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More insurers selling in China


More insurers are establishing operations in China, with Aetna being the latest to join the forces. Opening business in China involves substantial international expertise and patience with investments.

NATIONAL REPORTS - The Olympic torch may have been extinguished, but China is still very much in the spotlight, particularly for insurers.

In June, Aetna joined WellPoint, UnitedHealth Group and a few others in establishing operations in China. Although insurers like Aetna already sell insurance products to ex-patriots and multinational businesses operating in China, Chinese regulations require them to establish operations in China if they want to sell their products more broadly. What's more, they must wait two years after establishing a representative office before they can begin selling their products.

Most companies use that time to do market research, establish a relationship with the government and find a local partner-another requirement for foreign companies. Martha Temple, president of Aetna Global Benefits, says the company will use the time to explore the market and determine its level of investment and product mix.

With the world's largest population, an emerging middle class and a robust GDP, it's easy to see China's attraction. But tapping the market, experts say, presents formidable challenges.

CIGNA was an early leader in China. The Philadelphia-based insurer established a representative office there in 1994 and began selling products in 2003.

"In many ways it's still a nascent market," says Shirley Puccino, vice president of international health strategies and marketing for CIGNA International Health Benefits. "The country clearly presents an opportunity, but there are barriers to entering the market. You need to make sure you're in compliance, you need to identify the right partners and exercise creativity in designing new products."

And that's just for starters. Language and cultural barriers, currency risks and regulatory inconsistency-regulations differ from one province and often one city to the next-add to the challenge.

"The biggest single liability for companies doing business internationally is lack of patience," says Bruce Pollack, president of the Academy for International Health Studies. "They're worried about tomorrow's stock price, and an investment in China has to have an investment horizon of 10 or 15 or 20 years."

CIGNA's Chinese operations began turning a profit last year.


Competition is a factor, too. Many Chinese banks are beginning to offer health products aimed at the individual market. Several large Chinese insurers, such as China Life Insurance, are expanding into other insurance arenas and large multinationals are entering the fray.

Despite the influx, Pollack doesn't anticipate smaller U.S. insurers pack their bags and head for China.

"I don't think we're going to see to many more companies enter the market than we're seeing today," he says. "The smaller companies lack the international experience and China is not a market where you want to cut your teeth."

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