“There were other competitive cities, which provided a lot of preferential conditions. However, we focus more on the soft environment of Guangzhou, such as government services, business environment and talent reserve, and so on, which provide guarantee for our long-term development.” During the interview, Yu Luwei, general manager of Zurich (China), talked about the whole process from the first contact to the financial decision made to establish the branch in Guangzhou, and looked into the future of the company in Guangdong.

 

Guangzhou: the “third Chinese city” to establish a branch

 

In 2013, Zurich Insurance Group, which was founded in 1872, established Zurich Property Insurance (China) Co., Ltd (hereinafter referred to as Zurich (China)). With branches in Beijing and Shanghai, it then began to plan for the establishment of its third branch in China. Last September, at the Davos forum held in Dalian, president for Asia Pacific region at Zurich Insurance met with Ren Xuefeng, secretary of the CPC Guangzhou Committee. This promoted the century-old company to finally make the decision to select Guangzhou as the third Chinese city to establish its branch and therefore finish its business layout to cover the three major central cities of China. It was decided that this branch would be established in Zhujiang New Town.

 

In April 2013, Zurich Insurance (Beijing) was restructured into Zurich Property Insurance (China) Co., Ltd under the approval of China Insurance Regulatory Commission. Within the following three years, two branches were established in Shanghai and Beijing.

 

After the establishment of the two branches in China’s two top-class cities, Zurich Insurance took the third step in China to establish a branch in Guangdong province.

 

“The market of Guangdong is as important as that of Beijing and Shanghai. The economic aggregate in this market is equal to that of large and medium-sized European countries. The local GDP has kept on a high-speed growth for many years. This is rare globally. In addition, Guangdong has a fast and strong development of the insurance industry, ranking among the top three nationwide, with a growth of 70% in the first half of this year. From a long-term perspective, both the traditional and emerging industries of Guangdong will have a good development. So, there will be a good prospect in the future,” said Yu Luwei.

 

Attracted by “soft environment”

 

Many cities participated in the competition for becoming the third Chinese city where the branch of the century-old company would be established. These cities provided preferential conditions in terms of land and talents. Even so, for Zurich, Guangzhou was the most attractive city.

 

How was the final decision made? Let’s get back to the Davos forum held in Dalian in September 2015, when Zurich Insurance had the first contact with Guangzhou. “At that time, our president for Asia Pacific region met with Guangzhou’s government delegation led by Ren Xuefeng, secretary of the CPC Guangzhou Committee. It was their first meeting. Ren introduced and promoted Guangzhou on site and showed a map that was more than one meter long, along with descriptions about the blueprints of Guangzhou in the next five and ten years. We were very excited about it.”

 

“What we focus on is the soft environment of Guangzhou, including the highly efficient government services, the urban business environment and the talent reserve. We came with our expectations. As a result, whether at provincial level or municipal or district levels, our anticipations for the business environment of Guangzhou were completely testified. The governments at different levels and the business circle paid high attention to and provided great support for the whole process. The green card policy for talents of Guangzhou provides substantial convenience for residential registration and house purchasing. The government departments have thoughtful consideration about medical services for enterprises’ employees and even education of their children,” said Yu Luwei.  

 

“The best resources for finance education of Guangdong concentrate in Guangzhou, such as those in Sun Yat-Sen University and Ji'nan University. The talent reserve is closely related to the development potential of enterprises.” Yu Luwei said, “In addition, the air quality and food of Guangzhou are also advantages of the city.” Compared with various preferential policies, the soft environment of a city is a guarantee for a long-term development of a company.

 

The branch of Zurich (China) was established in Guangzhou also because that the city’s positioning keeps in line with the development strategy of the company. Guangzhou is an important hub on “the Belt and Road”, while the enterprises trying to go global through “the Belt and Road” are just the target clients of Zurich.

 

M&A insurance for enterprises

 

Concerning business, Yu Luwei mentioned the M&A (merger and acquisition) insurance. He said that many Chinese enterprises are not familiar with M&A insurance. Currently, local insurance companies have not launched such business, because it is related to cross-border business, which requires international experience that cannot be accumulated in a short period. He explained by giving an example: the value of an overseas project that has been assessed to worth RMB1 billion before M&A may reduce to RMB400 million. If the company has bought insurance, it will get the compensation for part or all of the difference.

 

Yu Luwei said that there have been countless cases about lessons learnt by enterprises for this reason.

 

He said, in accordance with the index on the participation of Chinese provinces, municipalities and autonomous regions in the construction of “the Belt and Road” released by the State Information Center, Guangdong ranked first nationwide. Many countries along “the Belt and Road” are high risk zones for mergers and acquisitions. However, the enterprises have not become highly aware of these risks. “Globally, the coverage of insurance for overseas M&A projects is about 40% in average. In accordance with statistics of related business organization, it is less than 10% in China.” What’s the problem without insurance? Yu Luwei said, “A company based in Guangzhou made investment in a ASEAN country. However, it did not know that the license for operation could not be issued without insurance. Therefore, the company hurriedly bought insurance from an insurance company only one week before the launch of its project. The result was that a great part of the profit under the project was devoured by the high cost of the hurry purchase of insurance. What a shame.” Concerning the M&A insurance, Yu Luwei said, “This kind of insurance has had a history of 40 to 50 years in the international market. However, it just entered the Chinese market. Therefore, there should be a great market potential. We hope that the governments will be able to provide more public services for the enterprises intending to go global to improve their awareness of risks and help them avoid detours.”

 

Zurich Insurance: ranks 141^st among Fortune 500 companies

 

Zurich Insurance Group (Zurich Insurance for short), established in 1872, has branches and offices in more than 200 countries and regions in Europe, North America, Latin America, Asia Pacific and the Middle East. Its operating income in 2015 reached USD68 billion, with profit of USD2.9 billion. On the list of Fortune 500 companies in 2016, it ranked 141^st. Moreover, it has been rated as “AA-” and AM Best “A+” by authoritative international rating agency Standard & Poor's.

 

Zurich Insurance established its representative office in China in 1993, becoming the first European insurance company with representative organization in China. In May 2006, it got the license for operation of property insurance business and became the first foreign-funded insurance company with property insurance branch in Beijing.  

 

West Tower of Zhujiang New Town selected

 

What’s the position of the Guangdong branch in the strategic planning of Zurich Insurance? “The branch in Guangdong will be the third branch of Zurich (China) and the company’s first branch at provincial level. It will be one of the milestones for the development of Zurich (China),” said the person in charge of related business at Zurich Insurance.

 

It has been decided that the branch will be established at the West Tower of Zhujiang New Town. Yu Luwei said that the branch will be put into operation at the end of this year or the beginning of the next year.

 

The entry of the competitive Fortune 500 insurance company may cause worries of local insurance companies. “We do not compete for stock, but for increment,” said Yu Luwei when mentioning the strategies for the development in Guangdong and even South China. He said, “Take the vehicle insurance market for example. Although there is a big market, we will not consider entering it.”

 

“Zurich (China) is planning to, based on the demands of the market and the customers in Guangdong, to promote a series of insurance products, including property insurance, engineering insurance, cargo transportation insurance, liability insurance and financial insurance products, as well as personal accident insurance and travel-related insurance products for individuals and teams. Meanwhile, we will work hard to promote more innovative insurance types and products, such as those related to mergers and acquisitions and those related to Internet information security.”