Instead of choosing the highly competitive coastal areas in China, foreign insurance companies may find better opportunities in the country's hinterland with its high growth potential.
That is the view of a senior official with the US Liberty Mutual Insurance Company.
It is true that basic facilities in the inland region for developing insurance service are currently poor compared with that in the economically developed coastal areas, said John Kimber, China managing director of Liberty Mutual, the eighth largest property and casualty insurer in the United States.
"But given that China's economy is making big strides forward, I'm confident that the country will attain its objective of reviving the inland economy, which will give a strong boost to insurance business there,'' he told China Daily.
"Look at China's coastal areas, they were equally underdeveloped 20 years ago,'' he added.
If Liberty is to get an insurance licence, it will locate its first business operation in the Chongqing Municipality in Southwest China, he revealed.
There are several advantages in doing businesses there, he added.
One is that Chongqing people and government are very helpful to foreign investors.
An official with another foreign insurer, which also has an interest in the hinterland, echoed this view, saying that having been closed to investment for so long, inland areas are keener to attract foreign investors.
Another reason is that a lot of infrastructural projects, like the Three Gorges Dam scheme, are being launched in the area. That in turn will bring enormous business opportunities to foreign non-life insurers.
The government's preferential tax and policy treatment for foreign companies investing in the inland areas will also facilitate businesses there, according to Kimber.
"We are not the only one who bear a good opinion of this region,'' he said. "I can see that many multinationals have shown an increasing interest in Southwest China.''
He said he hoped to get an insurance licence soon to offer property and casualty insurance services in Chongqing.
Currently, without the permission to conduct business in the country, Liberty Mutual is focusing on introducing foreign investment into China's inland areas, he said.
"The fact that the west is underdeveloped is actually very attractive because it holds the greatest potential,'' Alexander Fontanes, chief investment officer of Liberty Mutual was quoted as saying earlier.
One investment arm, called Liberty Pacific Direct Investment, targets direct investment in projects in Chongqing, while the other, the New World Liberty China Ventures Ltd, has wider investment targets including major cities in China's western areas.
Kimber declined to reveal the specific sum invested, but said Liberty will "continue on very actively with its future investment in the areas.''
China's insurance market, a fertile area for development, has attracted almost every major insurance company worldwide. But most of them have been flocking to the economically developed areas to start their businesses in view of a high living standard there, a fundamental for life insurance businesses.
"When Liberty Mutual first discussed its idea to start its business in China's west, even some officials from China's insurance authorities and governmental departments were curious why we did not choose the developed areas in the coastal regions,'' said Peter Lin, president and CEO of Liberty International Asia, a member of the Liberty Mutual Group.
"But you must look at the area with a long-term view,'' said Kimber.
(China Daily 08/22/2001)
