economy - Tables turned on Hank Guanxi and AIG

Maurice R. Greenberg

I just finished my second column on guanxi as I stumble into this overview by Bloomberg on the implications of former AIG-chairman Maurice Greenberg's downfall for the China operation of the insurance company AIG. That seems to ask for a follow-up. Greenberg got earlier this year at home in hot water because of discovered financial irregularities and had to step down.
Who arrived in the 1990s in Shanghai might have easily taken Greenberg for the anchorman of Shanghai TV, so often he was in the picture. With the help of then municipal leader Zhu Rongji Greenberg organized as the first one a license for an insurance company in Shanghai, 100 percent foreign owned.
Only later the Chinese authorities decided that the envious European insurance companies had to join a Chinese partner to get access to the market. Up to the last phase of the WTO-negotiations in 2001 Europe tried to secure a similar privilege for their insurance companies, but that was denied. Now it turns out that insurance companies with a Chinese partner have an easier job in expanding over the country than the American insurers who have none. AIG is losing its clout very fast.
From the dispatch in Bloomberg I understand that foreign insurance companies count their blessings in China in terms of branch offices, rather than market share. As always when insurance is the issue the market share of international companies is not compared with that of the domestic ones, because it is so tiny that is looks rather bad. Not sure whether that is really bad, because the Chinese insurance market still has to prove it can return a decent profit.

On business in China