, China would get
both the capital that Olin brings to the project as well as modern management
tools and concepts to develop their insurance industry.
T
For example, the level of expertise Olin Life can provide is priceless. It is widely
known that China lacks experienced managers, nor does it have an up-and-
coming group of fresh MBAs ready to take over converted state-owned
O
enterprises (SOEs). As the Chinese insurance and capital markets become less
regulated by the government, they will need experienced managers to handle
the transition from SOEs to private enterprises. An ejv would allow China to
acquire the latest methods of technology, i.e. computerized database systems,
N

advertising methods, salesperson training, etc. Olin can provide excellent

savoir-faire, knowledge and practice in how to build a solid insurance
infrastructure and efficient management systems.

Of course, there are qualifications to this offer. Olin Life needs enough
company control in order to adopt the best practices for motivating potential
O

management employees. You assume the Chinese employees are inexperienced,

inefficient and unpracticed. (Say this more diplomatically, of course.) You
assume they are accustomed to working for the state and having everything
provided for them.
D

So, with this in mind, Olin must have at least 51 percent ownership of the ejv.
There are just too many risks involved in running a company as complicated as
the insurance industry with inexperienced managers. With dominant control,
for example, you will be able to devise effective plans for salaries. This, too, will
clearly benefit the Chinese.

22
 With 51 percent, you’ll be able to consider a whole range of incentives to
motivate Chinese employees to work hard and remain loyal. Olin will consider
different kinds of housing options for workers, depending on the level of
employee. Olin will offer to create a sales training center that will attract the
best young Chinese minds, as well as assign more responsibilities to older
workers who want to advance. The details of this training center will have to
be worked out with the Chinese. All of these offers will help both Olin and the

PY
Chinese, so it’s a win-win situation.

From Olin’s perspective, an ejv will create an easy and immediate access to the
Chinese market.

Point 3. Once CIRC provides a building in Pudong, Olin can set up the state-
of-the-art sales training center. This step will offer substantial proof that Olin

O
Life is in China for more than quick profits. Your company did this, on a much
smaller scale, in the Philippines, and the results have been excellent. That
operation now has a significant indigenous management component and many
expats (American workers living overseas) have been able to return to the
United States. (Again, specifics should not be discussed if the Chinese ask.)

C
As for timing and numbers, you will offer to set up a sales training center
within the first six months to accept up to 10 promising Chinese candidates.
(No more than 10; more would mean higher costs for translators, instructors,
materials, space, real estate--a variety of factors about which you know nothing
right now.) Both Olin and CIRC will jointly decide upon the criteria for those
T
participants. You will agree to increase that number to 20 in year two. After the
contract is signed and the Pudong building is agreed upon, CIRC and Olin Life
can create a timetable for either a wholly-foreign-owned enterprise or an equity
joint venture.
O

With a branch office in Shanghai, you will be able to provide high quality life
insurance products and services to the Chinese consumers. You’ll be raising
public awareness about the need for life insurance while simultaneously
N

providing excellent job opportunities for local Chinese. Those job opportunities
will only increase in the future as the Chinese middle classes grow and expand
the entire life insurance market.

Point 4. You’d like the CIRC officials to recommend a real estate agent or
agency through which you could view some properties in the Pudong area. Jim
O

has informed your team that good office space is now available, but the prices
are soaring as dozens of companies and foreign firms line up to enter Shanghai.
The WTO has opened the door, and the pricing structure on all real estate is
rising. The real estate issue should be accomplished on this trip, not at a later
date. But again, Jim does not anticipate this being a problem for CIRC.
D

23
 Bibliography

Adler, Mike, et al. “China entry blueprint for foreign insurance companies.” IBM
Building an Edge—The Financial Services Newsletter, May 07, 2006, Vol. 7, Number 2.
http://www-03.ibm.com/industries/financialservices/doc

PY
Alston, Jon P. and Yongxi He. Business Guide to Modern China. East Lansing,
Michigan: Michigan State University Press, 1997.

American Chamber of Commerce People’s Republic of China. 2001 White Paper:

American Business in China. Parts 1, 2, 4, and 26. www.amcham-china.org.cn.

“As China changes.” The Economist. June 30, 2001. 9.

O
Balfour, Frederik. “China’s Millionaires Leap Past 1 Million on Growth, Savings.”Jun 1,
2011. http://www.bloomberg.com/news/2011-05-31/china-s-millionaires-jump-past-
one-million-on-savings-growth.html

Beal, Thom. “China’s deal to join the WTO improves access for insurers.” Wall Street
Journal. 19 November 1999. A, 16:3.

C
Belz, Adam. “Insurance companies target world markets.” USA Today. 20 June 2011.
http://www.usatoday.com/money/perfi/retirement/2011

“Beware the middle-income trap.” The Economist. 25 June 2011. 9-11

T
Blackman, Carolyn. Negotiating China: Case studies and strategies. NSW, Australia:
Allen and Unwin, 1997.
O
Brahm, Laurence J. Negotiating in China: 36 Strategies. Singapore, Reed Academic
Publishing, 1995.

Boettcher, Jacques G. “The China Predicament.” Multinational Business Review. Vol. 9

(1), Spring 2001. 27-41.
N

“Broader investment choices for foreign insurance companies.” China Law and
Practice, Dec. 2006/Jan. 2007, p.1+

Brown, Stuart F. “Balancing Act: For China’s large new class of lawyers, practice can be
dangerous.” Boston College Magazine. Summer 2011. 68.
O

Burkall, Don. CLU, ChFC. Financial representative. Northwestern Mutual. Personal

interviews. January 2002.

Burkitt, Laurie and Jeremy Page. “China’s population ia aging rapidly.” The Wall Street
Journal. 29 April 2011. online.wsj.com
D

Chadee, Doren D. and Feng Qiu. “Foreign ownership of equity joint ventures in China.”
Journal of Business Research. Vol. 52(2001) 123-133.

Chen, Huanming (Dorris). 2002 MBA candidate at The Fuqua School of Business,
Duke University, Durham, North Carolina. Personal interviews. September 2001.

24
 Chen, Ji and Stephen C. Thomas. “At a premium.” The China Business Review.
Mar/Apr 1999. 38-44.

Chen, Kathy et al. “Players in AIG saga dig in on eve of China’s WTYO entry—U.S.
business groups write to Bush in support of insurer’s position.” Wall Street Journal. 10
September 2001. A13+

PY
Chen, Min. Asian Management Systems. London: International Thomason Business
Press, 1995. “China: China’s experimental measures an investment in commercial JVs.”
East Asian Executive Reports. Vol. 21(3), Mar/April 1999. 12+.

Chen, Ming-Jer. Inside Chinese Business. Boston: Harvard Business School Press.
2001.

Chengdu Time City News Line. 21 January 2011. http://www.chengdutime.com/.

O
“China furthers opens insurance market.” China Daily. 23 November 2001.
http://www1.chinadaily.com.cn/news/2001-11-23
Chubb China Operations. www.chubb.com/china/laws

China: Market Overview. 2010. Best’s Review, 111(2), 49.

CIA World Fact Book, 2011.

C
Claye, Rachael. “Enter the Dragon.” Director. Vol. 52(11), June 1999. 85-86.

Clissold, Tim. Mr. China. UK: HarperBusiness, 2004.

T
Cohen, Raymond. Negotiating Across Cultures. Revised ed. Washington, D.C.: United
States Institute of Peace Press, 1997.
O
Cui, Geng and Qiming Liu. “Executive insights: emerging market segments in a
transitional economy: a study of urban consumers in China.” Journal of International
Marketing. Vol. 9(1), 2001. 84-106.

Cummins, J. David and Bertrand Venard. “Insurance market dynamics: between global
developments and local contingencies.” Risk Management and Insurance Review. 2008,
N

Vol. 11, No. 2, 295-326.

Devonshire-Ellis, Chris. “Political influence in China’s biggest companies almost 100

percent.” China Briefing. 25 April 2011.

Dickinson, Steve. “Avoiding mistakes in Chinese joint ventures.” China Brief. April
O

2008. 20-21.

Du Minghua. “Insurance in China: The wolf does come.” 1 November 2001.

http://english.peopledaily.com.cn
D

Eckholm, Erik. “China’s car shoppers prepare for a great drive forward.” The New York
Times. 7 October 2001. A18.

“Eighty years of growth and diversification: The AIG Story.” Business Insurance. April
12, 1999. 82-83.

“Enter the dragon.” The Economist. 10 March 2001. 23-25.

25
 “Foreign insurers to face tougher entrance criteria in China.” China Daily, Feb. 28,
2006. http://www.chia.org.cn/english/BAT/159527.htm

Gao, Xi-Qing. Executive Vice Chairman of the China Securities Regulatory

Commission. Lecture at Duke University Law School, 30 January 2002.

PY
Gilley, Bruce. “Driving force.” Far Eastern Economic Review. 22 November 2001. 85.

Goodall, Keith and Malcolm Warner. “Enterprise reform, labor-management relations,

and human resource management in a multinational context.” International Studies of
Management and Organization. Vol. 29(3), Fall 1999. 21-36.

Guthrie, Doug. Dragon in a Three-Piece Suit: The emergence of Capitalism in China.

Princeton, N.J.: Princeton University Press, 1999.

O
Helms, Marilyn M. “How to be successful in China: A SWOT analysis.”
Competitiveness Review. Vol. 9(2) 1999. 1-10.

Helsell, Tina. “Beyond financial due diligence.” The China Business Review. Vol. 26(1)
Jan/Feb 1999. 32-35.

C
“Household Debt, Gross Domestic Savings: China vs. Other Countries.” April 25th 2010
http://seekingalpha.com/article/200676-household-debt-gross-domestic-savings-
china-vs-other-countries

“How cooked are the books?” The Economist. 16 March 2002. 45-46.
T
Hu, Fred. “China’s WTO accession as a catalyst for capital account liberalization.”
Cato Journal. Vol. 21(1) Spring 2001. 101-111.
O
Hu, Yuanyuan. “Broaden investment channels.” China Daily, Dec. 12, 2006, p.11.

Indo-Asian News Service. http://www.ndtv.com/article/world/china-has-960-000-

millionaires-and-still-counting, Updated: April 13, 2011

Johnson, Ian. “Illegal bank’s collapse reflects risk in Chinese system.” Wall Street
N

Journal. 6 January 2000. A14.

Jones, Chuck. “As China opens insurance market, U.S. insurers build waiting list.”
Life Association News. June 1999. 28-31.

JunHe Law Offices. “Administrative Regulations on Insurance Companies.” Newsletter.

O

No. 13, December 1999-March 2000. http://www.junhe.com/g.htm

Karmin, Craig. “Hong Kong shares…” Wall Street Journal. 29 January 2002. C12.

Kwan, Chi Hung. “High investment supported by high savings—doubts over the
D

sustainability of the relationship.” China in Transition, Dec. 27, 2006.

http://www.rieti.go.jp/en/china/06122702.html

Langenberg, Eike A. Guanxi and Business Strategy. Heidelberg, 2007.

Lauffs, Andreas and Andrew Ning. “China prepares for WTO by opening insurance
section. International Finance Law Review. Vol. 20 (1) January 2001. 26-30.

26
 Leggett, Karby. “Beijing may force AIG to sell assets.” Wall Street Journal. 5
Septmeber 2001, A18+

Li, Ji and Chalmer E. Labig Jr. “Negotiating with China: Exploratory study of
relationship-building.” Journal of Managerial Issues. Fall 2001. 345-359.

PY
Li, Xiaowei. “Joint venture life insurer predicts growth.” China Daily, Mar. 11, 2006,
p.5.

Liangmin, Yang. “China’s insurance industry lagging behind other countries.” China
Economic Times. 21 August 2001. www.sinopolis.com

Lin, Justin Yifu. “WTO accession and financial reform in China.” Cato Journal. Spring
2001. 13-18.

O
Lu, Hao. 2002 MBA candidate at The Fuqua School of Business, Duke University,
Durham, North Carolina. Personal interviews. June-October 2001.

Mah, Adeline Yen, Watching the Tree. New York: Broadway Books, 2001.

C
Malloy, Ruth Lor. China Guide. 11th ed. Cold Springs, New York: 2002.
McDonald, James. “Chinese protectionism rising: US Firms.” The China Post. April 27,
2011. http://www.chinapost.com.tw

McGregor, James. One Billion Customers. NY: A Wall Street Journal Book, Free Press,
T
2005.

Miller, Theresa. “China using foreign insurers to boost work force, consumer
confidence.” Best’s Review. June 1999. 24-25.
O
“More foreign companies enter China’s insurance market.” Xinhua News Agency, Dec.
13, 2006. http://www.china.org.cn/englihs/BAT/192209.htm

“Morgan Stanley in China.” Harvard Business School Case #9-297-010. 1997.

N

Ng, Erica. China's Ad Spending Hits $120 Bil. 11 Feb 2010.

http://www.adweek.com/news/television/chinas-ad-spending-hits-120-bil-101570

O’Connor, Neal G. and Peter Chalos. “The challenge for successful joint venture
management in China: Lessons from a failed joint venture.” Multinational Business
Review. Vol.7 (1), Spring 1999. 50-61.
O

Osland, G.E. and S. Tamer Cavusgil. “ Performance issues in U.S.-China joint

ventures.” California Management Review. Vol. 38(2) Winter 1996. 106-114.

Perkins, Dwight H. “How China’s economic transformation shapes its future.” Living
D

with China. Ed. By Ezra F. Vogel. New York: W.W. Norton & Company, 1997. 141-
165.

Plafker, Ted. Doing Business in China. NY: Business Plus, 2007.

Pomfret, John. “In China’s market transition, some pay price.” The Washington Post.

27
 16 February 2002. 1+.

Potter, Pitman B. “The legal implications of China’s accession to the WTO.” The China
Quarterly. 2001. 592-609.

Powell, Bill. “China’s great step forward.” Fortune. September 17, 2001. 129-142.

PY
PricewaterhouseCoopers. Foreign insurance companies in China 2010.

Pye, Lucian. Chinese Negotiating Style. Westport, CT: Quorum Books, 1988.

Quanyu, Huang et al. Business Decision Making in China. New York: International
Business Press, An Imprint of Haworth Press, Inc. 1997.

“Ready for the competition?” The Economist. 15 September 2001. 35-36.

O
“Regional risk analysis of China.” http://home.aigonline.com/country_view

“Rising power, anxious state.” The Economist. 25 June 2011. 3-18.

Roberts, Dexter and Mark L. Clifford. “Power shift: China gets set for new leaders.”

C
Business Week. 25 February 2002.54-56.

Seligman, Scott D. Chinese Business Etiquette. New York: Warner Books, Inc. 1999.

Semkow, Brian Wallace. “China: Foreign financial institutions in the PRC.”

International Financial Law Review. July 1999. 17-21.
T
Seol, Kao Su. “AIG can keep ownership of its Chinese operations.” National
Underwriter. 10 September 2001. 10+
O
Sheed, Lawrence. “Fact box-Impact on Chinese sectors after WTO entry.” 09.16.2001.
Reuters English News Service. http://www.shanghaiguide.com/articles

Shenkar, Oded. The Chinese Century. NJ: Wharton School Publishing. 2005.

Shenkar, Oded and Simcha Ronen. “The Cultural Context of Negotiations: The
N

Implications of Chinese Interpersonal Norms.” The Journal of Applied Behavioral

Science. Vol. 23 (2), 1987. 263-275.

Shiller, Robert. “Sublime to the ridiculous: Savings arte in China and the U.S.” Taipei
Times. 26 Aug.2006, p.9.
http://www.taipeitimes.com/News/editorials/archives/2006/08/26.
O

Shimizu, Kazuhiko. “Capitalism for the masses.” Institutional Investor. December

1999. 22-24.

Si, Steven X. and Gary D. Bruton. “Knowledge transfer in intellectual joint ventures in
D

transitional economies: The China experience.” The Academy of Management

Executive. Vol. 13(1), Feb. 1999. 83-90.

Smith, Craig. S. “With trade links stronger, U.S. insurers scout for business in China.”
The New York Times. May 31, 2000.

Smith, Kennedy. “The China connection: Setting up shop.” Daily Journal of Commerce,

28
 Oct. 23, 2006, p.1.

Solomon, Richard H. Chinese Negotiating Behavior. Washington, D.C.: United States

Institute for Peace Press, 1999.

“Something rotten in the state of China.” The Economist. 16 February 2002. 37-38.

PY
Starr, John Bryan. Understanding China. New York: Hill and Wang, 1997, 2001.

Stuttard, John B. The New Silk Road. New York: John Wiley and Sons, Inc. 2000.

Tham, Irene. “WTO or not: China is ‘risky’ business.” ZDNet Asia. 26 September 2001.
http://www.zdnet.com/zdnn/stories/news

Thyfault, Mary E. “Developing nations schooled in quality, reliability, and speed.”

Information Week. March 26, 2001. 68+.

O
“To get rich is glorious.” The Economist. 17 January 2002. http://www.economist.com

Tsang, Eric W. K. “Can guanxi be a source of sustained advantage for doing business
in China?” The Academy of Management Executive. May 1998. 64-73.

C
Tse, Edward. “Chinese consumer market: The right way to achieve profitable growth.”
Best Practices in International Marketing. Eds. Michael R. Czinkota and Ilkka A.
Ronkainen. Fort Worth: Harcourt College Publishers, 2002. 123-137.

Tse, Edward. “Is it too late to enter China?” Harvard Business Review. April 2010. 96-
T
101.

Webb, Alysha and Mark L. Clifford. “China’s insurance tiger licks its chops.” Business
Week Online. 24 September 2001. www.businessweek.com
O
Wang, Yung-Tsung. Investment in China: A question and answer guide on how to do
business in China. New York: American Management Association, 1997.

Willetts, David. “Why China stands to grow old before it gets rich.” Financial Times,
Nov. 10, 2005, p.19.
N

Winestock, Geoff. “China takes a great leap toward the WTO.” Wall Street Journal. 22
June 2001. A13.

------------. “China’s entry to WTO hits snag as talks are postponed.” Wall Street
Journal. 13 September 2001. A14.
O

“Where the state does too little.” The Economist. 23 July 2011.
http://www.economist.com

Wong, SizSiz. Owner, SizSiz Wong Insurance Agency for Nationwide Insurance.
D

Durham, North Carolina. Personal interview. 18 September 2001.

Yeqing, Jiang. “Three major hindrances in the development of China’s insurance

industry.” China Economic Times. 5 June 2001. www.sinopolis.com

29
 Yongzhe, Huo. “Green Light for Swiss Re.” 27 November 2001.
www.chinadaily.com.cn.bw

Zhang, D. “Domestic insurers... have to shed complacency.” China Daily, 28 October

2005. p.9.

PY
O
C
T
O
N
O
D

30