Marketing Analysis Report: An Insurance Company Expanding to China (Essay Sample)

Marketing Analysis Report: An Insurance Company Expanding to China
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Introduction
Entering new markets can be a good strategic move for any business, though it comes with some challenges that need to be addressed. To leverage this opportunity, there is need for the business to analyze the new market and select an effective entry strategy. Hence, the paper aims an conducting a market analysis of China as a potential destination of an insurance company.
1.0 Analysis of A Potential New Market
1.1 Business Environment-China
China represents one of the largest insurance markets globally which is both closed and under-served. Notably, the country has more than 20% of the entire population of the world and a high level of domestic savings implying that the company is a perfect destination for an insurance company that intends to venture in international market (Wang, 2018). Notably, the Chinese Regulatory Authorities have been easing restrictions previously imposed on foreign firms. For instance, there were only nine foreign companies licensed to operate insurance business between 1992-1999 with operations being confined to Shanghai only (Wang, 2018).
1.2 Advantages of Entering China
Stability of Doing Business in China
Political, economic and social stability has greatly enhanced growth of China in all spheres for the last few decades (Quer, Claver & Rienda, 2010). Essentially, the country has been very stable which is a critical element for the success of any business. Hence, the insurance company entering this market will be able to strategize and predict the future with certainty.
Favorable Policies
The government has remained proactive in instituting supportive measures for business. For instance, some punitive insurance measures that were initially in force have been revised favorably. For instance, a company was required to have operated for over 30 years before being allowed to establish insurance business in China, but this has been scrapped (Quer, Claver & Rienda, 2010).
Great Infrastructure
China is one of the countries with great infrastructure owing to the heavy investment (Quer, Claver & Rienda, 2010). This implies that the country is a great destination to set up a company since transportation is perfect. Moreover, offering services is easy since the providers can move easily through road, air, water, and railway.
Skilled Talent
China has a huge population of young professionals that are highly competent and talented. The local tertiary institutions are constantly producing skilled personnel every year (Quer, Claver & Rienda, 2010). Additionally, China has made it easy for international students and skilled foreigners to work in the country. This will enhance the success of the company.
1.3 Subsidies Offered by China to Boost Transnational Insurance Firms
The Chinese government offers various subsidies to attract foreign investors. Firstly, the government imposes low taxes for companies investing in inland China compared to those in major cities. Secondly, the government has relaxed restrictions on the market entry of foreign investment for insurance companies as an incentive to attract investment.
1.4 Strategies Used to Secure Government Deals
Market Segmentation and Looking for Partners as A Strategy to Secure Government Deals
It is critical for the company to source for partners which will be essential for the firm to secure government deals. This is because the Chinese insurance regulatory authorities seem to give priority to companies with Chinese partners. However, foreign firms should not consider that they are making a necessary compromise but consider it as making a critical investment decision in acquiring a mentor who will aid them navigate the market they wish to enter. This will be critical in ensuring the company succeeds in this area.
2.0 Competitive Environment of the New Market
2.1 The Nature of The Competition
There is a rapid growth of the insurance market of China. Notably, it was 21% as at 2017 which was the highest in the entire world (Zhang, 2020). Additionally, the sector is booming in China while dwindling in the developed countries. The rapid growth in the sector has attracted many players both locally and internationally. The sector has various major players comprising of the local and foreign companies. Major local players include, China Life Insurance (Group) Company-large state-owned Ping an Insurance (Group) of China Ltd,-large private company, China Pacific Insurance (Group) Company Ltd.- large state owned, People's Insurance Company of China Group- large state owned , New China Life Insurance-large private company (Zhang, 2020). Conversely, major foreign players comprise of American International Assurance Company Ltd-large private owned, AIU Insurance Company- large private owned.
2.2 Porters Five Forces Model
Potential New Market Entrants.
The Chinese government supports local companies and creates hurdles for foreign players. The primary intention of the intervention is to maintain a favorable situation for local firms (simsree, 2015). Notably, the strict regulations of fraud and corruption inhibit new entrants as it is