2019 Guide for Foreign Companies: How to fail in China

Author: Fuqiang “Ringo” Ma, Chief Representative of Travelers Casualty & Surety Company Limited

Time flies. It’s already been a year since I moved back and worked in China again.

I am in the insurance business, and as a chief representative of a foreign company, I spend a lot time talking to people in the industry to get the first-hand information about the market. I talk to people in other industries too. I also ask questions. Tough questions. Questions like “why are foreign (insurance) companies not so successful in China after all these years”.

I always get good answers from good people. So now with their help, I am able to put up this guideline for foreign (insurance) companies who want to do business in China. Treat this as the exclusion part of an insurance policy. These are the things you want to avoid. The more you do, the more miserable your failure will be, not just in China.

1. Make unrealistic business plans based on imagination about the market potentials rather than field studies and researches, then have a very short patience; 

2. Sit your underwriters who have enough underwriting authorities thousands of miles away, make them believe that they are the real experts and local underwriters are merely submission receivers;

3. Make sure you have a very, very long decision-making process so that whenever a new opportunity shows up you’d definitely miss it;

4. Convince your profit center managers that each and every line must be profitable and whole-account all-line solution is just something local insurers who do not have by-line expertise offers to grab market share;

5. Do not set up a centralized China business and distribution channel management mechanism. Instead, have your offices in China, Hong Kong, Singapore, London, New York and Bermuda compete against one another so that you think your chance to win is maximized;

6. Do not develop any local products. Just export whatever you think will be big hits in China;

7. For IT systems, just follow your home country standards and practices. Do not develop business operation systems locally. Issue a paper cheque. Do not use online payment;

8. Make sure your China Strategy is completely changed when there is a leadership shuffle at the Regional or Global level;

9. Believe that people from Hong Kong and Taiwan know the Mainland market better than the Mainlanders; and

10. Whenever you have a setback, blame your China team for not having secured the right Guanxi.