Marketing death: culture and the making of a life insurance market in China 9780195394078, 0195394070

Table of contents :
Is China an inviting place for life insurance? : societal conditions, the market, and remaining puzzles --
Defining life insurance and product development : divergent institutional logics --
Manufacturing sales agents : cultural capital and management strategies --
Making transactions : selling strategies and sales discourses --
Buying life insurance : multiple motives but consistent preferences --
How culture matters : culture, market, and globalization.

Citation preview

Marketing Death

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MARKETING DEATH Culture and the Making of a Life Insurance Market in China CHERIS SHUN- CHING CHAN

Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam

Copyright © 2012 by Oxford University Press, Inc. Published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016 www.oup.com Oxford is a registered trademark of Oxford University Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Library of Congress Cataloging-in-Publication Data Chan, Cheris Shun-ching. Marketing death : culture and the making of a life insurance market in China / Cheris Shun-ching Chan. p. cm. Includes bibliographical references and index. Summary: “Marketing Death is the first book to offer a penetrating sociological analysis of the emergence of a life insurance market outside of the Euro-American context. Drawing on rich ethnographic data, it documents the processes and micro-politics through which local cultures shape the way a market is formed and, hence, sheds light on the dynamics through which modern capitalist enterprises are diffused to regions with different cultural traditions.”—Publisher’s description. ISBN 978-0-19-539407-8 (cloth : alk. paper) 1. Life insurance—Social aspects—China. I. Title. HG9169.C48 2011 368.3200951—dc23 2011018554

1 3 5 7 9 8 6 4 2 Printed in the United States of America on acid-free paper

To my mother Cheng Suet King

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Contents

Acknowledgments

ix

Illustrations

xv

Introduction

3

1. Is China an Inviting Place for Life Insurance? Societal Conditions, the Market, and Remaining Puzzles

19

2. Defining Life Insurance and Product Development: Divergent Institutional Logics

51

3. Manufacturing Sales Agents: Cultural Capital and Management Strategies

76

4. Making Transactions: Selling Strategies and Sales Discourses

115

5. Buying Life Insurance : Multiple Motives but Consistent Preferences

143

6. How Culture Matters: Culture, Market, and Globalization

169

Appendix A : Methods

195

Appendix B: Life Insurance Companies in China: 2009

227

Notes

231

Glossary

245

Bibliography

247

Index

267

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Acknowledgments

have long been surprising to friends and colleagues alike. When friends and colleagues outside the circle of sociology first heard that my area of research was insurance, their common response was, “What has sociology got to do with insurance?” And when sociology colleagues learned that my earlier work was on religion, they were also quite surprised by the disjunctive shift in my research areas. Fortunately, it did not require much effort to convince my colleagues of the connection between my earlier work and my current project; all it took was a brief elaboration on my theoretical interest in the role of culture in making a life insurance market. The idea of researching the emergence of life insurance in China was first inspired by Arjun Appadurai, who probably did not imagine that his 15-minute meeting with me would propel me into this project for 10 years now. In our conversations about culture and modernity, Appadurai found the commensuration of the value of human life to a probabilistic calculation of risks sociologically intriguing. Although the ultimate outcome of my project is not entirely about the commensurate logic of life insurance and modernity, I thank him for his stimulating conversation that triggered this project in the first place. My deepest gratitude goes to my informants that, unfortunately, I cannot name individually here. They include the sales agents, in-house managers and assistants, and life insurance clients and prospects. I am especially grateful to the sales agents, who shared their invaluable time with me when they could have been prospecting clients and for their unreserved openness to me and trust in my research. I warmly thank those friends who connected me to the field. Cao Yang, Chen Xiangming, Fan Lizhu, James Farrer, He Min, Jane Hu, Hu Jun, Charlie Lu, Tracy Shu, Sun Han, Sun Jiaming, Sun Jiwei, Tang Nie, To Yushan, Wang Jiangguo, Wang Lihua, Calvin Wong, Wu Yuxiao, Terry Xu, George Yang, Yap Chong Huat, Terence Yip, Yu Hai, Yu Zhiyuan, Zhang Ji, and Zhao Dingxin all connected me to my informants in China. My field research would have been impossible without their help. In particular, I would like to acknowledge Zhiyuan’s MY RESEARCH INTERESTS

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Acknowledgments

parents, Yu Min and Zhao Qi, for their hospitality and assistance in my settling in Shanghai, as well as Terence Yip and his colleague Ronald Wan, who worked in the life insurance industry in Shanghai, for their help and patience with my endless questions. This book derives from my doctoral research. I was fortunate to work with superb faculty during graduate school. I owe a tremendous debt of gratitude to Gary Alan Fine, the chair of my dissertation committee, for his unfailing support and encouragement throughout the ups and downs of my six-year-long stay at Northwestern University. Gary and I were initially connected by our commitment to ethnography and cultural sociology. But I must admit that I was a bit worried in the beginning that my theoretical position might not fit exactly with his tradition. Luckily, I soon realized how open and appreciative Gary is to different theoretical positions. For this, and for his unreserved confidence in my work, I am extremely grateful. Gary has been a good friend, and his generosity as my mentor continued even after I left Northwestern University. I also owe great thanks to the members of my dissertation committee: Wendy Griswold, who followed my project from the very beginning and guided me to locate my position in cultural sociology; Bruce Carruthers, who offered his expertise in economic sociology that helpfully shaped my theoretical formulation; and Bobai Li, whose sharp and critical comments pushed me to make improvements along the way. I express special thanks to Charles Ragin for launching research funding for the Center for International and Comparative Studies (CICS) at Northwestern University, which made my first stage of research possible. I am also indebted to Charles’s engagement in my project early on and his continuous support to me and my project after his departure from Northwestern. My gratitude extends to my teachers and the peers who gave me feedback, comments, and suggestions at different stages of my research. Chen Xiangming, Matthew Chew, Lee Ching Kwan, Liu Xin, Hermann Maiba, Geeta Patel, Alvin So, Arthur Stinchcome, Yeh Wen-hsin, Viviana Zelizer, Zhang Xiaodan, and Zhao Dingxin—all gave me constructive comments and suggestions in the proposal stage. Participants and organizers of the Culture and Society Workshop, Ethnography Workshop, and CICS Graduate Students Workshop at Northwestern University and the East Asia Workshop at the University Chicago deserve my thanks for their useful feedback during my dissertation writing. Friends and colleagues who read part of my manuscript in different occasions and gave me constructive feedback include Michael Adorjan, Tom Baker, Peer Fiss, Debbie Gould, Ho Sik Ying, Jin Lei, Erin Leddon, Assata Richards, Hovann Simonian, Colin Smith, Ling Tang, Tao Lin, Wang Danling, Viviana Zelizer, participants of Cultural Transformation in a Global Age Forum at the Department of Sociology, University of Pittsburgh, participants in various seminars and workshops at

Acknowledgments

xi

UCLA (including the Global Seminar and the Center for Chinese Studies Seminar at the International Institute, and the Seminar on Theory and Research in Comparative Social Analysis, the Culture Working Group and the Ethnography Working Group in the Department of Sociology), and participants in the Culture Workshop at the Sociology Department of UC San Diego. I am indebted to all these people for sharing their brilliant minds with me. Parts of the manuscript were presented at various institutions and conferences, including the Asian Studies Center at the University of Pittsburgh; the Departments of Sociology at Boston University, the Chinese University of Hong Kong, and Taiwan National University; the School of Sociology and Anthropology at Sun Yat Sen University; the Department of Anthropology at the Chinese University of Hong Kong; the Centre of Asian Studies at the University of Hong Kong; the Half-Day Forum with the University of Sydney at the University of Hong Kong; the annual meeting of the Association for Asian Studies in New York (2003); the Globalization Conference at the University of Chicago (2004); the Interim Conference on Values and Beliefs held by International Sociological Association Research Committee on Sociological Theory in Rio de Janeiro (2004); the World Congress of the International Institute of Sociology in Stockholm (2005); the annual meeting of the American Sociological Association in Atlanta (2003) and in Montreal (2006). I was fortunate to have numerous engaging audiences who often raised sharp, thoughtful, challenging, and constructive questions to push me to ponder and refine my arguments. I also had the privilege of participating in the Summer Institute on “Economy and Society: Trajectories of Capitalism,” held by Neil Fligstein and Walter Powell at the Center for Advanced Study in the Behavioral Sciences in the summer of 2006, where I benefited from exchanging ideas with a group of superlative young scholars. My year-long ethnography in China would not have been possible without funding support from the International Dissertation Field Research Fellowship offered by the Social Science Research Council, the research grants by the CICS and the Graduate School at Northwestern University, and the Scholarship Development Award by the Midwest Sociological Society. The Alumnae Dissertation Fellowship offered by Northwestern University freed me from teaching and made my dissertation writing more efficient. The University Center for International Studies, Asian Studies Center, and China Council at the University of Pittsburgh all provided financial support for my follow-up fieldwork in 2004. The Center for Asian Studies at the University of Hong Kong kindly hosted me during my writing in Hong Kong. The International Institute at the University of California, Los Angeles generously extended a fellowship for completing the manuscript. I am grateful to these funding institutions not only for their financial contributions but also for their recognition of the significance of this project.

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I thank the team at Oxford University Press for their great efforts in moving this book along. James Cook, the editor of this volume, deserves special thanks for his appreciation of the manuscript early on and his enthusiasm in making this book as perfect as it can be (though it is still far from perfect). While some editors from other publishers complained about the difficulties of securing reviewers for my manuscript, James incredibly convinced seven highly engaging reviewers to read through the entire manuscript at two different points of time. I have undoubtedly benefited from these anonymous reviewers’ insightful comments and constructive suggestions. I thank each of them for their critical eye and generous feedback that improves this book in many ways, particularly Viviana Zelizer, who decided to reveal herself as one of the reviewers, and offered enthusiastic encouragement and specific comments to sharpen this book. My thanks also extends to James Cook and Joe Jackson for their patience in working with me for the cover, and to Jenny Wolkowicki and Lora Friedenthal for their hard work at coordinating the production process. I thank Helen Chen, Maurice Choi, Owen Fung, Elaine Lau, Nichole Lu, and Sherese Tong for their research assistance in some rather tedious but indispensable tasks. It was in 2000 when I commenced this project. The journey over the years would have been impossible without love and support from friends and family. I thank all my dear friends in Chicago, Pittsburgh, Los Angeles, and Hong Kong for their joyful companionship and enduring friendship, particularly Yenni, Wing, Fabian, Alice, Moonlight, Sik Ying, Kaire, Mei Sin, Wong Tao, and Ming Ming. For Lucy and Anna, apart from keeping me companies through my graduate studies, I thank them for cheering me up and pulled me through some very difficult moments in Chicago. Eng, a special friend with a passionate heart, accompanied me through my transition from Chicago to Pittsburgh and offered tremendous practical help that made my life so much easier. His heartily generosity will never be forgotten. My colleagues at the University of Pittsburgh, including Nicole Constable, Evelyn Rawski, Tom Rawski, Tang Wenfang, and Bell Yung, treated me like a family member and offered unflagging support throughout my stay in Pittsburgh. I wish to express my gratitude to them from the bottom of my heart. The main body of this book was written when I resided in Los Angeles. Ken, despite being thousands miles away, was always at my side spiritually and affectionately. His love and enthusiasm suffused me with energy and inspiration. His enormous patience and enthusiastic encouragement embraced and indulged me to venture to take risk for possibly most rewarding returns. I am deeply grateful to him for sharing all the joys and pains throughout this process. I am also lucky to have four loving siblings, who have always been supportive of me in so many ways over the years. Finally, my dear mother and great friend, Cheng Suet King, contributed to this book in a special way. Her eagerness to

Acknowledgments

xiii

pursue knowledge, despite the nearly insurmountable odds present in China in the 1950s and 1960s, was passed on to her children, who have had the privilege to pursue knowledge in a much more conducive environment. Her endurance, her stubbornness in upholding principles, and her boundless love for her family have nurtured us to be who we are. This book is dedicated to her.

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Illustrations

Figures 1 2 1.1 1.2 1.3 1.4 2.1 3.1 6.1

Total Insurance Premium and Life Insurance Premium Income in China, 1984–2004 Life Insurance Penetration in China and Shanghai Compared to the United States, 1991–2004 Real Growth Rate of Life Insurance Premium Income in China and Shanghai, 1994–2004 Life Insurance Growth in Relation to GDP and Per Capita Disposable Income Growth in Shanghai, 1994–2004 Insurers’ Market Shares of the Individual Life Insurance Business in Shanghai, 1997–2004 Estimated Numbers of Personal Accident and Investment Policies Sold in Shanghai, 2001–2004 Insurers’ Market Shares of the Life Insurance Business in Shanghai, 1994–2004 Sources of Top Managers’ Cultural Capital and Its Impacts on Management Strategies Interactive Multiple-Process Model of Culture in Market Formation

5 6 45 46 48 49 62 113 172

Tables 3.1 5.1 5.2 5.3

Summary of Differences among Insurers Studied Perceived Functions of Life Insurance by Clients and Prospects Perceived Functions of Life Insurance by Socioeconomic Status Types of Life Insurance Policies Purchased as Reported by 128 Clients

83–84 158 159–160 161

xvi

Illustrations

A.1 A.2 A.3

Summary of Fieldwork, 2000–2004 Summary of the Socioeconomic Profiles of the Insurance Practitioners Interviewed (N=143) Summary of the Socioeconomic Profiles of the Clients and Prospects Interviewed (N=131)

203 204 204–205

Marketing Death

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Introduction To dramatize their impact, life insurance publications did not hesitate in using death as their “solicitor,” invoking the brevity of life to hesitant customers.  .  . . [Life insurance agents] were a visible reminder of the “gloomy and disagreeable prospective” of death. —VIVIANA

Z E L I Z E R,

Morals and Markets, 1979

For many Victorians, their first taste of life insurance appeared as an invitation to imagine, like Scrooge in A Christmas Carol, the haunting spectre of their future mortality. Salesmen combined plaintive scenes of the uninsured’s deathbed with sensational threats of premature death, which in their foretelling invariably struck without warning. —TIMOTHY

ALBORN,

Regulated Lives, 2009

If you died suddenly, would your spouse have enough money to cover your funeral costs? . . . . If you died tomorrow, would your spouse have the financial wherewithal to provide your children with the opportunities you always dreamed they’d have? . . . [I]f you died today . . . [w] ould your spouse have to make drastic lifestyle adjustments to make ends meet? . . . If someone would suffer financially upon your death, you need life insurance. — A D V E R T I S E M E N T , Time, September 2006 We can’t talk about death, you know, it’s a taboo. . . . [The Chinese] don’t want to hear about misfortunes. They don’t want to think about those things. They don’t want to talk about those things. It’s very difficult! —LIFE

INSURANCE SALES AGENT IN SHANGHAI,

2002

commercial life insurers have aggressively expanded their business to Asia, Latin America, and Central-Eastern Europe as markets in Western Europe and North America began to saturate. Home to one-fifth of the world’s population and noted for its impressive economic growth, China has become a primary target for this global expansion. Dozens of transnational life insurance corporations had established offices in Beijing by the end of the 1980s, impatiently awaiting their operating licenses. On September 25, 1992, American International Assurance Company, Ltd. (AIA), a subsidiary of American International Group, Inc., was the first among its competitors to obtain a license to operate in Shanghai, gaining the first toehold in the People’s Republic of China. A SINCE THE MID-1980S,

4

MARKETING DEATH

number of foreign life insurance corporations were subsequently granted licenses, operating as joint ventures with domestic partners. By the late 1990s, locally established life insurance firms began to appear on the scene as well. Yet despite the arrival of all of these players, creating a market for life insurance was not, and has never been, a simple process. In China, the local public’s resistance to the concept of life insurance was evident at the start. In the mid-1990s, one could see shopkeepers and offices in Shanghai post signs in their windows and doors that said, “Life insurance salespeople are not welcome!”1 In 1998, Richard Huber, then chairman and CEO of the Hartford, Connecticut–based Aetna Insurance Company, commented that a bigger obstacle to the life insurance business than China’s bureaucracy was its culture, specifically, that its population had “very little concept of insurance.”2 During an interview in 2000, the general manager of the Sino-German joint venture Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong) complained that the Chinese still held, in his words, “a stupid superstitious belief ” that the topic of death should be avoided at all costs. Throughout my field research from 2000 to 2004, Chinese life insurance sales agents were frustrated that people “didn’t want to talk about death or hear about misfortunes.” While advertisements in the United States give meaning to life insurance by defining it as “a plan for if,”3 this if is “unthinkable” for the Chinese. Intriguingly, despite the cultural taboo on death and insurance practitioners’ complaints about the difficulty of disseminating the idea of life insurance, the life insurance business in China has been growing rapidly since the mid-1990s. The average annual real growth of life insurance premium income from 1995 to 2004 reached 30.7 percent, compared to only 9.1 percent growth for property insurance.4 Moreover, the proportion of revenue coming from life insurance sales compared to revenue generated by the entire insurance industry soared from 34 percent in 1995 to 75 percent in 2004.5 Although life insurance penetration, or its proportion of the nation’s gross domestic product (GDP), was relatively low compared to developed markets, it did increase from 0.34 percent to 2.02 percent during the same period. This time frame witnessed a comparable dramatic growth in Shanghai, where average annual real growth attained 33.6 percent and penetration jumped from 0.68 percent to 2.87 percent. This impressive growth of the Chinese life insurance market starting in the mid-1990s is vividly displayed in figures 1 and 2. Yet the puzzle remains: How could a life insurance market grow so rapidly when death and fatal misfortunes are taboo subjects? This book documents the processes, the dynamics, and the micropolitics through which a Chinese life insurance market emerged in the presence of cultural barriers. It examines how life insurance develops in a society where

Introduction

5

the cultural setting is substantially different from the places in which it originated and where cultural values are largely incompatible with the probabilistic logic of life insurance. This case study is intended to address a more general question about the role of culture in economic practice and the role of local cultures in the global diffusion of capitalist enterprises. Specifically, how can a particular market emerge in the face of local cultural barriers? How do local cultures shape the way a market is formed? To what extent and in what way do local cultures wield the power to selectively adopt and reject certain modern capitalist ideas and practices?

The Puzzle: Marketing Death When Death Is Taboo The global expansion of the insurance industry coincided nicely with China’s dramatic economic and institutional restructuring. Launched in 1979, Deng Xiaoping’s daring economic reforms spurred stunning economic growth, escalating purchasing power of the Chinese people and the birth of a new middle class. These changes created the necessary economic conditions for commercial life insurance to emerge. At the same time, an obvious process of metropolitanization took place, with the number and size of large metropolitan areas developing

Premium income (billion yuan) 500 450

Life Premium Income

400

Total Premium Income

350 300 250 200 150 100 50 0 84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

19

00

20

02

20

04

Year

20

Figure 1 Total Insurance Premium and Life Insurance Premium Income in China, 1984–2004 Sources: Wang, Fei, and Li (2003) for data from 1984 to 1996 and Almanac of China’s Insurance 1998–2005 for data from 1997 to 2004.

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Figure 2 Life Insurance Penetration in China and Shanghai Compared to the United States, 1991–2004 Sources: Author’s calculations based on the following data: (1) Wang et al. (2003) for life premium income in China from 1991 to 1996; (2) the marketing and research department of Haier New York Life Insurance Company, Ltd. in Shanghai for life premium income in Shanghai from 1991 to 1996; (3) Almanac of China’s Insurance 1998–2005 for life premium income in China and Shanghai from 1997 to 2004; (4) China Statistical Yearbook 2005 for China’s GDP; (5) Shanghai Statistical Yearbook 2005 for Shanghai’s GDP; (7) Life Insurers Fact Book 2009 for life premium income in the United States; and (8) the Bureau of Economic Analysis of the U.S. Department of Commence for U.S. GDP.

rapidly (Yan, Fia, Li, and Weng 2002). The institutional and sociocultural changes associated with the shift from communal to metropolitan cities have largely followed Georg Simmel’s ([1903] 1971, 1950) description of the rise of new modern life. Rapid urbanization, progressive privatization of enterprises, contractualization of labor relations, shrinking provision of state welfare, and reduced family sizes have exposed the urban population to various social and economic risks. Together with the Chinese government’s welcoming and supportive attitude toward the development of commercial insurance, the institutional environment in China in the early 1990s was propitious for the emergence of a life insurance market. The cultural context, at first glance, was similarly promising. Urban China’s openness to foreign cultural influences, ranging from fast-food consumption to legal-rational business practices, has been well documented (see, e.g., Yan 1997; Guthrie 1999). Transnational life insurance companies entered China in concert with a number of other modern capitalist enterprises. The Shanghai stock market was inaugurated in 1990 (Hertz 1998), the world’s largest McDonald’s restaurant

Introduction

7

opened in Beijing in 1992 (Yan 1997), and Amway, a direct selling corporation, officially started its operation in China in 1995 ( Jeffery 2001). These new enterprises all received “feverish” receptions from the Chinese. Against this cultural backdrop, commercial life insurance, which is a foreign and modern means of risk management, may have been expected to receive a comparable reception by urbanites. However, complaints about the difficulties of disseminating the concept of life insurance to the Chinese were noted by both the insurance sales agents and the executives of the insurance companies. The Chinese cultural context, which I discuss in chapter 1, is not as conducive to the development of life insurance as it appears to be. To begin with, the Chinese have long-established risk management practices, mainly through savings and kinship support, that could not be changed overnight. More important, the Chinese concepts of life and death conceive of sudden, premature death as morally and spiritually frightening, which in turn has resulted in a cultural taboo on thinking and talking about death, especially accidental, unexpected death. This ingrained and pervasive taboo constitutes a resilient cultural resistance to accepting life insurance and poses a cultural obstacle to marketing life insurance products. Furthermore, the Chinese concepts of life and death define a “good life” as living well toward the end of life, and a “good death” as dying in full life. They also assign an intergenerational economic obligation to living family members and filter people’s selective attention to fatal risks. All of these cultural elements are incompatible with the ideological logic of life insurance and the idea of insuring against death. Of course, the Chinese are not unique in refusing the idea of insuring against death. Modern insurance emerged with a rather ambitious agenda to convert uncontrollable risks into calculable, manageable ones based on probabilistic logic. Commercial life insurance goes further to assume that the loss of human life or parts of the human body can be compensated in part by pecuniary terms. This alien, extreme form of rationality through which incommensurable beings and events are made commensurable (Espeland and Stevens 1998) has destined commercial life insurance to face resilient cultural resistance throughout the history of its development (Zelizer 1979; Clark 1999; Alborn 2009; Murphy 2010; Post 1976). In the United States, for example, it took almost a century for the life insurance industry to take off, because people refused to put a price on human life (Zelizer 1979, 1985). Viviana Zelizer’s seminal book, Morals and Markets (1979), poses a radical challenge to the conventional economic accounts of the development of life insurance. These conventional accounts center on economic growth, urbanization, the purchasing power of a population, and the advent of technical, statistical knowledge. To Zelizer, they failed to explain why the American life insurance

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market did not develop earlier than the mid-nineteenth century, despite favorable economic conditions. Instead, she puts forward a cultural argument, attesting that the societal cultural values in the United States before the 1840s were incompatible with the ideological logic of life insurance. The most critical cultural obstacle, among all, was the societal value that human life was sacred and priceless. Such a value was profoundly in tension with the logic of pricing human life, and buying life insurance was seen as gambling on life for “dirty money.” However, since the 1840s, changes in the cultural context made the public more receptive to adopting life insurance as a new form of risk management. The most critical changes included an increasing rational speculation on economic risk and a growing awareness of the economic loss consequent to a death. This recognition of the economic value of death, Zelizer argues, channeled the public to be receptive to insurers’ rhetorical discourse that linked the benefits of life insurance to the notion of a “good death” and a “responsible death.” Thus, the underdevelopment of the life insurance business in American society prior to the mid-nineteenth century was attributed to the impeding power of certain moral values. Its sudden expansion since then, to a large extent, could therefore be attributed to a subsequent change in cultural values ( Zelizer 1979:34–39). Zelizer’s argument suggests that cultural values can suppress the emergence of a market and that life insurance as an ideologically embedded entity could only develop when a favorable, namely, rationalized, cultural context arose. In line with Zelizer’s argument is Geoffrey Clark’s Betting on Lives (1999). Examining how life insurance became a field of gambling on lives, Clark suggests that the sudden expansion of life insurance in England in the late seventeenth to the early eighteenth century expressed an essential feature of modernity. It represented a bold effort to extend human control over uncertainty and required a particular cultural logic that reflected “an economic calculus of human life” (Clark 1999:5). Likewise, scholars who study the life insurance market in Taiwan contend that Asian cultural values only hamper the development of life insurance markets (Li, Duberstein-Lindberg, and Lin 1996). They argue that the development of the life insurance markets in Chinese and other Asian societies requires a prior change in their societal cultural values. This “cultural values matter” argument about the development of life insurance, while compelling and convincing, nevertheless leaves some questions unanswered: If cultural values can suppress a market from emerging, how can modern enterprises originating in culturally specific Western contexts be expanded to places with different cultural traditions? The sudden emergence of a life insurance market in mainland China is a case in point. How could the market emerge in the presence of incompatible cultural values?

Introduction

9

In Search of an Answer My initial analytic frame presupposed that in order to create a life insurance market, insurance practitioners would have to create a sense of risk that misfortunes could happen unpredictably, anytime and, in doing so, create a feeling of need for the new commodity. In other words, I expected to see insurance sales agents sell “pessimistic futures” to prospects, hearing many stories of misfortune from sales agents intending to induce a sense of fear about the vulnerability of life, as Zelizer (1979) documented about the American case and Alborn (2009) about the British case. To my surprise, however, I rarely heard the Chinese agents talk about death, accidents, or misfortune when they were persuading prospects to buy. Correspondingly, I found it very difficult to ask one particular hypothetical question when I interviewed clients and prospects: What would happen to your child if you were to die suddenly, or die accidentally? I did not use the word “die” or “death,” but instead asked what would happen if “something bad happened to you, or to your husband, that made you or your husband lose your earning ability?” However, I hardly got an answer. Their common responses were, “I’ve never thought about this.” If I pushed them to think about it, they would say, “I only think about good things. I don’t think about those bad things,” or “That won’t happen: I can’t be that unfortunate.” Their evasive attitude to my question intrigued me. As cognitive consent can only be inferred from silences in texts, and normative consent can be discerned by the unthinkability of alternatives or hypotheses (Schneiberg and Clemens 2006), the general absence of a risk discourse and the “unthinkability” of my hypothetical scenarios about misfortune cued me to the critical role of the cultural taboo. My participant observations allowed me to discern the cultural taboo as utterly taken for granted but unarticulated knowledge among the local people. Yet I wondered where the cultural taboo came from. To complicate matters, I was wrestling with a salient contradiction that emerged early on in my field research. On the one hand, sales agents claimed that the Chinese were family centered and that they would sacrifice anything for the benefits of their family. On the other hand, they complained that the Chinese were selfish because they were reluctant to buy insurance policies that would benefit beneficiaries. As my field research continued and the data grew, it became clear to me that the underlying cultural force of the taboo on death, and the reluctance to buy life policies making payments to beneficiaries, lies in the Chinese concepts of life and death. I elaborate on these concepts and their link to the taboo in chapter 1, and how they shape people’s choices of insurance products in chapter 5.

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The insights generated from my observations highlight the impacts of societal worldviews and values on members’ preferences and dispositions. To explicate how culture shapes economic behaviors through shared ideas and values, I go back to Max Weber’s masterpiece The Protestant Ethic and the Spirit of Capitalism ([1904–5] 1991). In Weber’s account, ideas or conceptions, such as the religious ideas of “calling” and “predestination,” have the power to drive the behaviors of those who share them in a certain direction, through constituting certain psychological attributes (e.g., fears) and motivations (e.g., serving God). The notion of culture in this classical tradition is conceived of as a coherent system of meanings shared by members of a social group (Geertz 1973). The shared subjectivities, though socially constructed, are central to both economic and noneconomic action. In Weber’s famous metaphor, shared ideas that exist in individuals’ heads act like “switchmen” that “determine the tracks along which action has been pushed by the dynamic of interest” ([1922–23] 1946:280).6 Zelizer’s and others’ “cultural values matter” argument about life insurance development is in line with this classical notion of culture. The classical view, with its emphasis on the impact of overarching societal culture on social and economic action, has been criticized for disclaiming the agency of individual actors. This criticism was first put forward by symbolic interactionists, who attend to culture’s practical dimension and emphasize the creativity of individual actors in using and reproducing generally accepted meanings (Goffman 1959; Blumer 1969; Fine 1979). Yet, symbolic interactionism does not repudiate the coherent concept of culture. In fact, on this view, smooth interactions can be accomplished only with shared, consistent cultural rules and assumptions. The focus on the practical capacity of culture has been taken further by some contemporary cultural sociologists, most noticeably Ann Swidler, who challenges the fundamental classical notion of culture. In her groundbreaking article “Culture in Action,” Swidler (1986) uses the metaphor of a “tool kit” to argue that culture matters as a repertoire—an array of cultural resources upon which individuals can draw to construct their strategies of action to solve various kinds of problems. Along the lines of Pierre Bourdieu’s (1977) theory of practice and the concept of cultural capital that centers on bodily know-how (or habitus), Swidler (1986, 2001) argues that culture in terms of practical skills, habits, and knowledge constitutes human action more directly than shared values and beliefs. What sets Swidler’s theory of culture apart from Bourdieu’s, however, is the fragmented image of culture and the voluntaristic underpinning of individual actors in relation to culture. Contrary to the classical conception, culture in Swidler’s theory contains diverse or even “conflicting symbols, rituals, stories, and guides to action” (1986:277). Its incoherent and fragmented nature is grasped by Paul

Introduction

11

DiMaggio’s bold analogy, a “grab-bag of odds and ends” (1997:267). With this notion of culture, people who share similar values and beliefs may behave very differently, often depending on an individual’s practical urgency, cultural competences, and institutional demands. In my inquiry about the role of culture in the creation of a Chinese life insurance market, I find the tool kit or “repertoire” approach to culture useful for resolving the puzzle left by the “culture values matter” argument. As the story unfolds in the following chapters, when culture as shared values and ideas conflicts with the ideological logic of life insurance, economic actors mobilize the tool kit properties of culture to circumvent the values and ideas that prohibit market development. They strategically capitalize on their local cultural knowledge, symbols, and practices to frame life insurance into a locally sensible entity and to smooth the path for transactions on the ground. Hence, the tool kit approach is particularly useful for extending the cultural perspective to make sense of the global diffusion of capitalist enterprises to places with different cultural traditions. Nonetheless, I maintain that the tool kit or repertoire paradigm alone is insufficient to explain the characteristics of the Chinese life insurance market. Shared cultural values and ideas do steer the direction along which the market is emerging. While life insurance in Euro-American societies first emerged as risk management and gradually moved to risk-cum-money management (Zelizer 1979; Ransom and Sutch 1987; Quinn 2008; Alborn 2009; Murphy 2010; Pearson 1990), life insurance in China first emerged as money management before moving toward money-cum-risk management. This new commodity was traded as savings and investment plans, instead of a protection against unexpected misfortunes. This trajectory, I argue, is shaped by the Chinese concepts of life and death. Defining life insurance as a money management instrument during its emerging stage, as I illustrate in chapter 2, went against the transnational insurance players’ intent, because it proved unprofitable. (I use “transnational” or “foreign” as a generic category throughout this book to include joint ventures, which were indeed headed and operated by foreign partners and were categorized as “foreign” companies in official publications.) The experienced transnational insurers failed to create a risk management market to serve their interests, because the cultural resistance forged by local values and ideas was resilient. Thus, collective subjectivities manifested by folklore, values, moralities, and perceptions constitute a rather consistent pattern of preferences that affect the track by which the market takes shape. They act like “switchmen” by constituting obstacles, necessitating circumventing strategies, and circumscribing a range of possible and impossible actions. Thus, this book brings together the classical and contemporary views of culture to understand the formation of the Chinese life insurance market. It argues

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against the theoretical divide between the coherent and fragmented paradigms of culture, a divide that I argue elsewhere is unproductive to the field of cultural sociology (Chan 2009a). The important question is not which concept should be prioritized in relation to action, but how to conceptualize the articulation of the two (Sewell 1999). This project addresses this line of inquiry. I propose an “interactive multiple-process model of culture” and argue that culture matters, but it matters not as either cultural values or practical tool kits. It matters through the interplay of both. Culture matters not only as a regulatory force but also as a constitutive agent.7 Throughout this volume, I analyze how different forms of culture interplay to regulate and constitute the behaviors of various economic actors, including top managers, sales agents, and consumers. I argue that the very cultural barriers rooted in shared ideas and values that compose the local resistance to a new economic practice also necessitate the mobilization of the tool kit to circumvent this resistance. These dual processes, shared ideas composing the resistance and the cultural tool kit circumventing the resistance, result in a market with local characteristics. Such processes also manifest the interplay of agency and structure. My analysis throughout this book highlights the agency of economic actors in materializing symbolic elements into resources and yet puts equal weight on the structural constraints that culture exercises in the process.

In Search of a Site To dig into the microprocesses by which a new economic practice is introduced to a population, and the dynamics through which macroforces shape these microprocesses, I confined my ethnographic research to one city, Shanghai. In addition, I also interviewed a dozen insurance practitioners in Beijing to assess the generalizability of the Shanghai case and five insurance sales agents in Chicago to discern the distinctiveness of the Chinese case. Shanghai presents itself as an ideal place for this study for three major reasons. First, the city represents the “lowest end” of how Chinese culture plays a role in the construction of a modern capitalist enterprise. With its distinctive historical background as an international settlement from the 1860s to the 1930s, Shanghai is especially receptive to foreign influences. In the 1990s, Shanghai was an experimental city for everything new, modern, and capitalist, ranging from fashions (Chew 2007), to toys (Davis 2000), to sexual discourses (Farrer 2002), to the stock market (Hertz 1998). The city and its people are known to take the lead in appreciating and accepting Western concepts and practices. In this context, if we find that the economic behaviors of people in Shanghai (a city that is relatively “westernized” and eager to be further westernized) are shaped by certain Chinese cultural elements, then we can be confident that these cultural elements are as

Introduction

13

influential, if not more so, in other Chinese cities. Second, Shanghai represents the “highest end” of global–local dynamics. In 2000, there were seven transnational life insurers in mainland China, six of which started their operations in Shanghai. The city has been described as the “Olympic stadium” for commercial life insurance and the “insurance hub of China,” where competition between transnational and domestic life insurers has been most intense. This fierce competition provides rich data on global–local interactions. Lastly, because the majority of the transnational insurance firms started their operations in Shanghai, using it as a base for future expansion to other cities, their operations and experiences in this city often served as a model for other cities to follow. To begin my case study, I conducted six weeks of preliminary research in the summer of 2000. My initial contacts with informants provided two useful findings that helped in identifying the major field sites for the subsequent ethnography during 2001–2002. First, I found that there was a strong tension at both the managerial and sales levels between the first wholly foreign-owned insurer, AIA, and a newly formed domestic insurer, Ping An Life Insurance Company of China, Ltd. (Ping An). Second, I noticed the contrasting morale of the sales agents and the conspicuous difference in business growth between two joint ventures that started at about the same time: Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna) and Allianz-Dazhong. Therefore, I selected these four insurers, which represented the widest range of variety, to be the major field sites for this study. Data were collected through formal and informal interviews, participant observations, and questionnaires and by referencing public documents and insurers’ publications. I spent most of the time in participant observations, visiting the agency offices of each selected insurer on a daily basis. I attended training sessions for the agents, joined in morning assemblies, and participated in small group meetings on a regular basis. With the consent of certain agents, I went with them to prospect potential buyers, to sell products, and to visit existing clients. My empirical inquiry was centered on the creation of an individual life insurance market, through which the ideas of life insurance is diffused and negotiated.8 (See appendix A for details of my ethnographic journey and data collection.)

Culture and Life Insurance in China Insurance is indisputably a social and cultural product (Baker 2000, 2002). Life insurance, in particular, is sociologically interesting. The instrumental rational assumptions on which life insurance operates are often confronted with, and simultaneously attempt to challenge, incompatible societal cultural logics. Selling life insurance requires the sale of not just a commodity but a concept, an idea. Commercial life insurers in all different sociocultural settings have to convince

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the public of the necessity of life insurance. How they manage to do so, however, is culturally specific. The development of life insurance in China is particularly suggestive of the mechanism through which culture works, because the market has only recently been germinating. Culture in this process, prior to the establishment of an institutionalized market, is at the forefront in “living” form, as opposed to culture in “dead” form when cultural constructs have been congealed through institutionalization ( Jepperson and Swidler 1994). In other words, the “living” form of culture can be found in preinstitutionalized practices, events, activities, and organizations. Studying the making of a new market therefore allows us to foreground the multifaceted nature of culture and its nuances when investigating its role. Furthermore, it opens an avenue to capturing the micropolitics and dynamics of an institutionalization project in the context of globalization: How do transnational life insurance firms establish themselves as legitimate organizations in a specific locale? How do domestic firms as novice players cultivate their legitimacy? How do transnational and domestic firms contest and collaborate with each other in forging the organizational field? This institutionalization process is where conflict, tension, negotiation, compromise, and cooperation among economic actors are imperative and intense. It is where market as a “societal field” and organization as a “negotiated order” are realized (Swedberg 1994; Strauss, Schatzman, Ehrlich, Bucher, and Sabshin 1963; Fine 1984). It is also where the interest and agency of economic actors come to center stage (DiMaggio 1988). This book is based on a social constructive image of the market, as common among economic sociologists. What distinguishes this project from others, however, is its emphasis on both the production and the demand that forged the market. Prominent economic sociologists, more often than not, prioritize the importance of production in market formation and economic institutions, focusing on organization and management (e.g., White 1981; Fligstein 1990, 2001; Van Maanen and Kunda 1989; Martin 1992; Smith 1990; see comments in Zelizer 1988). Consumers are either invisible or presented in abstract terms, leaving the demand side and market exchange to economists and anthropologists. Seldom do economic sociologists explore the dynamics from production to consumption, investigating the interactions among producers, distributors, and consumers that constitute the market.9 While I agree that the production side of the market is important, because producers create demand and needs (Fligstein 2001; White 1981, 2002), I maintain that producers must react to the lived experiences of consumers (Bourdieu 1984; Zelizer 2005b ; Beckert 2009; Aspers 2009). The emerging Chinese life insurance market presents an opportunity to scrutinize how producers introduce a new concept and a new practice to the local population, and how the local public receives and responds to this something

Introduction

15

new. As life insurance involves complex products, the valuation criteria in this emergent stage must be contested and established in political and social processes (Beckert 2009; Krippner 2001). The case of Chinese life insurance thus calls for a multilevel analysis of organizational strategies, interpersonal interactions, and individual motives and rationales: How do transnational and domestic insurers negotiate with consumers? How do insurance firms manage and socialize their Chinese sales agents? How do sales agents strategically interact with prospects to prompt purchase? What drives the Chinese prospects to buy? How do they choose among different products? And, what are the meanings of their purchases? All of these questions lie at the core of this book. Apart from contributing to cultural sociology and economic sociology, this project also offers a sociological lens for understanding China in the context of globalization. It reveals the global–local dynamics of making a market for something conceptually new to the Chinese, detailing how local people interact with foreign entities and ideas. It assesses to what extent and in what ways transnational players impose a set of rationalities and practices on the Chinese population and how the Chinese respond in the process. Furthermore, it seeks to grasp the dynamics between the dramatic sociocultural changes in China and its cultural heritage.

Overview of the Book This project asks why a life insurance market has been emerging and growing impressively in China despite cultural resistance. However, as “why” often cannot be observed directly but only addressed inductively through a series of “how” questions (Katz 2001, 2002), this book is replete with a number of how processes and dynamics. To decipher how culture matters in the development of the Chinese life insurance market, I begin with a survey of the economic, institutional, and cultural conditions under which commercial life insurance was introduced in urban China. Then, I present the characteristics of the emergent market and analyze how different levels of economic activities compose it: from insurance firms as the units of analysis, to interactions among managers, sales agents, and potential customers, and finally to individual buyers’ motives for purchasing life insurance. To protect the anonymity of informants, I use pseudonyms throughout the book.10 However, I kept the names of the companies, because there were only few of them during the market’s emergent stage, and their identities will be obvious to anyone who cares to look them up. For the same reason, I have not invented pseudonyms for the general managers of the companies, using their real surnames instead. Chapter 1 provides a context for the ethnographic stories that unfold in subsequent chapters. It begins with a brief historical background of commercial life

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insurance in China, dating back to the early nineteenth century through the end of the Maoist regime. Then, I detail the economic, institutional, and cultural conditions in urban China in the late 1980s to the 1990s, and assess each of these conditions’ possible impacts on the development of commercial life insurance, both favorable and unfavorable. In particular, I discuss how major cultural barriers to life insurance, including the Chinese cultural taboo on death, are rooted in Chinese philosophical and folk religious traditions. Finally, I relate these institutional and cultural conditions to the theoretical questions of the book. This chapter ends with a presentation of the characteristics of the emergent Chinese market, namely its uneven growth pattern, the dominance of domestic insurers, and its disproportionate focus on money management, and argues that neither the cultural value nor the cultural tool kit model alone is sufficient to explain these characteristics. Chapters 2 through 5 present rich ethnographic details of the micropolitics and dynamics through which the market is emerging. Chapters 2 and 3 focus on the organizational strategies of insurance companies. Chapters 4 and 5 center on the market exchange. Chapter 2 analyzes the disparity between transnational and domestic life insurance firms’ strategies. Insurance firms from both camps faced a conflict between local preferences and profits when designing their products. However, they handled this conflict very differently. While transnational firms defined life insurance as modern risk management and offered products for managing unexpected misfortunes; domestic firms defined life insurance as money management and launched products for savings and investment purposes. The former adopted a profit-oriented model by attempting to change local preferences; whereas the latter took on a market-share approach by accommodating local preferences. Through a chronology of the ebbs and flows of the market’s development, I demonstrate the tension between the local cultural logics and the profit-oriented institutional logic of life insurance. I document the battle between the transnational and domestic players in the field, explaining how their battle is rooted in their different ways of handling cultural obstacles, and in their divergent institutional logics of operation. Chapter 3 discusses the variation among individual insurers. As the life insurance business relies heavily on sales agents, manufacturing a productive sales force is the core organizational task of a life insurance company. However, some insurers are more effective than others in orchestrating a committed and spirited sales force. The Sino-American joint venture Pacific-Aetna was most effective in motivating its sales agents and boosting their morale, whereas the Sino-German joint venture Allianz-Dazhong was least capable of doing so. The domestic insurer Ping An adopted a paternalistic approach to control their agents, while the American AIA used a mix of professional and missionary models. Why was this

Introduction

17

so? By offering a comparative picture of the labor–management techniques that various insurers deployed, I relate their heterogeneity to the top executives’ cultural capital, which, I argue, is in part a product of the institutional and cultural environments of these executives’ home regions and the organizational cultures of their former workplaces. How sales agents prompt people to buy life insurance is the question addressed in chapter 4, which narrates and explains the strategies, dramaturgical performances, and sales discourses of the insurance agents that lead to transactions. It describes how Chinese insurance agents facilitated their sales by mobilizing the local practice of guanxi (interpersonal relationships) and renqing (interpersonal obligation) and by capitalizing on the norm of reciprocity, the Chinese guanxi hierarchy, and stereotypical gender roles. Chapter 4 further investigates how agents from domestic and foreign insurers adopted subtly different sales talks in broaching the need for life insurance. It ends with an analysis of how culture of different forms, together with institutions, affects the adoption and the effectiveness of various sales discourses. Chapter 5 asks what makes people buy life insurance, what kinds of products they buy, and why. Through studying the intentions and interpretations of their choices, I aim to explain the meaning of buying life insurance from the clients’ perspectives. The data suggest that while Chinese clients had multiple and mutable motives for buying life insurance that shifted over time, their preferences for money management products were universal and consistent. Furthermore, buyers from different walks of life shared the same definition of life insurance: they all defined life insurance as money management. I examine how this definition and buyers’ preferences were shaped by their shared folklore, values, moralities, and perceptions, and how shifts in prevailing motives over time were brought about by institutional changes. My theoretical argument about how culture matters in creating a market is discussed in chapter 6. This concluding chapter includes three parts. First, it addresses the questions raised in the introduction. It elaborates how, on the one hand, Chinese concepts of life and death as shared ideas and beliefs produce public resistance to receiving life insurance as risk management and how, on the other hand, insurance practitioners mobilize local cultural symbols and practices to get around this resistance. Moving beyond the specifics of this case, it proposes a theoretical model that links the two manifestations of culture, one as a coherent meaning system and the other as a fragmented tool kit, to the construction and adoption of a new economic practice. Second, this chapter includes a comparative analysis of the life insurance markets in Hong Kong and Taiwan to scrutinize the extent to which local cultures and agents wield the power to construct and sustain alternative models of capitalist practices. It maintains that the presence of

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competitive domestic players in the field is critical to strengthening the agency of the indigenous parties. Finally, this chapter reports on the changes in some insurance firms over the years, discusses how Chinese clients may change their attitudes toward risk management insurance, and offers projections about the market’s future development.

1

Is China an Inviting Place for Life Insurance? Societal Conditions, the Market, and Remaining Puzzles T O E X A M I N E T H E role of culture in the process of market formation, we have to first delineate the societal conditions, both theoretically favorable and unfavorable, that were present when commercial life insurance was introduced. This chapter is dedicated to this task. I first give a brief history of commercial insurance, particularly life insurance, in China and describe the revival of the domestic insurance industry and the arrival of the transnational insurance firms during the reform era. Next, I examine in detail the economic, institutional, and cultural conditions in contemporary China that could affect the development of life insurance. Based on these conditions, I present three potential hypotheses about how culture may or may not affect the emergence of a Chinese life insurance market. In characterizing the key features of the emergent market, I consider the strengths and weaknesses of these hypotheses and discuss the open questions that remain.

Historical Background of Commercial Insurance in China Commercial insurance is an imported concept on Chinese soil. It was first introduced by the British during their imperialist reign in China. The development of the insurance industry in China prior to Deng Xiaoping’s economic reforms can be divided into a pre-1949 and post-1949 periods.

The Pre-1949 Period The first insurance company to appear in China was a British marine insurer that entered Guangdong, South China, as early as 1805. The earliest life

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insurance company, Standard Life Assurance Company, British, appeared in South China in 1846. It sold life policies mainly to foreigners residing in China.1 Subsequently from the mid-nineteenth century to the first quarter of the twentieth century, numerous foreign insurance companies landed in China, mostly in Shanghai, Guangzhou, and some other major cities ( Wu and Zheng 1993). Having seen that the foreign insurers were making promising profits, local businessmen were eager to set up their own insurance companies by modeling the operation of the foreign firms. At the same time, China’s Self-Strengthening Movement (1861–1895), led by intellectuals, strongly encouraged the public and private sectors to learn from the West, including learning about the insurance business. The first domestic insurance company, a small-scale marine insurer, was established in Shanghai in 1865. The first domestic life insurance company, however, did not come on the scene until 1894, almost 50 years after the first foreign life insurer arrived ( Wu and Zheng 1993). The development of the insurance industry in China reached its climax in the late 1920s and 1930s. Nonetheless, the market was dominated by foreign players. By 1929, there were more than 30 foreign insurers but fewer than 20 domestic ones. The number of domestic insurers increased to 45 by 1935. Nevertheless, the number of foreign insurers increased even more rapidly to 166, coming from 16 countries, mostly Britain, America, Japan, and Germany. At the same time the regulatory bodies were controlled by foreigners. Consequently, more than 80 percent of the insurance business was in the hands of foreign enterprises (Xu, Cao, and Zhou 2001). In 1925, the first Chinese insurance handbook, Baoxianxue (The Knowledge of Insurance), was published. It closely referenced British and American insurance books. In the section on life insurance, the authors commented that many people still did not understand the meaning or the benefits of life insurance. Citing American and Japanese scholars’ definitions and concepts of life insurance and supplementing them with some Chinese aphorisms, the authors promoted the idea that life insurance was “for preventing danger” ( Wu and Zheng 1993). Beginning with a Chinese aphorism tian you bu ce feng yun, ren you dan xi huo fu (the sky has unpredictable clouds and winds; life has misfortunes and fortunes) in the first chapter, the concept of life insurance as a means of risk management was first introduced to the Chinese through this locally published text. However, as the circulation of this lengthy insurance handbook was limited to the intellectual elite, so was the idea of life insurance. Throughout this period of significant growth in the insurance industry, life insurance accounted for only a small proportion of the business (Huebner 1930).

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21

Only about one-fifth of the insurance companies carried life policies. Among these, the China United Assurance Society Ltd., founded by a local businessman in 1912, was the largest domestic life insurer. However, like the smaller domestic companies, it sold mainly group policies ( Wu and Zheng 1993). Furthermore, the largest part of the policies sold were endowment for savings purposes rather than traditional risk management policies (Huebner 1930). Foreign life insurers offered more individual policies, but their clients were mostly expatriates. Therefore, life insurance was never popular among the locals at the individual level during the boom of the insurance development in the 1920s and 1930s ( Wu and Zheng 1993). With the outbreak of the Sino-Japanese War in 1937, followed by the Second World War, many insurers shut down their operations in China. Nevertheless, a number of them resumed their business soon after. Again, the foreign insurers dominated and completely controlled the regulatory bodies of the industry. American International Assurance Company, Ltd. (AIA) was the first foreign insurer to restart its business, and it subsequently became the largest and most influential insurer in Shanghai until the establishment of the People’s Republic of China (PRC) in 1949 (Xu et al. 2001).

The Post-1949 Period When the Chinese Communist Party (CCP) took over in 1949, there were still 63 domestic and 42 foreign insurers in Shanghai. With no business prospects in sight, all foreign insurers pulled out of China by 1952. A number of domestic insurers merged to become two large companies operating with joint public and private capital and continued to operate into the 1950s. In October 1949, the People’s Insurance Company of China (PICC) was founded as the first national state-owned insurer, unifying the former regional state-owned insurance companies. Two life insurance products were offered in 1951, one for groups and one for individuals, and both carried endowments for savings purposes. By the end of 1952, only about 100,000 life policies were sold nationwide, of which more than 80 percent belonged to group policies.2 The growth of PICC ceased in 1958 when Mao’s aggressive agriculturalization and industrialization campaign, the Great Leap Forward, began. From 1959 to 1964, during the campaign and its disastrous aftermath, PICC’s business plummeted, and insurance was only sparsely seen in Shanghai, Tianjin, Guangzhou, and Harbin. Subsequently, during the widespread political and social upheaval of the Great Proletarian Cultural Revolution in 1966–1976, the insurance industry all but disappeared (Xu et al. 2001).

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The Reappearance of the Insurance Industry The reemergence of the insurance industry in the PRC can be divided into two distinct stages. From 1979 to 1991, the state-run PICC resumed operations. The insurance business was closed to foreign firms, and PICC practically monopolized the business. Beginning in 1992, an entirely new scenario emerged. New ideas and practices were brought in by the American-owned AIA. New private domestic insurers emerged, and a number of Sino-foreign joint ventures appeared.

The Revival of Domestic Insurance As part of its market reforms, the PRC government enthusiastically promoted the reestablishment of commercial insurance. In April 1979, the State Council gave authority for the People’s Bank of China to revive PICC’s business. In 1982, group life and accident insurance policies were offered and sold to employers as benefits for their employees. In the same year, an individual life policy to be sold to workers in state-owned enterprises (SOEs) and collective enterprises was also available.3 This individual policy, called Simple Life Insurance, combined both features of whole life and term life. The insured amount would be given to the policyholder who survived the term or to the beneficiary if the policyholder died within the term. One of my informants, a woman in her early 50s, said that she bought the policy in 1984 as an expression of renqing, or interpersonal obligations. None of the workers in her work unit wanted the policy, but about 20 percent of them bought it in order to give face to the department head, who had a personal relationship with the PICC salesperson. The general public at large had no concept of life insurance, and PICC did not launch any serious training for their salespersons or any education for the public about this new commodity. As a result, life insurance never became popular when PICC was the only insurance provider. In November 1987, the Bank of Communication (Shanghai Branch) set up an insurance division. This division became independent and was named China Pacific Insurance Company Ltd. in April 1991. With its headquarters in Shanghai, China Pacific was the first private insurer to expand its business throughout the country. It started selling life insurance policies in 1995. Another domestic insurer, Ping An Insurance Company (Ping An), was founded in Shenzhen in March 1988. Ping An’s business was initially confined to property insurance, mainly in Shenzhen and a few other cities. But in September 1992, it was renamed as Ping An Insurance Company of China and began to expand its business to the entire country. It opened a branch in Shanghai in November 1993, and started to sell life insurance in July 1994. In 1997, the company restructured its ownership

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23

into stock shares and adopted the name Ping An Insurance Company of China, Ltd. In January 2003, it was restructured into a holding company, and its name was further changed to Ping An Insurance (Group) Company of China, Ltd. [Ping An (Group)]. The life business sector was then taken over by Ping An Life Insurance Company of China, Ltd., which was set up in December 2002 to subsequently become a subsidiary of Ping An (Group). (To avoid confusion, I adopt Ping An’s title in 1997–2002 as its official name throughout this volume.) With the emergence of domestic private insurers and the advent of foreign insurers, PICC was under pressure to reform its organization in order to stay competitive. This state-owned insurer spun off business to three independent share-holding companies in 1996: China Life Insurance Company, Ltd. (China Life) took over its life insurance business, PICC Property Insurance Company, Ltd. took over its property insurance business, and China Reinsurance Company, Ltd. took over its reinsurance business.

The Reentry of Foreign Insurance Since 1992, China has been permitting foreign access to the emerging insurance sector, due to both its new open door policies and pressure from the major players of the World Trade Organization (WTO). Unlike its crippled position in the face of foreign superpowers during the nineteenth through the early twentieth century, Chinese authorities in the 1990s maintained control to avoid falling prey to foreign forces. They kept a tight rein on the access of foreign insurers, especially those selling life insurance. They limited their regional access, first only to Shanghai and Guangzhou in 1992 and 1995, respectively. A few more cities, including Tianjin, Dalian, Chongqing, and Shengzhen, were added to the list in 1999. After China’s entry into the WTO in November 2001, a dozen more cities were opened to foreign players, including the capital, Beijing. In 2004, the Chinese authorities lifted the regional restriction by opening the entire country to foreign entrance. However, except for AIA, all foreign life insurers had to join with a local partner and run their business as a joint venture. In 1992, two of the subsidiaries of American International Group, Inc. (AIG), AIA and American International Underwriters Insurance Company (AIU), were the first foreign insurers granted licenses to operate in the PRC. AIA specialized in life insurance and AIU in general insurance. Since the second half of the 1990s, a number of foreign life insurers have arrived to form joint ventures. The Manulife Group from Canada, Prudential from the United Kingdom, the Allianz Group of Germany, American-based Aetna Life Insurance, and the AXA Group of France were among them. Between 1993 and 2000, six joint ventures were

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formed. The number of foreign life insurers multiplied to 20 by the end of 2004. (See appendix B for a list of life insurance companies in China up to 2009.) How ready was the local population to enthusiastically greet these insurers? To assess the possible influences of economic, institutional, and cultural factors on people’s reception to commercial life insurance, I explore these conditions in detail below.

Economic and Institutional Conditions in Urban China Economic Growth and Rising Purchasing Power Since life insurance can hardly be perceived as a necessity when people can barely make ends meet, its development requires substantial economic growth and an increase in the purchasing power of a population. Viviana Zelizer (1979) notes that the sudden expansion of the life insurance industry in the United States occurred at a time when the economic environment proved propitious and savings deposits were mounting. These necessary economic conditions were obviously present in China. The expansion of the Chinese economy in the 1980s and 1990s astonished the world. It grew from one of the poorest economies in 1978 to the seventh largest in the world in 2000. During this period, per capita GDP increased 5.2 times, and per capita income increased 4.7 times for rural residents and 3.6 times for urbanites (Bian 2002). The economic growth from the mid-1980s and especially in the early 1990s was remarkable. The average annual growth of GDP was 8.8 percent from 1985 to the end of 1990 and 12.3 percent from 1991 to the end of 1993.4 The financial surplus in ordinary people’s pockets was evidenced by China’s high personal or household savings rates. The urban household savings rate, measured by the proportion of savings to disposable income, increased from around 10 percent in the mid-1980s to almost 20 percent in the mid-1990s (Kuijs 2005). In Shanghai, the savings of city households surged from 15.5 billion yuan (~ US$1.9 billion) in 1978 to 518.8 billion yuan (~ US$62.7 billion) in 1990; in other words, it increased 33.5 times. By 1994, the figure further tripled to 1.6 trillion yuan (~ US$193 billion) in just four years.5 There is no doubt that the Chinese population in the early 1990s, especially those in coastal cities, had strong purchasing power and substantial disposable income for a new commodity like life insurance.

The Birth of a New Middle Class Another socioeconomic condition necessary for the emergence of a life insurance market is the existence of social stratification and a middle class. Life insurance companies elsewhere often target those in the middle class as their primary

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25

clientele, because these people have extra money (to buy life insurance) and yet are vulnerable to a sudden downturn in the economy or unexpected misfortunes in families (Murphy 2010). In China, rapid economic growth has accompanied by the birth of a new middle class. In the 1990s, the new class was mainly composed of white-collar employees, such as office personnel, managers, and professionals, along with private entrepreneurs (Bian 2002). Although the lifestyle and values of this emerging middle class have yet to be stabilized, its members have been found to seek material comforts and be especially open to foreign products and ideas (Davis 2000). Except for those who were cadres in the prereform era, the majority of the people who belong to the middle class now are either former SOE workers or children of SOE workers. They have experienced an upward mobility of their financial, material, and symbolic status but are expected to be less dependent on the state provision of welfare than their parents’ generation. These people have the highest propensity to buy life insurance as a means of risk management.

Increasing Job Insecurity Economic growth and the existence of a new middle class are only the very basic conditions for the possibility of a life insurance market. A strong purchasing power of the population does not automatically transform into demand for life insurance, if people do not have a higher sense of risk. The booming Chinese economy and growing wealth of its people come with the price of increasing job insecurity. The permanent status of the employees of SOEs, the so-called “iron rice bowl,” was shattered by the advent of the new market economy. In October 1986, the labor contract system was implemented, causing new employees of SOEs to lose de facto lifetime employment and comprehensive welfare benefits ( Tomba and Tomba 2002). New entrants to state jobs were hired on limited term contracts, usually three to five years. Those who chose to work for private corporations, of course, were also hired on a contract basis and could be fired at any time. In Shanghai, the proportion of contract employees in production firms increased from an initial 5 percent prior to the economic reforms to 85 percent in 1995 (Davis 1999). At the same time, the old employees in the SOEs and collective enterprises, who were supposed to enjoy lifetime employment, faced a wave of massive furloughs (xiagang, literally “stepping down from a position”) beginning in the second half of the 1980s. Initially, furloughed employees were provided with partial wage payments and continued to enjoy the welfare benefits of their employment terms. Starting in 1992, however, intensified marketization drove numerous SOEs to bankruptcy. The pace of furloughs accelerated, and laid-off workers received subsistence pay

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and reduced benefits. It was estimated that about 17–28 percent of SOE employees in Shanghai, Chongqing, and Shenyang were furloughed by 1994 (Rawski 1995). Thus, Chinese employees, both the old and the new, in the reform era have been subject to a full range of job insecurities. The dramatic changes in Chinese workplaces should have raised people’s general sense of risk and their receptivity to the idea of insurance in general and life insurance in particular. This is especially the case when existing risk management mechanisms have been quite severely weakened by drastic institutional changes.

Eroding State Provision of Welfare Family and kinship support had always been the informal, communal form of assistance one could expect to receive in times of adversity in pre-Communist Chinese society. After 1949, the state implemented a comprehensive social insurance scheme through a danwei system. Danwei refers to one’s work unit, which was a unique economic and social organization in China during the Maoist era. It was considered a “microcosm society” in which economic and social life were inseparable (Lu 1989). For nearly 50 years, the danwei system provided cradle-tograve welfare benefits to its workers and therefore was the primary institution people could count on apart from their immediate families. Housing, health care, education, retirement benefits, and childcare were either provided for or substantially subsidized by one’s danwei. As early as 1953, free medical services were provided for workers who had a danwei. Retired workers could receive a pension equivalent to 70 percent of their working wage (Li 1993). This comprehensive social insurance eroded in the 1990s as a result of the rapid pace of market reforms. To increase their competitive edge during the market reforms, state and collective firms scaled back various fringe benefits for their employees (Davis 1999; Guo 2003). A decreasing proportion of the work force was entitled to free medical care and housing benefits.6 At the same time, medical and hospital fees have been escalating. In her studies in 1995, Deborah Davis (1999) found that hospitals in Shanghai, as in many other cities, required either written guarantee of payment by danwei or down payments of 5,000–10,000 yuan (~ US$604–1,208) before any major surgeries. After July 1994, an increasing number of enterprises no longer provided such guarantees, leaving patients and their families desperate to borrow from relatives as the only alternative. Pension reform in China also went hand in hand with the restructuring of SOEs. A nationwide pension reform was launched as early as 1986 to transform the enterprise-based pay-as-you-go system into a municipal-based three pillars

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system (Zhao and Xu 2002). The three pillars refer to a public defined benefit for redistribution of funds, a mandatory funded contribution for each worker, and a voluntary supplement pension managed by each individual firm or private insurance company. The last pillar obviously opens the door to the commercial insurance industry. The difference between the old pay-as-you-go system and the new three pillars system was not only practical but also conceptual. Under the old system, the existing working population supported the retired population, so it was one collective group supporting another collective group. Under the new system, how much one will receive depends on his or her contribution to the pension fund. This individualized scheme reflects an idea of self-reliance and individual responsibility. Although the new pension system is mandatory and supposedly covers all workers in both the state and private sector through the first and second pillars, the system has been widely evaded in the private sector (Zhao and Xu 2002; Lee 2007). Furthermore, the long-term viability of the system and its capability to provide adequate support for future pensioners are unclear. For example, Ching Kwan Lee (2002) finds that the retirement pension fund in Guangdong registered a 10 million yuan (~ US$1.2 million) deficit in 1996. Consequently, Chinese employees have been facing an increasing uncertainty about their future pension benefits. The erosion of the state provision of social insurance has exposed the population to higher economic and social risks. Together with an increase in the numbers of urban poor, the government has been encouraging family and local community services to provide assistance or relief (Croll 1999). While it once attempted to weaken the Chinese familial culture during Mao’s regime, the government now emphasizes the important and central role of family in intergenerational care. However, rapid urbanization, changes in living arrangements, and shrinking family sizes have largely impeded the resurrection of familial and communal care.

Urbanization and Increasing Difficulties of Informal Mutual Help Urbanization in China has been characterized by conspicuous metropolitanization. From 1980 to 1990, the number of metropolitan cities (defined in terms of having a nonagricultural population above one million) doubled from 15 to 31 (Yan, Fia, Li, and Weng 2002). At the same time, these and other cities experienced an influx of people from rural areas seeking jobs (Lee 2007). Although rural migrants face the highest level of economic and physical risks, commercial insurers do not regard them as potential clients, both because of their high-risk profiles and their inability to pay for premiums. I therefore limit my discussion

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about the impact of urbanization to those who are identified as potential clients for commercial life insurance. Besides migration, urbanization is always accompanied by a reduction in family size. The average size of urban households in China dropped from 4.4 to 3.6 members in just eight years from 1980 to 1988 (Davis and Harrell 1993). Once married, young people now tend to move away from their parents. Extended families are increasingly rare in urban areas, accounting for only about 20 percent of the 800 sampled families in Shanghai in a survey in 1996. In an inland city, Chengdu, extended families made up less than 30 percent of the sample in this same survey (Shen, Yang, and Li 1999). The average family size in Shanghai was 3.26, which is quite comparable to the 3.31 in Chengdu. This decline of the extended family was accompanied by shrinkage of kinship networks, thanks to the one-child policy launched in 1979. This policy, apart from accelerating the decrease in family sizes, has substantially weakened kinship linkages, as fewer people have siblings, cousins, aunts, and uncles. By the early 1990s, lineage resources were rarely available to the urban population (Davis and Harrell 1993).7 The thinning kinship networks and decreasing family sizes mean that traditional “insurance” through kinship support has been breaking down. Each nuclear family has had to become socially and economically more self-reliant. Another obvious sign of urbanization in China are the new housing arrangements that manifest a shift from a Gemeinschaft (community) to a Gesellschaft (society). The living arrangements in prereform China largely facilitated intimate social interactions among neighbors. Housing was provided by danwei, and neighbors were normally colleagues as well. In Shanghai, the typical dwellings during the Mao’s era were called shikumen (literally translated as “stone multiplestoried gate”). In each shikumen, there were public or semipublic areas where residents interacted with each other on a daily basis. The intimate relations among residents of shikumen were described by Deborah Pellow as follows: “They knew each other, cared about each other—even while they also quarreled with one another about sharing the water tap or kitchen. At dinner time, one could casually drop by a neighbor’s house, rice bowl in hand, and be fed. If one were ill, he/she could depend upon neighbors for help” (1993:421). Thus, neighbors provided each other with informal mutual help and constituted part of the resources for risk management should any unexpected contingencies occur. In the 1970s and early 1980s, some shikumen were converted to xincun (literally translated as “new villages,” comparable to American townhouse complexes, but usually with five stories and without elevators). The physical layout of a xincun was to some extent similar to that of a shikumen, which facilitated mutual help among neighbors. Since the late 1980s, however, high-rise apartment buildings have been replacing shikumen and xincun (Pellow 1993). In Shanghai, the number of residential

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buildings higher than eight stories increased from 959 in 1990 to 4,498 in 1998. The change in residential setting resulted in infrequent interactions among neighbors. A 1993 survey on neighborhood interactions in Shanghai indicates that exchanges of help among neighbors were infrequent (Logan 1999). Furthermore, burglaries have been reported to be on the rise since the late 1980s. Many apartment dwellers began to install iron-bar doors with padlocks in the early 1990s (Pellow 1993). During my field research in 2001–2002, I noticed that the iron doors had actually been fortified. Those I saw were no longer iron bars with padlocks but solid pieces of iron comprising the entire door, much like the door to a prison cell. Each iron door has a peephole of less than half an inch in diameter for seeing through to the outside. I saw these doors not only in Shanghai but also in Beijing.8 As there were no contacts among neighbors, the sense of community was weak. In fact, each household had become an isolated island ( Wu and Li 2002). It is not surprising that quite a large number of my informants nostalgically recalled their relations with their old neighbors in the past: In the 70s and 80s, Shanghai people lived in xincun. There were longtang (lane halls) as common areas. Neighbors shared many things together. . . . In the 90s, households became independent units. Now neighbors do not talk to each other. You will not even borrow an egg from your neighbors. It’s completely different. If you need any help, your neighbors will not help you.9 What this informant described illustrates the breakdown of community and the rise of individualism ( Yan 2008), even though the individual unit might well refer to a family. The shrinking sizes of kinship networks and families, and increasing alienation among neighbors, have undermined the traditional informal mutual help system that the government intended to resurrect. Furthermore, the one-child policy has also restructured demographic patterns, resulting in a rapidly aging population. The wealth generated by an only child will eventually need to support two parents and, perhaps, four grandparents. Traditional intergenerational care through children’s support for old age is simply unfeasible, regardless of whether the younger generations are willing to resume such a responsibility. In addition, compared to the United States in the mid-nineteenth century when life insurance emerged, China in the 1990s had far fewer religious charity associations that could offer communal support to those suffering misfortunes. The state’s diminishing provision of welfare for the population and the breakdown of the informal mutual help system, indisputably, created an institutional environment highly conducive to the development of commercial life insurance.

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Government’s Supportive Attitude and Legalization In addition to the socioeconomic changes, the government’s stance on commercial life insurance has always been a crucial factor in its development ( Zelizer 1979; Clark 1999; Alborn 2009). The Chinese authorities’ espousal of the development of commercial insurance has been realized through their abandoning certain ideological principles, opening the door to foreign economic players and building the legal infrastructure for the industry. The year 1992 marked a new phase and a new direction for China’s economic reforms, when a “socialist market economy” was officially adopted by the CCP. The CCP officially declared that economic reforms should no longer be constrained by the abstract, ideological question of whether the innovations were capitalist or socialist, as long as they could spur economic development. The significance of this official declaration lies in the abandonment of the requirement for “ideological correctness” in introducing reform measures (Chen 2000). Modern businesses and enterprises, as well as foreign capital, technologies, and human resources, were allowed to enter China, and commercial life insurance was one of them. For practical reasons, the Chinese government has been very supportive of the development of commercial life insurance, in order to reduce its financial burdens. A “medical reform and insurance” pamphlet distributed by an insurer in Shanghai cited Prime Minister Zhu Rongji’s speech promoting commercial insurance: The basic medical care [provided by the state] is low level. . . . protection. Any medical needs that go beyond this minimal, basic level should be resolved by commercial insurance. Now is the time to change the old concepts. Investment in health is everyone’s responsibility. No one can be entirely dependent on society. Society requires us to actively participate in commercial insurance.10 Hence, the government implicitly and explicitly encouraged the public to supplement the new pension and medical schemes with private insurance, as part of its efforts to launch pension and medical reforms. By opening the door first to AIG, state authorities also aimed at importing the technology and management of commercial insurance for the development of the domestic insurance industry. In return, it accelerated the process of legalizing and regulating insurance practices as a form of support for foreign insurers. In October 1995, the National People’s Congress promulgated the first formal insurance law to regulate and enforce legal activities of insurance firms. The

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People’s Bank of China was delegated legal authority to grant operation licenses and to supervise the operation of the insurance industry. In 1998, an independent official regulatory body, the China Insurance Regulatory Commission (CIRC), was set up to take over the role of the People’s Bank of China. The CIRC carries the functions of formulating and enforcing insurance law and regulations, overseeing insurance business operations, protecting the interests of policyholders, maintaining order, ensuring fair competition, and facilitating the development of insurance in China. The legalization of the insurance business, though still in the process of being formalized, has provided a critical source for cultivating the local population’s sense of trust in this new enterprise. Taken together, the economic and institutional conditions in China in the 1990s were promising for the development of a commercial life insurance market. The cultural conditions, on the other hand, were rather mixed. The cultural situation in China in the 1990s consisted of an array of both disenchantment and reenchantment. On the one hand, signs of rationalization were noticeable. On the other hand, traditional Chinese cultures and practices resurfaced in the increasingly rationalized and modernized China. The postreform cultural milieu in urban China can be characterized as a combination of market rationalism and neotraditionalism (King 1991). Some of the cultural contents were favorable to the development of a life insurance market, whereas others were resilient obstacles.

Cultural Elements Congenial to Life Insurance In post-Mao China, cultural elements congenial to life insurance are numerous. Intensified marketization, the birth of a consumer society, welcoming or even feverish reception of things new and foreign, the return of familialism, the materialization of a child-centered ethos, and the central role of reciprocity in defining Chinese guanxi (interpersonal relations) are all facilitative cultural properties.

Intensified Marketization and the Birth of a Consumer Society Bold economic reform is itself a manifestation of an instrumental rational movement that goes along with the evaporation of the communist utopia. Deng Xiaoping once voiced his reformist position before Mao’s death with this metaphor: “It does not matter whether it is a white cat or a black cat, it is a good cat as long as it can catch mice.” This metaphor once got him into the trouble, as he was accused of “going bourgeois.” In the early 1990s, however, this metaphor was resuscitated to justify radical marketization and intensive commercialization.

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Chinese scholars convincingly argue that the progressive marketization and commercialization beginning in 1992 was a post-1989 state strategy to move the public’s attention away from the political arena in the aftermath of the crackdown on the students’ pro-democratic movement (Dai 1999; Xu 1999). They contend that the state orchestrated a consumer society to replace socialist or democratic ideals. Consequently, countless shopping malls were opened, and a consumer society began to take shape in the early 1990s (Li 2006; Dai 1999). Only a few years after the onset of economic reforms, refrigerators, televisions, and washing machines began to appear in urban households. By the early 1990s, these appliances were found in almost every urban household (Davis 2000). Ownership of consumer goods became the major form of displaying personal wealth. “Making money, spending hard” became a fashionable new lifestyle that has been widely reported in the media (Lu 2000). The emergence of a culture of consumerism requires new definitions of needs and necessities, as well as an emphasis on individualization of lifestyle (Simmel [1903] 1971). Magazines and advertisements teaching individuals how to acquire “fine taste” through consumption exploded (Dai 1999). The public, especially the new middle class, was very receptive to these new definitions of needs and necessities that go along with the central tenets of consumerism (Li 2006). If people in general adopt a rather open attitude to new concepts of needs and necessities, they would be expected to accept life insurance as a new necessity in the face of increasing risks in an everchanging institutional environment.

Cravings for New and Foreign Commodities and Ideas From the mid-nineteenth to the mid-twentieth century, China attempted to import Western technology and certain economic practices but resisted Western political or cultural ideals (Calhoun 1994). The idea of integrating Chinese culture for essence and Western technology for utilitarian ends (zhongxue wei ti, xixue wei yong) was adopted by the Chinese as a possible solution for asserting a viable national identity, on one hand, and strengthening the national defense in the face of hostile imperialism, on the other. However, after a century of suffering foreign invasions and occupations, followed by three decades of being closed off from the world, the Chinese could not be more eager to see, touch, and acquire something new and to catch up. The economic reforms begun in 1979 thus are fundamentally different from those in the pre-Communist period. The current reforms encourage importing both technological and cultural elements from the West. The open attitude to the new capitalist games is found not only in the younger generations born after the 1970s. The older generations are no less eager to participate in the new games.

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Ellen Hertz’s ethnographic study of local responses to the arrival of the stock market in Shanghai finds a “remarkable outpouring of enthusiasm for stock trading at the popular level” (1998:3). While the Shanghai Securities Exchange was opened in December 1990, a “stock fever” (gupiao re) culture sprang up in 1992. Hertz was stunned to find that participation in the stock market cut across all social classes and categories. Basically, “everyone”—peasants, workers, hooligans, intellectuals, and government officials—was getting on the stock market bandwagon in Shanghai (Hertz 1998). During my research in 2000–2002, I observed that even furloughed workers were among the active participants.11 The Chinese’s fervor for new economic activities, of course, was not limited to the stock market. Lyn Jeffery’s (2001) study of direct selling illustrates the same degree of enthusiastic reception to this new form of marketing. In fact, the reception to direct selling was so feverish that some people got cheated out of money, pushing the government to outlaw this marketing approach in March 1998. Perhaps the extent of the urban Chinese’s openness to a new way of life is best illustrated by their daring adoption of a new money management practice. With the commercialization of housing, individual households began to take out mortgages to purchase property. By the summer of 1992, five million urban households in China held 12-year mortgages from the China Construction Bank (Davis 2000). By 2001, Shanghai ranked number one in lending money to residents through mortgages and credit card loans. Thus, residents of Shanghai took the lead in taking out mortgages and building credit card debt.12 Living on loans was, indeed, a very new money management and consumption experience for the average Chinese. It not only manifested how open the Chinese were to newness but also put the households at higher economic risk if the breadwinners lose their earning abilities. Taking on mortgages as a new consumption behavior should facilitate the willingness to buy life insurance for protecting the family dependents from bearing huge debts or losing their houses. Furthermore, the Chinese people’s eagerness for “American experiences” and a modern way of life was vividly captured by Yunxiang Yan’s (1997) ethnographic study of the McDonald’s in Beijing. For the local Chinese, eating at McDonald’s in the 1990s carried a positive connotation of yang (oceanic, meaning Westernized and modern), which stood in opposition to tu (soil, meaning rustic and oldfashioned). Although the food quality at McDonald’s was not appreciated by the locals, the fast food restaurant was very well received in China because of its symbolic association with modernity and Americanism. Likewise, Davis and Sensenbrenner (2000) found that Western-style toys have successfully penetrated the children’s market, especially in urban Shanghai. They observed that the toys sold in Shanghai stores had similar features as those in the 1995 Disney film Toy Story, and Chicago Bulls tank tops were popular among boys 8–18 years of age. At the

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same time, disco dancing was made popular, also in Shanghai, through American films like Break Dance and Flash Dance (Farrer 2000). James Farrer found that the disco culture in Shanghai resonated with mid-twentieth century American culture, and through disco dancing and expression, the young people embraced dominant market values rather than resisting them. It is no accident that Shanghai was the first city opened to foreign life insurance firms. Once a treaty port and an international settlement, Shanghai carries a high propensity to adopt “Western” culture. The identity of the citizens of Shanghai taken in relation to the rest of China can be compared to that of New Yorkers in the United States. Shanghai residents are especially receptive to anything new and yang. On several occasions, when I purchased in Shanghai simple items such as jackets, pants, a diary, or pens, the salespeople suggested to me to pick one style over the other because it was “yang qi” (Western style). Sticking to the “old-fashioned stuff ” bears a negative connotation of backwardness, meaning out of place and out of time. Commercial life insurance, which is not only new but also a modern invention from the West, should be well received by a people fond of “anything foreign and modern.”

Family- and Child-Centered Ethos In creating a life insurance market in the United States and Britain in the nineteenth century, life insurers forcefully appealed to “family responsibility” to convince the breadwinners that it was their duty to buy life insurance. Life insurance was presented as “life-saving household cement” that could prevent family dissolution, so it was the moral obligation of the household heads to insure their lives to protect their families (Zelizer 1979:100–1; Alborn 2009:147–53). Today, American life insurers still largely mobilize this moral discourse of “family responsibility” to persuade the public of the imperative of buying life insurance. Given that Chinese societies are traditionally renowned for their family-centered ethos, with which family continuity has been the principal obligation of individuals (Fei [1947] 1992) and family interests are placed above individual or societal interests (Lau 1982), life insurance should have a clear market niche. In the 1950s and 1960s, various campaigns were launched by the CCP to shatter the family-centered way of life and replace it with a communal-based organization. The Maoist state has, to a certain extent, successfully weakened kinbased mutual support for contingencies in urban China through its generous medical and pension plans for all state employees (Davis 1993). However, some traditional cultural practices were held in check but not eliminated. Family continued to be central to people’s lives, and membership of a family continued to define who a person was (Evans 1997; Whyte and Parish 1984; Stacey 1983).

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When the state began to retreat from its central role in welfare in the 1980s, a revival of familialism was noticeable (Davis 1993). As presented earlier, the state itself also wants to see a return of family-oriented ethos so as to facilitate intergenerational care to reduce the burden of the aging population on the state. Commercial life insurance providers can nicely go hand in hand with the state position regarding the need for life insurance as a family obligation. At the same time, the one-child policy has led parents to channel energy and emotion into bringing up one perfect child, resulting in a child-centered way of life. The “only child,” or “little queen/king,” has become the commercial target in urban China, as many advertisements in cities directly target primary-school students as consumers. In Shanghai, for instance, the child-centered ethos has been markedly displayed in household budgeting. Davis and Sensenbrenner (2000) report that Shanghai parents spent more on their only child’s discretionary needs than they did on their own, with at least half of their monthly expenditure going to toys, clothing, entertainment, and educational enrichment activities for their child. Life insurance, which is often defined as a way of showing love and care for dependents, especially for the “helpless” children, would be likely to be well received by the Chinese parents in this child-centered context.

Guanxi, Renqing, and Interpersonal Trust Since commercial life insurance is an invisible commodity and involves an intertemporal monetary transaction, trust is always an issue (Carruthers 2005). The problem of trust is especially obvious when life insurance is new to a population. Zelizer (1979) found that in dealing with the problem of trust, life insurance companies in the United States put on a benevolent, philanthropic image and their sales agents presented themselves as clergy and missionaries. In China, a different source of trust is available for the life insurance practitioners to mobilize to overcome the liability of selling a new and alien commodity. The pervasiveness and dominance of guanxi in Chinese business world provide a desirable condition for handling the difficulty of trust pertaining to a new commodity. Chinese guanxi are characterized by the prominent Chinese sociologist Fei Xiaotong ([1947] 1992) as structured like a nested concentric pattern with the self in the center. Layers of concentric circles extending from the center represent different categories of relations to the self in a descending order of intimacy. According to David Wank (1996), the degree of intimacy in Chinese guanxi descends from those that are blood ties to acquired personal relations and finally to business relations. The degree of trustworthiness, intensity of sentiment, and type of obligation are then specified by the degree of intimacy in the guanxi hierarchy. The foundation of trust in Chinese society hence is essentially

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built on interpersonal relationships. Studies based on 1990 and 2000 World Value Survey data report that China registered an extraordinarily high level of interpersonal trust and institutional trust compared to other countries, despite its lack of independent, formal civic associations ( Tang 2005; Yang and Tang 2006). Probing this unexpected finding that runs against political scientists’ theories of trust and democracy, Wenfang Tang (2005) argues that institutional trust in China is embedded in interpersonal trust among the Chinese, which in turn is a function of informal social interactions (see also Hamilton 1985; Wong 1996). In other words, informal social interactions and relationships are the source of trust in China. This particular social organization of trust is likely to benefit the personal sales approach adopted by the life insurance industry. In addition, guanxi among the Chinese are largely governed by the etiquette of renqing that may further facilitate life insurance sales. Renqing as an etiquette is an enactment of the norm of reciprocity, which is prescribed by a general principle of interpersonal obligations that governs the social relations and interactions in Chinese societies. By definition, renqing involves a giving and a receiving party such that the receiving party is indebted to the giving party and owes an obligation. Alvin Gouldner (1960) proposes that indebtedness, created by the time lag between Ego’s provision of a gratification and Alter’s repayment, is a kind of “moral cement” that reproduces and stabilizes social relations. The etiquette of renqing serves the same function as gift giving that cements social relations through an endless cycle of reciprocity and indebtedness (Mauss [1950] 1990). It is the asymmetric obligation that makes a relation special and qualified to be what the Chinese refer to as guanxi (Lin 2001). It stipulates that people with a good relationship should deliver asymmetric obligations to each other for reproducing and strengthening that relationship (Hwang 1987; Lin 2001; Peng 2004; Gold, Guthrie, and Wank 2002). Therefore, it is not uncommon for Chinese to engage in a small economic transaction with a friend or relative in order to do a favor for this person to perform the etiquette of renqing, instead of gaining economic benefits from the transaction (Lin 2001; Hwang 1987). Friends and relatives who observe the etiquette, as most Chinese adults do, may well provide an entry point for the marketing of a new and alien commodity like life insurance.

Cultural Obstacles Despite the above favorable cultural elements, some rather entrenched beliefs and dispositions exist among the Chinese that remain unfavorable to the emergence of a life insurance market. The most powerful and overarching cultural barrier is the taboo on thinking and talking about death, especially premature death. This taboo manifests as an observable avoidance of the topic, particularly unexpected,

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accidental, or premature death, among not only the elderly but also the generation in their late 20s to 30s. I discuss how such a cultural taboo is rooted in Chinese concepts of life and death that deserve some elaboration.

Concepts of Life and Death and the Taboo on Premature Death Comparative ethics philosophers point out that the topic of death has traditionally been treated very differently in Western and Chinese philosophies (Hui and Xu 2000). Death has never been a taboo subject in traditional Western literatures and philosophies. Instead, it has been a central theme of Western philosophies. Historian Philippe Aries (1974) found that the discussion of death and dying has at times been extremely popular. It was not until the first half of the twentieth century that death became a taboo topic in Western contexts, due to changes in religious beliefs, improved medicine, and increased violent death (Gorer [1965] 1976). Since the 1960s, American social scientists have been bringing death back into the dialogue (Aries 1976). Chinese philosophies, on the other hand, have always been silent about the subject of death and dying. A this-worldly orientation toward life has been widely recognized as part of the Chinese cultural tradition ( Weber 1951). Indeed, death is rarely discussed or mentioned in the teachings of Confucianism. Confucius taught his disciples that, because there are too many things a human has to learn to live a life with propriety, life, not death, is what human beings should care about. Death is something unknown, and human beings should not spend too much time and energy speculating and theorizing about death. “Not knowing about life, how to know about death?” (wei zhi sheng, yan zhi si) is a well-known Confucian aphorism. Furthermore, the Confucian notion of death does not imply the possibility of eternity as it does in Christianity. Death is “the end,” and what follows “the end” is unknowable (Hui and Xu 2000; Hou and Fan 2001). Death for common people is already a mystery; the avoidance of the topic further mystifies it. As Geoffrey Gorer ([1965] 1976) maintains, when death is “unmentionable,” it turns to a “horror” subject and produces a general sense of fear. The sense of fear regarding death among the Chinese intensified when the “something unknown” began to take on a dreaded and terrifying image under the influence of folk Buddhism, which has bred the idea of a dark world (yinjian) and a cruel hell (diyue). According to these ideas, the majority of commoners who do not commit serious misdeeds in their lives will go to the dark world after dying and await reincarnation. The dark world is a damp, cold, miserable, and dark place with many ghosts around. Hell, which is reserved for those with bad karma, is described as having 18 levels, where numerous cruel punishments and tortures are applied.13 These horrifying notions of the dark world and cruel

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hell have become a folk belief continuing into the contemporary era (Hou and Fan 2001). In the Maoist era, especially during the Cultural Revolution, the state attempted to eradicate the supernatural meanings of death. It presented death as nothing to be feared and educated the public that there was no life after death. However, traditional beliefs about death have never been uprooted, and folklore about death soon resurfaced in post-Maoist China ( Whyte 1988). Furthermore, Taoism advances the idea that the degree to which a death is terrifying depends on when and how the death occurs. Different ways of dying denote different meanings and are associated with varying degrees of fearfulness. Taoism (and Confucianism) highlights the idea that life and death are a whole and that dying when one is aged is part of natural law that should not be feared (Hui and Xu 2000). However, dying early or prematurely, especially if the dying is unexpected, as when a young person dies suddenly due to an accident or an illness, it is miserable and frightening. In the folk Taoist belief, the person who suffers from an accidental or a nonlegitimate death is normally not ready and unwilling to die. This is what the Chinese call “dying without closing the eyes” (sibumingmu). In this case, the spirit of the dead person might not be at rest and is likely to become a ghost and wander miserably in the human world. Unexpected premature death is considered dangerous, as the dead “were cheated out of their lives” and would therefore turn to “hungry ghosts.”14 In the folk Buddhist belief, an unexpected early death is taken as a punishment for bad karma. In Arthur Wolf ’s (1974) studies in Taiwan in the 1960s, an infant’s or a small child’s death was assumed to prove that the child was an evil spirit. In pre-Mao China, an infant death was conceived as “someone from a previous life coming back to dun you for a debt” ( Wolf 1974:147, citing Mary Bryson 1900). The fearsome concept of premature death is further tied to the Chinese social organization of relations, in which individuals are ordered by seniority and regarded as a temporal continuity of a lineage (Fei [1947] 1992). The malicious ghosts are believed to be those discontented souls who have no descendants because they died childless or as children ( Wolf 1974). The differentiation in the meanings of death in relation to lineage continuity and seniority is dramatized in the hierarchy of death rituals and ancestral worship. Martin Whyte (1988) found that those who had lived full lives and had many descendants received the most elaborate funerals in pre-1940 China, whereas the death of a child was given very little ceremony at all. Furthermore, older generations did not don mourning garb or observe rituals for deceased relatives younger than themselves. The taboo on having the older generation, the so-called “gray-haired persons,” attend the death rituals of the younger generation, the so-called “black-haired persons,” was still commonly observed when I lived in China and Hong Kong during the 1970s and

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1990s. Likewise, ancestor worship can appropriately be performed only by a junior for a senior, and not the other way round. Thus, young adults dying before their parents bear the guilt of not fulfilling the filial duties, as their parents may not have worshippers, especially if the young adult is the only child. At the same time, young adults are unlikely to be enshrined as an ancestor on a proper altar if they do not have their own descendants ( Wolf 1974). Premature death, therefore, is spiritually dangerous and morally condemned. The Chinese concepts of death are not one-sidedly negative and terrifying, however. As mentioned before, in Taoism, dying is viewed as part of natural law, or a return to nature. In the Buddhist worldview, there is life after death—life and death form an endless cycle through reincarnations. Thus, parts of the Taoist and Buddhist notions of death resemble the pre-Christian and Christian notions. Yet, apart from the contents of the concepts, it was the prolonged “silence” of Chinese philosophies on the subject that, on the one hand, gave rise to a generalized “horror” feeling toward death and, on the other hand, left the subject to the dramas of folklore. Although philosophical, religious, and feudalist traditions give rise to the taboo on thinking and talking about premature death, today this taboo has an independent power in shaping human action. In other words, one does not need to hold beliefs about hell, the dark world, ghosts, evils, and precipitating death in order to observe the taboo. When something has customarily been a taboo subject, a violation of the taboo is not only socially offensive but out of the conceivable “normality” of being a human being (Durkheim [1915] 1965). Thus, what matters is that observing the taboo produces collective avoidance of issues related to premature death. Such avoidance results in “subjective immunity” (Douglas 1985) that puts premature death out of the cognitive and normative schematic reference frames of most Chinese.15

“Good Life,” “Good Death,” Moral Obligation, and Risk Perception The concepts of life and death not only produce a taboo on premature death but also define a “good life,” a “good death,” and the obligatory relation between the living and dead members. In both Confucian and Taoist worldviews, a good life involves improving one’s life quality as one grows older. A person who has a hard life as a youth but a comfortable life when older is considered by the Chinese as more fortunate and happier than a person who has a comfortable life early on but a hard life when old. In other words, to have a truly good life is to have a good life at the end, which is associated with the accumulation of virtues. A good death, closely associated with a good life, is dying when one is old and has lived a full life.

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A full life refers to having descendants and living a life with dignity toward the end. American and British life insurers alike have been promoting the idea of “economic immortality,” in which a “good death” or a “responsible death” should involve posthumous financial arrangements for the living dependents ( Zelizer 1979; Alborn 2009).16 This idea is not compatible with the Chinese definition of a good death as dying in full life, which may only occur when one’s children are grown and financially independent. Furthermore, the idea of posthumous “economic immortality” is incongruous with the Chinese allocation of rights and responsibilities between the living and the dead. In Chinese tradition, the intergenerational rights and obligations follow a simple logic and practice: parents are obligated to raise their children, who in turn are obligated to take care of the aged parents and grandparents. This is seen as natural law and natural practice. When grandparents and parents pass away, they become ancestors. Ancestors are bestowed with a certain degree of transcendental, sacred power. They have the obligation to watch over the living members of the family in a spiritual sense, protect them, and at times exercise their sacred power to help them resolve their mundane problems ( Wolf 1974). The living members, in return, extend the obligation of filial piety to the ancestors by providing them with the food and money that they need in the “other world,” be it hell, the dark world, or heaven (Stockman 2000). This obligatory relation between the living and dead members still holds unwaveringly today.17 It is the living members who are obligated to provide the dead members with financial resources and material goods, and not the other way round, as advocated by life insurance companies. The definition of a good life and a good death as living well toward the end in part explains why the Chinese place significant emphasis on yanglao. Yang refers to “raising” or “feeding,” which is the same character for raising children, and lao refers to “aged.” Yanglao, therefore, can be translated as “support for the elderly,” which is a delayed reciprocity to the parents by the grown children (Y. Yan 2003:172). In pre-Mao China, for one to be qualified to have a good life, one must have children to rely on so that the yanglao issue can be taken care of. In Maoist China, the state’s comprehensive welfare program took care of the yanglao for urban residents, whereas reciprocity by the children continued to be the yanglao practice in rural areas. In post-Mao China, however, the dismantling of state welfare, together with urbanization and the one-child policy, have created a dire concern regarding the yanglao issue. Urban dwellers have been aware of the impossibility of relying on their only child to support them in old age. Therefore, the focus on the quality of life in the end, as prescribed by the concepts of life and death, coupled with institutional and demographic changes, direct people’s

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attention to the risk related to retirement. The most commonly perceived risk by the Chinese is not having enough resources to live a comfortable life as one gets older. This perceived risk, nonetheless, would not have diverted people’s attention away from fatal accidents that might happen during one’s preretirement age, if there were no taboo surrounding premature death. Thus, it is the collective avoidance of thinking and talking about premature death, along with a disproportionate attention to the quality of life after retirement, that organizes the Chinese’s selective attention to different kinds of risks. Fatal misfortunes during one’s preretirement age are far from the center of attention. This selective attention to risks in part constitutes the locals’ product preferences that go against the profit-oriented operation of life insurance, as I illustrate in chapter 2.

Existing Risk Management Practices Another cultural obstacle to the development of life insurance in China is the persistence of some traditional forms of risk management, namely, personal savings and intergenerational care. Savings have been a long-established risk management practice of the Chinese for centuries and always remain the first priority for Chinese families despite the emergence of a consumer society (Croll 1999). In 1995, China’s gross national savings rate and urban household savings rate reached 40 percent and 21 percent, respectively (Kraay 2000; Horioka and Wan 2007). Economists have actively engaged in debates over the reasons behind China’s high savings compared to both developed and developing countries, but no consensus has been reached. I contend, however, that rapid economic growth and the typical economic hypothesis that developing countries have higher savings rates cannot fully explain China’s extraordinarily high savings. For instance, China’s median gross national savings rate was as high as 25 percent in 1965–1973, the highest of all developing regions (Loayza, Schmidt-Hebbel, and Serven 2000), when at the same time the country’s economy was suffering miserably from the political turmoil of the Cultural Revolution. From 1974 to 1984, before the economy took off, the median national savings rate in China already exceeded 30 percent, far greater than the aggregated median gross national savings rates in any other region (Loayza et al. 2000). Since 2000, China has had the highest national savings rate in the world (Horioka and Wan 2007), against the backdrop of increases in investment and consumption channels. Available data indicate that the household savings rate in China was also the highest among both developed and developing countries: 25.3 percent in 2001, compared to 9.8 percent in Mexico in the same year, 7.4 percent in Korea, and 6.4 percent in the United

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States in 2002 (Kuijs 2005). China’s net savings surplus, in a survey conducted by economists in 2005, showed no signs of subsiding in the near future.18 Therefore, it is fair to say that China persistently and consistently has high savings rates that cut across different historical moments and different sectors. This persistence and consistence, I maintain, is because saving is not only an economic behavior but also a cultural practice. China’s annual real GDP growth from 1995 to 2004 was consistently in the range of 7.1–10.5 percent. Annual inflation rates, on the other hand, stayed under 3 percent, except in 1995 and 1996.19 Nonetheless, the annual household savings rate throughout this period was on the rise from 16.96 percent in 1995 to 27.86 percent in 2004 (Horioka and Wan 2007). Household savings rise in the context of a relatively stable and promising economic growth, I argue, because savings remain the most commonly adopted means of risk management. Elisabeth Croll (1999) observed that there was a reduction of consumer spending in the 1990s when welfare responsibilities of the state were uncertain. This suggests that people went back to using personal savings to handle uncertainties. It is beyond the scope of this book to explain why the Chinese historically love to save. The agricultural origin of the society, the Confucian teaching that frugality is a social virtue, and the concern about having a good life at the end all contribute to the emphasis on savings. For our purposes here, I only want to highlight the fact that saving has long been a habit of the Chinese for managing unexpected contingencies regardless of whether it is an effective means, and it is unlikely to be easily replaced by commercial life insurance. Traditionally, “raising the son for protection against aged life” (yanger fanglao) was the most reliable “insurance” for the Chinese. Huebner (1930) identified the informal mutual help among Chinese family and kin members as one of the main obstacles to the development of life insurance in the 1920s and 1930s. During Mao’s regime, the CCP attempted to weaken the concentric structure of particularism by substituting family, kin, and friends with small-group communes as one’s primary groups. Nonetheless, it was not very successful. People still sought close circles of intimates for defending against the risks and uncertainties of political campaigns as well as for improving their chances in life ( Whyte 1974; Gold 1985). As discussed earlier, kinship and communal mutual help have been declining as a result of urbanization and the one-child policy. However, kinship support has not been annihilated. During my research, I observed that some of the so-called nuclear families in fact hosted a grandmother or a pair of grandparents for taking care of the grandchild. In return, the grandparents’ daily expenses were covered by their child. Therefore, intergenerational care continues to be part of risk management practices adopted by some households despite its increasing difficulties.

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A Note on the Case of Shanghai It is important to note the extent to which the favorable and unfavorable societal conditions for the development of life insurance presented above apply to Shanghai in particular and to urban China in general. I propose that although the degree of intensity for some of these conditions may vary from city to city, they are all present to a large extent in Shanghai. For instance, the “stock fever” culture was prevalent in Shanghai in the late 1990s to the early 2000s, since the first stock trading floor was inaugurated in this city. Likewise, consumerism and the cravings for new and foreign commodities were also more conspicuous in Shanghai. Furthermore, due to Shanghai’s fast-pace urbanization and its widespread high-rise apartment buildings, informal help through kinship and neighbors was generally more difficult in Shanghai than in the inland cities. However, Shanghai in the 1990s shared more or less the same institutional restructuring and the same intensity of the cultural taboo on death and the values on a good life and a good death with the rest of urban China. Taken as a whole, Shanghai can be considered a forerunner of modern urban China. As the ethnographic data presented in this book primarily come from Shanghai, the term “local” in the chapters that follow in most circumstances refers to Shanghai, though I am confident that it can be largely generalized to the case of urban China as well.

What Can Be Expected? Several Possibilities Given the above configuration of economic, institutional, and cultural conditions, does China provide a favorable environment for the emergence of a life insurance market? The economic and institutional changes brought about by the economic reforms seem unmistakably favorable to its development. The cultural elements, on the other hand, are rather mixed. The key questions are whether culture matters at all in the formation of a life insurance market, and if it does, how. Let me propose several possibilities, or potential hypotheses. First, if culture does not matter in the process of market formation, and only economic and institutional forces matter, we would expect to find a welcoming reception for the arrival of commercial life insurance as a new risk management institution. Rapid economic growth, the increasing purchasing power of the population, and the birth of a middle class met the most elementary conditions for the possibility of a life insurance market. Rapid urbanization, smaller family sizes, the weakening of mutual help, the aging population, and the decline of the workplace and welfare benefits all required individuals to take on more economic and social risks. Together with governmental and legal support, urban China in the

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1990s was economically and institutionally inviting for the arrival of commercial life insurance. Second, if culture does matter mainly in a Weberian sense, we would expect the Chinese concepts of life and death to suppress the emergence of a life insurance market. On this view, Chinese cultural beliefs and values are incompatible with the ideological logic of life insurance. Culture as such prescribes and delimits a range of possibilities and impossibilities of economic action and acts as a conductor to guide, direct, and circumscribe possible action. If culture matters primarily as a coherent, shared meaning system in making a life insurance market in China, then the deep-seated cultural taboo on thinking and talking about premature death and the associated meanings of good life and good death, as well as the selective attention to risks, should significantly impede the development of a life insurance market. Third, if culture matters mainly as a repertoire that provides resources and capacities for strategies of action, then the concepts of life and death and other beliefs should not pose an overwhelming problem to the development of a profitable life insurance market for the strategic economic actors. If culture functions primarily as a tool kit for economic practice, life insurance practitioners would be expected to aggressively mobilize favorable cultural elements (e.g., the new consumerism, the fondness of things new and foreign, the familial and child-centered ethos, and the norm of reciprocity) to market their products. Through their strategies of action, insurers and their distributors should be able to get what they want. Beliefs and values become less directly relevant. To assess which of these possibilities the data support, I now turn to the key features of the emergent Chinese life insurance market.

The Emergent Market and the Remaining Puzzles Until the end of 1991, before AIA had arrived in Shanghai, the total insurance premium income in China was only 17.8 billion yuan (~ US$2.15 billion), making up 0.85 percent of GDP. Less than one-fourth of this premium income came from life insurance. By the end of 2002, insurance premium income soared into 305.3 billion yuan (~ US$36.9 billion), comprising 2.98 percent of GDP, and life insurance accounted for up to three-fourths of this income ( Wu 2004). In Shanghai, life insurance gained popularity in just a decade, after the city was opened to transnational life insurers. By the end of 2002, the proportion of life insurance policies in force over the population in Shanghai attained 107 percent. As life insurance sales became concentrated in urban areas, the figure reached 165 percent when taking only the urban population in the city into account. This means, on average, each individual held 1.65 life policies.20

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At first glance, the impressive growth of the life sector of the insurance industry against the backdrop of its cultural barriers seems to support either the first or the third hypotheses presented above. In other words, it may appear that either culture as a whole, or culture in the Weberian sense, does not have an impact on the life insurance business. This emergent Chinese market, however, displays several intriguing characteristics that merely economic, institutional, and/or cultural tool kit factors cannot explain.

The Growth Pattern The most common explanation offered by economists for the sudden expansion of the life insurance business in China is its promising economic environment, specifically, the economic growth of the country and corresponding economic wealth of the people.21 However, when we look at the growth pattern of the life insurance business in its emergent stage, which is neither stable nor linear, it is at odds with these economic factors. Figure 1.1 indicates that Shanghai took Real growth (%) 100 China

80

Shanghai

60 40 20 0

04

Year

20

03 20

20 02

01 20

99 20 00

19

19 98

19 96 19 97

95 19

19

94

-20

Figure 1.1 Real Growth Rate of Life Insurance Premium Income in China and Shanghai, 1994–2004 Sources: Author’s calculations based on the following data: (1) Wang et al. (2003) for life premium income in China from 1994 to 1996; (2) the marketing and research department of Haier New York Life Insurance Company, Ltd. in Shanghai for life premium income in Shanghai from 1994 to 1996; (3) Almanac of China’s Insurance 1998–2005 for life premium income in China and Shanghai from 1997 to 2004; (4) China Statistical Yearbook 2005 for the consumer price index growth rate in China; and (5) Shanghai Statistical Yearbook 2005 for the consumer price index growth rate in Shanghai. Note: The negative real growth at the national level in 1994 was due to the extraordinarily high inflation, 24.1 percent, during that year as a result of currency devaluation.

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Growth (%) 120 100

Life premium income GDP

80

Per capita disposable income

60 40 20

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

19 96

19 95

19 94

0

Year

Figure 1.2 Life Insurance Growth in Relation to GDP and Per Capita Disposable Income Growth in Shanghai, 1994–2004 Sources: Author’s calculations based on the following data: (1) same sources as figure 1.1 for Shanghai’s life premium income; (2) Shanghai Statistical Yearbook 2005 for Shanghai’s GDP and average per capita disposable income. Note: This graph shows nominal growth instead of real growth because GDP deflators for Shanghai are not available. The nominal growth pattern, fortunately, closely resembles the real growth pattern shown in figure 1.1.

the lead in the growth of life insurance sales in 1994–1995, before the city shared the country’s overall pattern of growth from 1996 to 2004. The market in Shanghai experienced its first sharp growth in 1995–1997, and this impressive growth followed in China more generally in 1996–1997. Both markets experienced a setback in 1998–2000, before they reached another peak of growth in 2001–2002. Growth began to decline in Shanghai in 2002 and nationally in 2003. How can we explain this pattern, particularly the two waves of sharp growth? While economic growth is a necessary condition for the development of insurance in general and life insurance in particular, it is definitely not a sufficient condition. Focusing on the case of Shanghai, figure 1.2 demonstrates that the growth pattern of life insurance sales has no observable, direct correlation with the growth of GDP or with the growth of per capita disposable income in the city. Market booms took place during 1995–1997 and 2001 when the growth of GDP and per capita disposable income either slowed or flattened. The growing wealth of the citizens is insufficient to explain the ups and downs of life insurance sales. While the large gains in life premium income during 1995–1997 were due in part to its low original starting point, it is puzzling that this growth rate suddenly dropped in 1998, it climbed again in 2001, and it slid continuously afterward.

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The Dominance of Domestic Players Another feature of the emergent Chinese market is the dominance of domestic insurers, in contrast to the insurance market in nineteenth century China, which was controlled by foreign players. In Shanghai, for example, where foreign life insurance companies were the most active, domestic insurers consistently captured more than three-quarters of the market from 1997 through 2004. Even more puzzling was that Ping An, as a new and inexperienced domestic private insurer, captured the largest market share during the market boom. Soon after Ping An entered Shanghai, its market share in the life insurance sector rose dramatically to 33 percent in 1996 and went further up to 42 percent in 1999. In 2001, this newly founded domestic insurer captured half of the life insurance business in Shanghai. Ping An’s triumph was not restricted to Shanghai. In Beijing, it held as much as 48 percent of the market share in 2001. In less than a decade, Ping An forged a reputation with international appeal. Its general manager, Mr. Ma Mingzhe, was appointed by the U.S.-based Life Insurance and Market Research Association (now known as LIMRA International, Inc.) as a member of the association’s board of directors in December 2001.22 When Ping An (Group) was listed on the Shanghai Stock Exchange in March 2007, its price was the highest among the financial stocks in China, resulting in the world’s largest initial public offering by an insurance company.23 When explaining the success of Ping An, journalists too often attribute the business growth of domestic companies to state policies that favor domestic players. However, this account oversimplifies the situation. In the 1990s, the state did impose two major restrictions on foreign insurers: (1) limiting their operation to a few designated cities and (2) restricting their business to individual life, so as to leave group business to domestic firms. However, these restrictions alone cannot explain domestic insurers’ dominance. This study is confined to a single city, and group business is excluded, which means the above two variables for foreign and domestic insurers are held constant. Yet, experienced foreign insurers still lost more than 80 percent of the individual life business to their domestic competitors, as shown in figure 1.3. Furthermore, state favoritism fails to explain why the predominantly government-owned China Life, which was supposed to receive the same, if not more, favorable treatment from the state, lost market share to the newly established private insurer Ping An. Figure 1.3 indicates that Ping An captured at least 40 percent of the individual life business from 1998 to 2002, when China Life secured only around 30 percent on average.

Money Management Market Another intriguing feature of the Chinese life insurance market that cannot be fully explained by economic and institutional factors is that it emerged as a money management, rather than a risk management, market. Products with

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Market share (%) 90 Domestic Insurers

80 70 60 50

Ping An

40 China Life

30 20

Foreign Insurers

10

04

Year

20

03 20

02 20

01 20

00 20

99 19

98 19

19

97

0

Figure 1.3 Insurers’ Market Shares of the Individual Life Insurance Business in Shanghai, 1997–2004 Sources: Author’s calculations based on the following data: (1) Almanac of China’s Insurance 1998–2000 for data from 1997 to 1999; (2) Almanac of Shanghai Insurance 2001–2005 for data from 2000 to 2004. Note: “Domestic Insurers” include all locally founded companies, including Ping An and China Life, though these two companies’ businesses are also shown separately for comparison.

investment connotations, which were introduced only in late 1999, accounted for more than 38 percent of total life premium income by 2001, with their share rising to 58 percent in 2003. These products include dividend insurance (also called participating insurance on which policyholder is entitled to share in the surplus earnings of the company through dividends) and unit linked insurance (a British variant of variable life with an insured amount dependent on the investment returns of the premium). On the other hand, products primarily for risk management have had a consistently low share. For example, personal accident insurance accounted for only around 2 percent of the total life premium income throughout.24 As the premiums for accident insurance are much lower than that of unit linked or dividend policies, a more valid comparison is the number of policies sold in each category. While those figures are not available, I estimate the number of policies based on the mean premium rate of each category of products purchased by the clients in my studies.25 Figure 1.4 is derived from these calculations. It shows that sales of unit linked and dividend policies were consistently much higher than sales of personal accident policies. For example, I estimate that more than 3 million unit linked and dividend policies,

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Estimated no. of policies 3,500,000 Unit linked & dividend policies 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000

Personal accident policies

500,000 0 2001

2002

2003

2004

Year

Figure 1.4 Estimated Numbers of Personal Accident and Investment Policies Sold in Shanghai, 2001–2004 Sources: Author’s calculations based on premium income from each of these policies available in Almanac of Shanghai Insurance 2002–2005 and the mean annual premium rate of each of these policies purchased by the clients in author’s surveys and interviews.

compared to fewer than 700,000 personal accident policies, were sold in 2003. The popularity of money management products was not confined to Shanghai. At the national level, unit linked and dividend insurance accounted for up to 65.2 percent of total life premium income in 2003, compared to personal accident insurance’s 2.5 percent. Why were risk management products far less popular than money management products? One possible hypothesis is that effective risk management tools, but not money management instruments, were already in place at the time life insurance was introduced. However, the institutional factors I have presented indicate otherwise. First, a new money management instrument, the stock exchange, was introduced in the early 1990s and met a feverish reception, particularly in Shanghai. Moreover, the unwavering habit of saving among the Chinese continued to render savings banks a central money management tool. On the other hand, the institutional shift from a planned to a market economy exposed the Chinese population to higher economic and social risks. Although some traditional forms of risk management, such as savings and intergenerational care, were still common, extensive kinship support or communal forms of mutual help declined due to urbanization, the one-child policy, and changes in neighborhoods. This decline was not compensated for by any new means of risk

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management, except that commercial life insurance was supposed to provide an alternative. Therefore, it remains a puzzle why the emergent life insurance market did not turn out to be a risk management market. Another hypothesis is that it is in the best interest of the insurance companies to sell money management rather than risk management products in the Chinese context, so the life insurance practitioners deliberately created a money management market. However, as I discuss in chapter 2, selling risk management products is more profitable to insurance companies when the market is still emerging. It goes against the profit-making interest of the insurers when products are sold predominantly for money management purposes. Hence, neither of the above three hypotheses (i.e., culture does not matter; culture matters primarily in a Weberian sense; culture matters primarily as a tool kit) can satisfactorily explain the growth and characteristics of the Chinese life insurance market. I maintain that how culture matters is more complicated than simply prohibiting or facilitating a market’s emergence. A more satisfactory answer for these remaining puzzles is pursued in the rest of the book. The empirical findings presented in the chapters that follow unravel why neither culture as a shared meaning system nor culture as a repertoire is alone sufficient to explain the rapid growth of the market and its characteristics. These chapters unfold the story of how these two forms of culture and institutional conditions interplay in constituting and shaping the way the market is formed.

2

Defining Life Insurance and Product Development Divergent Institutional Logics

Zheng Yingyun, an insurance agent for AIA, frowning anxiously, was walking in and out of her office area. She had just finished a long conversation with a prospect over the phone. Obviously, her sale did not go through. “This damn Ping An,” she cursed. “They just talk about huibao (returns), huibao, and huibao! We know that buying insurance is buying protection. The damn Ping An agents always talk about returns and profits to the prospects. They have misled our prospects! They should go to hell!” Zheng was angry, as she just lost a sale to a Ping An agent who had successfully convinced the prospect that Ping An products are hesuan (better deals). —Participant observation at an agency office of AIA, Shanghai, January 2002 The agents of Ping An were furious and upset when they learned that a local paper published an article criticizing their investment product, unit linked. They believed that the article was written by someone tied to AIA. They were already angry with the AIA agents who distributed another press article reporting the investment losses of unit linked to their prospects. “This AIA doesn’t observe business ethics. They are jealous of our sales volume and have been attacking us with every means at their disposal,” Dai Hong, an insurance agent of Ping An, complained about AIA. —Participant observation at an agency office of Ping An, Shanghai, March 2002

demonstrate the routine conflicts between American International Assurance Company, Ltd. (AIA) and Ping An Insurance Company of China, Ltd. (Ping An), the largest foreign and the largest domestic insurers in Shanghai, during my research period. When producers venture to create a market for an entirely new commodity, it is a matter of managing uncertainty, gaining control, and establishing order (Fligstein 2001; White 2002; Beckert 2002; Guseva 2008; Bandelj 2008). The largest firms at the outset are

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most likely to define the new commodity and control the competition when a market order is not yet formed (Fligstein 2001). The conflicts between AIA and Ping An, as the story unfolds, demonstrate not only a commercial battle but also a cultural war between foreign and domestic firms. Through a chronology of the ebbs and flows of the market’s formation, this chapter examines the divergent ways of handling uncertainty and gaining control between foreign and domestic insurers. This chapter is about the production market. Harrison White’s (1981, 2002) role structure model of a production market hypothesizes that firms seek niches in a market based on the positions of all other producers. In this hypothesis, what a firm does when facing uncertainty is watch the competition in terms of observables and decide on its role in relation to other producers in the market. Buyers’ tastes and demands, in White’s model, have little impact on firms’ strategic decisions; as he boldly puts it, “markets are not defined by a set of buyers” ( White 1981:518). The ethnographic data presented in this chapter, however, only partially supports White’s hypothesis. We will see that, yes, insurance firms closely watched what other insurers did when planning their product development. Nonetheless, some firms were more responsive than others to buyers’ tastes and preferences. In fact, there was a clear pattern of divergence between the foreign and domestic firms in their response to buyers’ demand. While the foreign insurers, as White predicts, were rather insensitive to buyers’ preferences when locating their niches, the Chinese insurers, on the other hand, eagerly catered to local buyers’ preferences, even at the expense of profit. The Chinese insurers’ responsiveness to buyers’ demands cannot be explained simply by their choice of roles in the market structure ( White 2002). The Chinese insurers in Taiwan and Hong Kong, in the absence of foreign insurers, were similarly responsive to buyers’ preferences in their product development (Chan 2012). How can the marked disparity between foreign and domestic insurers in their choice of roles in relation to buyers’ demand be explained? The answer, I suggest, lies in the divergent institutional logics of foreign and domestic insurers’ operations. The foreign insurers’ model was grounded in a rather rigorous profit-oriented institutional logic, whereas the domestic insurers’ model was based on a market-share institutional logic. This disparity, I argue, represents their divergent ways of managing local cultural obstacles. The taboo on premature death, the notion of a good life and a good death, and the perception of risk shared by the local people together constitute a set of local preferences and dispositions that are incompatible with the profit-oriented institutional logic of life insurance. This incompatibility puts profit and market share in tension with each other. The battle between AIA

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and Ping An is, in fact, a battle over the extent to which insurers as capitalist corporations could possibly yield to local cultural forces. Why, then, did they exhibit such differences? My explanation is that foreign insurers’ maturity in the insurance business and their naturalized convention of rationality precluded them from pursuing a daring and risky approach over a profit-oriented one. On the other hand, it was precisely the Chinese insurers’ inexperience in the insurance business that gave them the option of violating the conventional profit-oriented model to embrace an alternative approach. Their novice status put them in a vulnerable position, and instead of focusing on profit maximization, they struggled for survival. Their struggle prompted them to be much more willing to accommodate potential buyers’ preferences in order to capture the market share. Consequently, they produced a dynamic of market formation that is more vibrant than conventional market theories would predict.

Conflict between Profits and Local Preferences In Britain and the United States, the popularity of life insurance began with policies insuring against death, specifically premature death, before it moved into money management policies.1 Nowadays life insurers in the United States and Europe carry a wide range of risk and money management products, though risk management remains the primary function that defines life insurance. In the United States, traditional whole life and term life remained the most widely sold products even at the end of the twentieth century.2 Thus, the life insurance markets in Euro-American contexts emerged as risk management markets and have been moving toward risk-cum-money management markets. This market trajectory and its characteristics have their root in the rather unique feature of insurance as a commodity.

The Profitability of Life Insurance The operation of commercial life insurance follows the central institutional logic of capitalism, namely, “accumulation and the commodification of human activity” (Friedland and Alford 1991:248). However, insurance belongs to a category of commodities requiring a specific logic of operation to make profit and capital accumulation possible. Producers of insurance face a higher degree of uncertainty than do producers of most other commodities, because their products are based on assumptions about the future that are difficult to calibrate, despite advanced technologies (Ericson, Doyle, and Barry 2003). As insurance is an exchange of money now for money payable contingent on the

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occurrence of certain events in the future (Arrow 1971), the setting of prices and conditions under which money is payable cannot be based on a logic of making the products attractive to buyers (Ericson and Doyle 2004). The basic principle on which insurance operates is a probabilistic calculation of risk. Ironically, insurance should ideally be sold to those who need it the least, or those with the lowest risk profiles. The calculation of a profit margin requires actuarial training because it is a rather complicated task. For traditional risk management insurance products (typically term life, whole life, accident insurance, health insurance, and critical disease insurance), profits mainly derive from the profit margins that are calculated upon death and casualty rates. For money management products (typically products with savings and investment functions, such as endowment or annuity insurance, participating policy, and variable life), profits principally come from the investment returns of premiums. The profitability of money management products thus relies more on the investment environment, which is often less predictable. Moreover, defining life insurance as primarily a money management instrument undermines insurance’s unique function of managing casualties that other financial institutions cannot provide. It has to compete with the existing money management establishments such as savings banks, government bonds, and the stock markets (Post 1976). To compete with these institutions, insurers would have to offer products that have relatively low profit margins. Therefore, according to the profit-oriented principle, it is in the best interest of insurers to define life insurance primarily as risk management for a specific market niche, and secondarily as money management for diversification purposes. In China, it was even more important from the insurance providers’ perspective to define life insurance as a risk management tool, because the local regulatory and investment conditions were unfavorable to the development of money management insurance products. As commercial life insurance was new to the People’s Republic of China, the state imposed a number of restrictions on the investment options of life insurers. To begin with, life insurers in China could not invest their premium income overseas, and they had to reinsure 20 percent of their business. The rest of the premium income could be invested in bank accounts, interbank lending, government bonds, or treasury bonds. However, poor loan performance of the banks and continual interest rate cuts were likely to bring insurers to insolvency. In response to this problem, the China Insurance Regulatory Commission (CIRC) allowed insurers to invest in certain state-level corporate bonds. Since October 1999, insurers were allowed to invest 5 percent of their premium income in security or mutual funds. The percentage was later raised to a maximum of 15 percent. However, the proportion that each insurer could invest in the stock market was set by the CIRC. For example, by March

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2001, AIA and Ping An were allowed to invest 15 percent of their premium income in stock, but China Life Insurance Company, Ltd. (China Life) and Manulife-Sinochem Life Insurance Company, Ltd. (Manulife-Sinochem) were allowed to invest only 5 percent (Xu 2002). Despite this opening up of the stock market for insurers, the investment channels were still very limited. The largest proportion of insurers’ premium income was still held in banks. In 2002, for instance, 58.1 percent of Ping An’s premium income was put in fixed deposits and 21.5 percent in government bonds.3 Consequently, insurers’ investment returns were largely dependent on the interest rates of savings deposits. Under these institutional constraints, a risk management product, with an insured amount payable only when the specified circumstance(s) occurred, such as death, injuries, or critical diseases, was more profit guaranteed than were money management products.

The Local Preferences The Chinese cultural logics that define death, good life, and risk, as discussed in chapter 1, are not at all compatible with the profit-oriented institutional logic of life insurance. This incompatibility was observable in the general public’s preferences with respect to life insurance products. Regardless of the specific details of an insurance policy, the crux of the matter for the informants was whether the insured would get the money back when they were alive. To quote one client: Whether the products belong to the returning principal type or not is crucial. All the people I know, including myself, will buy only those with returning principal. The accident insurance doesn’t have any market. . . . Why? Accident insurance means the insurance company will pay only when you die or become severely handicapped or paralyzed, or are in a condition where you are almost dying. Otherwise you’ll get nothing in return.4 The terms “returning principal” (huanben) and “nonreturning principal” (bu huanben) were often mentioned by the informants to distinguish money management and risk management products. The former refers to an insurance policy that makes a payment to the living insured at maturity (or to the beneficiary when the insured dies prior to policy maturity). The latter refers to the kinds of insurance that pay out only if the stated circumstances occur within the stated period. Almost all of the informants expressed an explicit preference for “returning principal” policies, but specifically only for the kind that makes payment to the living insured. They called the kind that makes payment to the beneficiary “death

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insurance,” which was not what they wanted. Using the term “principal” to refer to premium is telling. It suggests that life insurance as a category and as a practice has been interpreted, understood, and treated as money management. The cultural logics of the Chinese preferences for money management products are further discussed in chapter 5. For our purposes here, we see that there was observable local resistance to risk management products. The battle between AIA and Ping An, indeed, was a battle over the legitimate means to overcome this resistance.

Divergent Institutional Logics Insurance companies, be they foreign or domestic, are supposed to hold the same economic interests, namely, profit making and capital accumulation. Normally, market share yields profits. However, when the kinds of products the local people want are generally unprofitable, a large share in the market does not necessarily result in large profits. In China, the obvious conflict between local preferences and insurers’ profitability confronted life insurance providers with a tough choice between market share and profits. Yet foreign and domestic insurers displayed a clear pattern of differences in their choices. Foreign insurers gave priority to profits, whereas domestic insurers focused on market share. This disparity, I argue, was grounded in the divergent institutional logics under which they operated. Institutional logic, as defined by Roger Friedland and Robert R. Alford, is a set of “material practices and symbolic constructions” that constitutes an institution’s “organizing principles” (1991:248). Like cultural logic, institutional logic embraces certain things and excludes others. It sets the limits on the very nature of rationality and legitimacy, and it organizes routines and choices (Douglas 1986; Biggart and Guillen 1999). When applied to organizational practices, institutional logic constitutes a set of assumptions and values, usually implicit, about how to interpret organizational reality. It is like a lens that filters, focuses, and directs the attention of an organization’s decision makers ( Thornton and Ocasio 1999; Quinn 2008). Adhering to a profit-driven institutional logic, therefore, likely results in significantly different organizational and marketing strategies than does adhering to a market-share institutional logic.

Foreign Insurers’ Profit-Oriented Operation Given AIA’s and other foreign insurers’ experience in Asian markets, especially in Hong Kong and Taiwan, they were certainly not ignorant about Chinese culture and local people’s preferences. However, they refused to adopt the local

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definition of life insurance and resisted fully localizing their products according to local preferences. An actuary of Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna) explained why his company had been insisting on promoting risk management products: The most profitable product for an insurance company is the traditional type that reflects closely the meaning of insurance, mainly, risk management. For this kind of product, insurers can calculate the risks involved and set reasonable profit margins. Normally, protective products have higher profit margins than savings or investment products. To accommodate the prospects’ preference, we have added an endowment element into most products. However, the protective element should be the main feature. The endowment should be the secondary and at best be the rider.5 This actuary’s statement should be read in a context where the Chinese life insurance market was still brand new and underdeveloped.6 Traditional risk management products could yield good profits, because the actuaries in China usually used a mortality table more conservative than one based on actual mortality rates. In other words, the products were overpriced and the profit margins were high. In addition, although the average premiums for traditional risk management products were lower than those for money management products, selling a large quantity of risk management products with low premiums but high profit margins could actually guarantee more profits than selling money management products with high premiums but low profit margins. This was especially the case in a new market that was not yet saturated and with limited investment outlets for insurers’ premiums. Thus, foreign players in China attempted to accommodate local preferences, but only up to the point where the profit margin of each product was not compromised. When there was a conflict between profit and market share, they chose the former. Their product development was indeed not defined by buyers’ preferences.

Domestic Insurers’ Market-Share Operation Facing the same resistance, the novice Chinese insurers simply offered what the majority preferred. Ping An was among all most responsive to local demand and preference. It played a leading role for domestic insurers in shaping the definition and product development of life insurance. Instead of taking the trouble to introduce a new concept of risk management, the Chinese insurers defined life insurance

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in a way that accorded with the local means of risk management, namely, savings. They also capitalized on the locals’ concern about retirement and their child-centered ethos when designing their products. One of the vice directors of product development at Ping An recalled the company’s rationale for launching yanglao (retirement) and child policies in its early phase: The Chinese don’t like to hear about misfortunes. They don’t like to think about those things. They don’t like to talk about those things. What should we do? We have to offer products that they like. The Chinese like savings. They are most concerned about their yanglao issue. . . . Now parents treat their only child as the king . . . or the queen. We knew that the child policy would be well received. . . . Any products that have a good market are good products.7 Ping An’s high sensitivity to buyers’ tastes and preferences goes beyond locating a market niche as White (1981, 2002) hypothesizes. Their aggressive and risk-taking product development revealed an ambition to rapidly expand and replace AIA as the industry leader. Ping An’s strategies can only be explained by a market share institutional logic that, as we will see, legitimized initial financial losses.

The Battle between Foreign and Domestic Camps Beginning with the arrival of AIA in 1992 up to 2004 when I left the field, the development of the life insurance business in Shanghai can be divided into six phases, with a unique feature standing out in each. (1) From late 1992 to the middle of 1995, AIA endeavored to import a new concept of risk management and a series of new practices to kick off the emergence of a life insurance market. (2) With the arrival of three domestic life insurers into the market in 1994– 1995, AIA began to lose control over the definition of life insurance. The newly established Ping An led other domestic companies to redefine this new commodity as money management, and offer savings and child products. A sudden boom in the market was evident, particularly in 1997. (3) More joint ventures entered the market during 1998–1999 and sided with AIA to battle with domestic insurers over the concept of life insurance. But the market experienced its first setback in 1998–2000, when savings and child policies began to lose their appeal. (4) Ping An created a second boom in life insurance sales by launching an investment product called unit linked. A “unit linked fad” was observed in 2000–2001. (5) The downturn of the stock market in the middle of 2001 resulted in a “unit linked crisis” and shut off the growth of the life insurance market. (6) After 2002, Ping An and China Life went public to raise funds and, at the same time, started following more closely the product development of

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their foreign counterparts. More joint ventures and domestic insurers arrived, but the market was stagnant.

AIA’s Pioneer Role and the Introduction of a New Concept of Risk Management (1992–1995) Prior to the entry of AIA, the state-owned People’s Insurance Company of China (PICC) concentrated its business on group life. The product design of the tiny amount of individual life policies that PICC sold was not based on a commercialoriented calculation. For example, the premium and insured amount of their Simple Life policy were chosen for convenience: clients paid one yuan a month in return for one yuan a day at the end of a term of 20 years. Their products were distributed by staff who received salaries rather than commissions.8 As the first commercial life insurer, AIA faced no competitors upon its entry. However, it faced a population with basically no idea of what life insurance was. This foreign insurer carried the mission of “educating the public about the concept of life insurance.” It defined life insurance as a new, modern, and effective risk management instrument, as a protection against misfortunes. The first two products AIA offered were personal accident policies. These policies covered death, dismemberment, and medical and hospital fees incurred by an accident. Neither of these policies carried a cash value, and therefore, payments would be made only upon the occurrence of the stated circumstances. To sell these products, AIA underscored the protective function of life insurance and trained their sales agents to go door to door, telling people stories of misfortunes that happened to families without insurance. However, the agents faced not only rejections but contempt, suspicion, and even hostility. Huang Lei, who worked for AIA in 1993 but quit two years later, recounted how people responded: Most people were hearing the term baoxian (insurance) for the first time. They didn’t understand what it was. Although we used stories to tell them about the concept, we couldn’t be too explicit. You know, we Chinese don’t want to talk about death or misfortunes. . . . But some people mistook the meaning of life insurance. As you know in Chinese, bao has double meanings as “to protect” or “to ensure.” When they heard baoxian, some mistook it and yelled at me, “What? You are selling a curse on me?”9 Baoxian, the Chinese words for “insurance,” indeed carries contradictory double meanings. Xian refers to danger, dangerous, risk, or risky. Bao has two different meanings: to protect or to ensure. Therefore, bao-xian together can be interpreted

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as “to protect (against) dangers or dangerous events” or “to ensure dangers or dangerous events (happen).” AIA soon offered two other products: a term life and a whole life policy. Knowing that the Chinese would like to see a return on their money, AIA modified the typical feature of term life by adding a cash value to be paid to an insured who survived the term. However, because the cash value for both policies was calibrated upon an interest rate much lower than that offered by savings banks, neither of these policies was appealing to the public. In response to the difficulties of selling any of these products, AIA then introduced a new whole life policy called LES that proved popular in Hong Kong. This policy served mainly a protective function for the beneficiary, because the insured amount was paid only upon the death of the insured. Surprisingly, quite a few of these policies were sold from 1993 to 1995. Shen Hingfu, a senior agent of AIA, explained why the policy was popular: The LES carries an incremental dividend. . . . It offers a guaranteed minimum dividend rate of 3 percent. . . . When we sold this product, we first talked to the prospects about the importance of protection and risk management. When we found that the prospects didn’t like to listen to what we said, then we talked about dividends. Very often, when they heard of dividends, they just liked it. They bought it as a kind of investment. They didn’t care about its risk management function. They simply liked the dividends. It was very popular even for children. The parents thought this product was a good deal.10 LES was the first life insurance product that brought AIA to the public’s attention. The dividend feature of this product gave the agents an inviting topic to broach with their prospects, allowing them to use specific framing language that better fit the prospects’ preferences. Framing as a linguistic strategy is often used to convince others who do not necessarily share common interests that what will occur is in their interest (Fligstein 1997). By highlighting the dividend feature of the policy, the sales agents were invoking a money management genre to legitimize this new commodity. This linguistic framing, which is quite commonly adopted by business organizations for legitimacy when introducing something new (Hirsch 1986; Fiss and Zajac 2006), contributed to a gradual growth of AIA’s business between 1993 and 1995. Thus, AIA played a leading role in initiating the emergence of an individual life insurance market. It secured 91 percent of the total 770,000 individual life policies sold in Shanghai in 1995 (Sun 2001). On the other hand, PICC monopolized the group life business. These two companies, one American and one Chinese

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state owned, each took on a unique role and had a clear niche. Nonetheless, AIA’s business growth was brought by the popularity of a product that was received by the buyers as “a kind of investment.” Its mission of educating the public about the risk management concept of life insurance had not been achieved. This unfinished mission in part doomed AIA to lose market share to the newly emerged Ping An in 1996 and after.

Domestic Insurers’ Entrance and a Local Interpretation of Life Insurance (1995–1997) In 1996–1997, AIA was shocked by an unexpected, sudden explosion in life insurance sales. Even more surprising to this experienced American insurer was that this sudden change was brought by a new domestic insurer, Ping An. Ping An started its business by selling property insurance. The general manager, Mr. Ma, had no prior experience in running a commercial insurance business. In 1993, he visited several well-established domestic insurance companies in Taiwan and was impressed by the success of the domestic life insurance industry there. Upon his return, he decided to switch the business priority of Ping An to life insurance.11 In July 1994, Ping An introduced its first life insurance product. In just two years, it had already seized a substantial portion of market share in Shanghai, measured by the share of the total premium income in the city. Figure 2.1 shows that by the time Ping An entered the life insurance business, market share for PICC stood at 78 percent, AIA’s at 12 percent, and that of China Pacific Insurance Company, Ltd. (China Pacific) at 9 percent. By the end of 1995, however, PICC had lost a substantial share to AIA and Ping An. Both AIA and Ping An experienced considerable sales growth in 1995, when AIA owned 23 percent of total life premium income. Nonetheless, this was AIA’s greatest market share ever. Subsequently, its share dropped to 13 percent in 1996 and fell further to 8 percent in 1997. One reason for this decline was that PICC, which used to sell group life only, was then restructured into China Life and began to promote individual life. But, the real competitor of AIA was Ping An, whose market share rose remarkably from 1 percent in 1994 to 14 percent in 1995. It jumped to a staggering 33 percent in 1996 and increased to more than 40 percent in 1999. In 2001, Ping An captured up to half of the life insurance market share in Shanghai. The strong sales of Ping An upon its entry surprised all of its competitors. According to figure 2.1, 1996 was the critical moment for reversing the fortunes of Ping An and AIA in the market. What happened then? First, an incident in late 1995 hurt the reputation of AIA. A senior citizen in Shanghai, holding an

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Market share (%) AIA

90

Ping An 80

China Life (PICC)

70

China Pacific

60

Other 14 insurers

50 40 30 20 10

04

Year

20

03 20

02 20

01 20

00 20

99 19

98 19

97 19

96 19

95 19

19

94

0

Figure 2.1 Insurers’ Market Shares of the Life Insurance Business in Shanghai, 1994–2004 Sources: (1) Ershiyi Shiji Jing ji Baodao (Twenty-first Century Economic News) January 7, 2002, for data from 1994 to 1999; (2) data from 2000 to 2004 are author’s calculations based on the premium income of each company available in Almanac of Shanghai Insurance 2001–2005.

AIA insurance policy purchased before AIA withdrew from China in 1949, demanded that the insurer fulfill the terms stated in the policy. AIA refused to do so, maintaining that the present company was legally and financially independent of the earlier one. The old client was not convinced. He reported this incident to the local media. The media was sympathetic to this elderly resident and questioned the credibility of AIA. AIA defended its position by using a legal justification. Nonetheless, it failed to understand that the locals were, in fact, demanding a moral, humanistic obligation. What this American insurer failed to understand was that the Chinese notion of justice could be different from the Western one (von Senger 2000; Chen 2000; Stockman 2000).12 Its lack of sensitivity to the local concepts of justice, integrity, and morality caused severe damage to its reputation in 1996 and 1997. At the same time, Ping An proved its sensitivity and responsiveness to local demand and preferences. At the time Ping An joined the life insurance market in 1994, it did not have an actuary or a trained underwriter. This inexperienced domestic insurer modeled its first product on that of AIA. It presented a personal accident policy but set a much lower premium for coverage similar to AIA’s. Nonetheless, the accident policy was not very well received by the public. Soon after Ping An found that the product was not exactly what ordinary

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citizens wanted, it launched three policies that served primarily a savings function. They included a whole life endowment policy called Ping An Longevity Insurance, a whole life annuity policy named Hundred-Year-Old Retirement Annuity Insurance, and a child endowment-annuity policy named Child Lifelong Happiness Insurance. The first two policies, called yanglao xian (retirement insurance), were designed to appeal to the local penchant for savings and the concerns about life during retirement. A Longevity policyholder would receive an installment of “living funds” every three years starting from the insured date until death, and the beneficiary would receive the insured amount when the insured died. A Hundred-Year-Old policyholder would receive an annuity with an annual increment of 5 percent, starting from age of 55 for males and 50 for females until death. The beneficiary would receive the insured amount if the insured died before the designated age. The child policy, on the other hand, was offered to capitalize on the emerging child-centered way of life. The premium of this policy was fixed at 360 yuan (~ US$44), or one yuan a day, for any healthy child age 1 month to 15 years. The coverage included compensation for the child’s death and a number of benefits for the insured child: a living endowment, high school education funds, college education funds, a wedding endowment, and monthly pension funds until the insured passed away. This child policy was sold as a savings plan for the child. In fact, when selling either yanglao or child insurance, the sales agents did not have to touch on the troublesome topic of premature death or other misfortunes. However, they were left with a problem: to be appealing savings plans, the insurance products had to be economically competitive. Indeed, none of the three savings policies Ping An introduced was competitive. The amount payable to the insured was based on an interest rate of 7.8 percent, which was lower than the 10.98 percent interest rate offered by savings banks at the time. As the agents highlighted the savings function of the products over their protective function, it was difficult to convince the “shrewd Shanghainese” that it was a good deal. Nonetheless, figure 2.1 indicates that Ping An’s sales volume in 1995 increased to 13 percent of the total sales in Shanghai. How did Ping An compete for its share? Ping An deployed a marketing strategy called renhai zhanshu (human-sea strategy). This strategy came from Mao Zedong’s military tactics in the Korean War. When confronted with the technologically advanced U.S. force, Mao deployed a vast number of ordinary people to meet the U.S. army. Interestingly, Ping An used this strategy to compete with the U.S.-based AIA. It recruited a large number of insurance agents, mostly women in their 30s and 40s, to reach out to as many people as possible through their guanxi, or interpersonal relationship, networks. The agents aggressively but tactfully approached their friends and relatives to sell them insurance. As I detail in chapter 4, it was quite common

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for these friends and relatives to buy an insurance policy from the agents in order to fulfill the etiquette of renqing (interpersonal obligation) that constitutes the Chinese norm of reciprocity. This marketing strategy proved to be effective. Ping An surprised AIA with its dramatic growth in 1995. It was nonetheless only a prelude of more surprises to come. When selling the child policy, the sales agents of Ping An did not have to rely much on the etiquette of renqing. Taking advantage of prevailing child-centered sentiments, they used a slogan of “saving one yuan a day for your child” and presented child insurance as a fashionable savings plan for children. Despite its lower interest rate, the child policy was well received by the public. Many parents bought one or several child policies as a gift for their only child, which I further describe in chapter 5. Understanding life insurance as an alternative money management instrument was further reinforced when the insurance policies became appealing savings plans. Beginning in the second half of 1996, the interest rate in China dropped consecutively a few times. Two significant interest rate cutbacks took place in August 1996 and June 1997. However, Ping An did not immediately adjust the interest rates for its products. As a result, it created an astounding scene in Shanghai in 1996–1997. People actually queued up for life insurance! Shi Jin, an insurance agent who worked for Ping An during that period, described this historical moment: It was a peculiar phenomenon. . . . Every time the bank announced that the interest rate was going to fall, people lined up outside the headquarters of Ping An. . . . Some of them bought the yanglao policy, but the majority wanted the child policy. They all wanted to give the best for their only child. They formed a very long queue outside the building. The staff at the headquarters couldn’t manage so many buyers, and therefore, they called us. A bunch of agents went there. It was very funny. There were two queues lining up outside the headquarters, one for buyers and one for agents. The agents stood next to the buyers, filling out the application forms for them and collecting cash from them. Many agents of Ping An made a fortune at that time.13 People flocked to Ping An for these insurance policies, fearing that the interest rates for the policies would soon be adjusted. As the insurance policies guaranteed fixed interest rates higher than those offered by banks for the entire covered period (which could be 20, 30, or even 40 years), these policies were indeed “great deals.” Thus, the popularity of Ping An’s Longevity, Hundred-Year-Old, and Child Lifelong Happiness policies marked the first miracle of Ping An.

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Witnessing the dramatic increase in Ping An’s sales volume, China Life began offering a child policy with a high fixed interest rate. However, the features of that policy were not as innovative and attractive as the one offered by Ping An. No education funds or wedding endowment was listed for the child’s benefits. Nevertheless, it was the child policy that made China Life experience their first increase in market share in 1997 after AIA’s and the other insurers’ arrival in Shanghai (see figure 2.1). Ping An and China Life, though competing against each other, simultaneously united to render life insurance a money management concept, in contrast to the foreign camp’s risk management concept.

Intensified Battle over the Concept of Life Insurance and a Market Setback (1998–2000) AIA lost a significant market share to Ping An and China Life in 1996–1997. Why did AIA not offer something similar? An senior agent of AIA had the following comment on the difference between AIA and Ping An in responding to buyers’ preferences: “Ping An was more sensitive to the locals. Whatever the locals wanted, Ping An offered it. . . . AIA insisted that insurance was not for children. It was not the right concept to put a child as the insured. However, Ping An didn’t care. It just offered whatever the prospects liked.”14Another senior agent described how AIA responded to the sudden expansion of their local competitors: “When Ping An, China Life and China Pacific joined the market, they offered products that pleased the potential buyers. . . . We, AIA, insisted on the original meaning of insurance. . . . So, we put our efforts toward selling personal accident insurance and educating our prospects on the right concept of insurance.”15 Not until 1998 did AIA offer its first yanglao policy. It took AIA two years to respond to the popularity of yanglao insurance, because this foreign company was cautious about offering products that might induce losses. With its experience, AIA foresaw that the interest rate in China would drop, so it waited until the interest rate seemed low enough to offer savings products. More foreign players arrived between 1996 and 1999. Four Sino-foreign joint ventures were formed: Manulife-Sinochem in November 1996, Pacific-Aetna in October 1998, Allianz-Dazhong Life Insurance Company, Ltd. (AllianzDazhong) in January 1999, and AXA-Minmetals Assurance Company, Ltd. in June 1999. Upon their entry, they all sided with AIA to defend a risk management definition of life insurance. The battle between domestic and foreign players intensified over the concept of life insurance. The foreign camp insisted on a risk management definition, because their products were not competitive when insurance was framed as money management. Their reluctance to offer competitive

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savings products made them lose market share to domestic players but saved them from financial losses. The high-interest-rate products that domestic firms sold the most in 1996– 1997 induced severe losses for them. Starting in the mid-1996, there were a series of substantial interest rate reductions in China. Although the domestic insurers did adjust their interest rates and the features of their products accordingly, they did so slowly in order to boost their sales. For instance, when the official interest rate was dropped to 2.25 percent in June 1999, the interest rate for a number of Ping An’s products stood at 5 percent. The same applied to China Life and China Pacific. AIA and the joint ventures drew the regulatory body’s attention to the problem. Worrying that the loss-inducing products would lead to insolvency of the domestic companies, the CIRC, in the second half of 1999, ordered the domestic insurers to stop selling high-interest-rate policies and set an upper and a lower limit on interest rates (2.5–4 percent) for all insurance products. Nevertheless, Ping An and other domestic insurers had already sold a substantial amount of unprofitable policies. By June 2000, the losses Ping An incurred from those sales reached 10 billion yuan (~ US$1.2 billion). And Ping An was not alone. China Life and China Pacific suffered from the same problem. China Life’s losses were even bigger because of the nationwide scale of its sales. Its deficit mounted to 20 billion yuan (~ US$2.4 billion) by June 2000.16 In response to the new regulation imposed by the CIRC, Ping An came up with a new idea to get around the restriction. It offered a product with a guaranteed minimum interest rate of 2.5 percent plus a “return of difference.” This “return of difference” stipulated that if savings banks offered an interest rate of higher than 2.5 percent anytime in the future, Ping An would pay the difference, up to 7 percent. Nonetheless, it failed to attract a large crowd of buyers. Because the rapid growth of life insurance sales was driven by high-interest-rate products, their absence significantly slowed the growth of the market, especially in 1999– 2000 (see chapter 1, figure 1.1).

The Unit Linked Fad: Ping An’s Miracle and an Innovative Definition of Life Insurance (2000–2001) Throughout its infancy as an insurer, Ping An had identified itself as an innovative, responsive, and ambitious company. In response to the interest rate restriction imposed by the CIRC, Ping An launched an entirely new product called unit linked (toulian) in October 1999. For this product, each unit of the premium paid is linked to an investment return. Like variable life insurance in the

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United States, it is investment insurance in which the amount payable may fluctuate during the term of the policy. In China, the variable is tied to an index of mutual funds, corporate bonds, financial bonds, and savings interest. Because the amount of return (or the so-called insured amount) is linked to the investment performance of the premium, this product is not one with a high profit margin. Nevertheless, its advantage for insurance providers is that the investment risk has been shifted to the clients. Ping An launched this product with the inventive idea that, on the one hand, the product might relieve part of its financial burden, and on the other hand, it could continue to present life insurance as money management and even capitalize on the “stock fever” culture in Shanghai. In 2000–2001, the Shanghai integrated stock index hit its highest point since its inauguration. This produced not only an optimistic investment atmosphere in Shanghai but also “stock fever,” a phenomenon captured in the early 1990s by anthropologist Ellen Hertz (1998), as summarized in chapter 1. Stock fever intensified during my research period of 2000–2002—buying and trading stocks were enormously popular, and most of my informants held some stocks. Capitalizing on stock performance and the popularity of stock exchanges, Ping An presented unit linked as a profitable investment, like a variant of stock. This new concept of insurance as a modern, fashionable means of investment received a feverish response from the public. An agent of Ping An recounted how she sold unit linked in 2000–2001: It was not difficult at all. Most of our prospects first learned about the unit linked through their friends and colleagues. These friends and colleagues liked this product so much that they helped to spread the word to our prospects. When people saw that their colleagues and friends all bought this product, they thought it must be good. They didn’t want to lag behind and miss out on the opportunity [to make profits]. Many of my clients were referred by their friends or colleagues to come to me specifically for this product.17 By characterizing insurance as investment, Ping An was able to beat all its competitors. Unit linked brought another surge in Ping An’s sales, and its market share rose to a peak of 49 percent at the end of 2001. Among its premium income from individual life insurance policies, 45.4 percent came from this single product. It brought dramatic growth to Ping An not just in Shanghai but nationwide. By the end of 2001, Ping An’s total life premium income at the national level had increased 78 percent compared to the year before. In Beijing, Ping An held as much as 48 percent of the market share.18

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In response to the unit linked fad, China Pacific followed Ping An’s lead and offered an investment product called All-Powerful Life in August 2000. This product was similar to variable universal life in the United States. A distinctive attraction of the All-Powerful Life was a guaranteed minimum return rate equivalent to the savings interest rate. It was an investment product, and yet, the risk was lower than for unit linked. This product, according to an agency manager of China Pacific, was well received by the public and brought some of China Pacific’s declining market share back in 2000–2001 (see figure 2.1). While frustrated by the unit linked fad, the foreign insurers pushed even harder on the traditional idea of insurance. They underscored the risk management function of life insurance in their agency training, blaming Ping An for misleading the public and distorting the concept of insurance. The managers of these foreign insurers repeatedly commented that the life insurance market in mainland China was too “immature” for investment insurance. AIA was the most vocal in attacking unit linked. Whenever the press reported the fall of the stock market index and possible losses for unit linked clients, its agents clipped the newspaper stories, duplicated them, and sent them to their prospects and clients. They presented the news clips to their prospects as evidence that unit linked was not only an unprofitable product but also a risky product. The vulnerability of unit linked gave foreign insurers an opportunity to restate the “right” concept of insurance. “Insurance is supposed to reduce risk, not to add risk to our clients,” the general managers of the foreign insurers reiterated.19 Nonetheless, under the pressure of competition, these foreign insurers introduced a new category of products that sounded like investments. Manulife-Sinochem first offered a participating policy in March 2000, with a dividend rate dependent on the profitability of the insurer’s investment. Participating policy differed from Ping An’s unit linked policy in guaranteeing an insured amount and differed from AIA’s LES of the past in not guaranteeing the dividend rate. However, when Manulife-Sinochem launched its first participating policy, it offered a guaranteed dividend rate plus a nonguaranteed one to make it appealing. The local people called this type of product “dividend insurance” (fenhong xian). AIA responded quickly to this new product line. By the summer of 2000, it carried two dividend policies. One was called Higher and Higher and the other Dividend Every Year. Both were whole-life policies with an endowment component. Because the profit margins of dividend products were relatively low, AIA was not very enthusiastic in promoting these products. Nevertheless, the agents found it easier to sell the Dividend Every Year policy when they could talk about dividends, so they concentrated on selling this product. Allianz-Dazhong also followed the trend and provided two dividend products similar to AIA’s. These two products, one called Full of Gold and Jade and the other Fortune

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God Looking After, became the primary products that the agents of this SinoGerman insurer sold in 2001–2002. Pacific-Aetna was the least interested in offering dividend policies, though it finally did, given the keen competition. In November 2000, it offered two products with dividends, one called 333 Incremental and Returning Principal and the other 888 Returning Principal. Like AIA, Pacific-Aetna did not promote these products. The profit margins on these products were so low that the sales and marketing manager of PacificAetna discouraged agents from selling them. He explained to the agents why the dividend products were not beneficial to the insurance companies and why they should make an effort to sell traditional life policies.20 Thus, foreign insurers’ responses to the unit linked fad were rather ambivalent. While they continued to defend the traditional risk management definition of life insurance, they also offered parainvestment products to compete with Ping An (although they discouraged their agents from selling them). Because dividend policies were presented as a money management instrument that met the local concept of insurance, it was rather well received by the public. In the first three quarters of 2001, more than 70 percent of the policies sold in Shanghai were in the dividend category.21 Together with unit linked, dividend insurance brought another surge of market growth in real terms to 52.3 percent in Shanghai and 41.8 percent in China overall in 2001 (see chapter 1, figure 1.1). However, an undesirable consequence was that the definition of insurance further veered from the concept of risk management.

The Unit Linked Crisis and Ping An’s Lessons (2001–2002) The unit linked fad lasted for about a year and a half. It came to a halt in the last quarter of 2001 as a consequence of the downturn in the stock market and an “awakening” about what investment insurance meant. In the last quarter of 2001, the stock index in Shanghai started to decline. The fall was dramatic in 2002, when the index slumped to 1748.89, down more than 22 percent from the previous year.22 On December 6, 2001, an article titled “0.67 Percent of the Customers Gained, 99 Percent of Them Lost Up to Now: Ping An ‘Unit linked’—The Concealed Fact of Loss” appeared in a national newspaper, Nanfang Zhoumo (Southern Weekly).23 This article explained that although the stock index rose in 2000–2001, the majority of the unit linked clients suffered losses because none of their first-year premium was invested in the stock market. The first-year premium was in fact a payment for the risk management function of the policy. When part of the second-year premium went to the investment account toward the end of 2001, the stock index started falling. The majority of clients did not realize that part of their premium was used for a risk management

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function, what they called a “nonreturnable” component. On December 30, 2001, three policyholders of unit linked in Fuzhou, a city between Guangzhou and Shanghai, collectively filed a complaint with the CIRC accusing Ping An of cheating them. They alleged that the sales agents of Ping An misled them to believe that unit linked would bring them a profit rate of at least 18 percent. However, by December 2001, they found that their accounts actually suffered losses.24 The appearance of the Nanfang Zhoumo article and the disclosure of the Fuzhou incident resulted in a “unit linked crisis.” Following the lead of the three clients in Fuzhou, a number of unit linked clients in different cities complained that Ping An sales agents had also misled them by exaggerating the possible returns of the product. Ms. Xu was a typical unit linked buyer who complained that her agent cheated her: “Oh, don’t mention the unit linked! It’s a trick. The agent told me that my principal could have doubled in 10 years, and tripled in 15 years. Who doesn’t want to make profits?. . . . It was not until I read the Nanfang Zhoumo that I found out that I was actually losing. All of the people in my work unit are facing the same fate. We were all cheated!”25 Although buying the unit linked policy, by definition, is a risk-taking behavior, the Chinese clients bought this product not because they were ready to take risk. While insurance agents in the United States in 2002–2003 reported that only corporate or wealthy clients bought variable life for investment purposes because these clients were able to bear the risk,26 the situation in China was different. The buyers of unit linked came from all different economic backgrounds and age groups. They wanted to make profits but were generally not prepared to take the risk. During the two months from December 2001 to January 2002, a number of newspaper articles appeared to explain to the public what unit linked was and what insurance should be. Just to cite a few examples, articles such as “Educating Insurance Consumers to be ‘Understanding Persons’,” “Don’t Get into the Misleading Area of Unit Linked,” “Paying Attention to Risk, Focusing on the Long Run,” and “Buying Insurance Requires a Change in the Concept of Consumption” appeared in Zhongguo Baoxian Bao (China Insurance News) and Jingrong Shibao (Financial News). They all attempted to “correct” the “misunderstanding” of insurance. The unit linked crisis marked the end of the unit linked fad. While Ping An had been popular since its emergence thanks to its highly localized products, its reputation was hurt by unit linked. Since early 2002, Ping An had been suffering from a severe setback. This new rising star stood at a crossroads for repositioning itself in the insurance industry. There were disagreements in the top managerial body. Some, mostly the local Chinese, wanted to continue the innovative, aggressive, and daring model in its product development so as to continue to make Ping An “big.” Others, mostly the Taiwanese and other expatriates, wanted to adopt a

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more conventional model of operation that focused on profits rather than market share.27 Nonetheless, as the CIRC further tightened control over the industry, for example, setting a ceiling interest rate for all life insurance products and placing a cap on commission rates, there was not much room for Ping An to be innovative and daring.

Converging Product Lines but Continued Negotiations over the Concept of Life Insurance (2002–2004) Ping An’s innovative, daring, and opportunistic strategies were prevailing only in an environment that was relatively unregulated and volatile (Axelrod 1984). Increasing regulations imposed by the CIRC and the unit linked crisis left Ping An with little leeway but to join its foreign counterparts to develop risk management products. In the second half of 2002, Ping An and AIA both concentrated on promoting critical disease insurance. The critical disease insurance appeared as a response to the privatization of medical care in China. This kind served mainly a risk management function, though it carried a cash value. The first critical disease policy, named Protective God, was offered by AIA. It covered 20 critical diseases. If an insured was diagnosed as suffering from any of the covered diseases, she or he would receive 50 percent of the insured amount. The other 50 percent would be given to the insured in five years, or to the beneficiary if the insured died. If the insured lived to the age of 88 without suffering from any diseases, she or he would get the insured amount, or else the amount would be paid to the beneficiary. In other words, this policy was like a whole life policy but with a focus on managing the financial burden brought about by critical diseases. Similarly, Ping An offered two critical disease policies: Carnation for females and Evergreen for males. These two products served the same function as the Protective God of AIA, yet they covered a few more serious diseases and carried a dividend component. This dividend component seemed insignificant because there was no guaranteed rate. Nevertheless, as described in chapter 4, it was this dividend component that facilitated the agents’ sales talks. As a result, Carnation and Evergreen were slightly better received by the public compared to the Protective God policy. However, the purchase of any of these products required a certain sense of risk that critical diseases might occur to the buyers. This insurance failed to stimulate another surge of market growth because the prospects’ sense of risk, as described in chapter 1, was different from the one called for by these products. Although Ping An suffered a setback with the unit linked crisis, its extraordinary growth within a short period of time attracted investors who were optimistic about this Chinese insurer’s future development. In October 2002, the

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London-based HSBC Group bought 10 percent of Ping An’s shares. To rescue its reputation from the unit linked crisis, Ping An launched a “caring project” from the late 2003 to March 2004. Their sales agents were asked to visit all of their existing clients of unit linked, to explain to them the contents of their policies, and to offer them two alternatives if they did not like their policies. One option was to convert all their original accounts, whatever they might be, into a “guaranteed account” so that their principal would be guaranteed. The clients might not make profits, but they would not suffer losses. Another option was to surrender the unit linked in exchange for one of the two whole life endowment policies, with an administrative fee equivalent to 12 percent of the amount of premium they already paid for the unit linked. In addition, the “caring project” offered to give 3 percent of the profits that Ping An yielded from the unit linked to the clients who opted to keep the policy.28 This “caring project” again demonstrated the flexibility of Ping An’s organizational strategies in dealing with the locals’ complaints and accommodating their preferences. It did seem to have a remedial impact on Ping An’s reputation. Ping An’s initial public offering in Hong Kong on June 24, 2004, was fervently received. The subscription for its initial offering was more than 50 times the number of shares it issued.29 Ping An raised HK$14.3 billion (~ US$1.73 billion) with this exercise.30 In May 2005, the HSBC Group took over another 9.91 percent share of Ping An that originally belonged to Morgan Stanley and Goldman Sachs. Then, on March 1, 2007, Ping An was listed on the Shanghai Stock Exchange, where its price jumped 38 percent on the first day of trading. Ping An raised 38.9 billion yuan (~ US$4.7 billion) from this exercise.31 In addition to Ping An, China Life also went public. In fact, it did so right before Ping An did and was similarly positively received by the public. The subscription for its initial offering in Hong Kong was more than 20 times of the number of shares it issued. It raised HK$27.86 billion (~ 3.37 billion) from its listing in Hong Kong on December 18, 2003, and its price jumped 26 percent on the first day of trading.32 When it was listed in Shanghai on January 9, 2007, it raised 28.32 billion yuan (~ US$3.42 billion), and its price jumped more than 100 percent on the first day of trading.33 While Ping An’s share prices in Hong Kong and Shanghai appeared promising, its market share dropped significantly starting in 2002. During 1998–2001, the average annual growth of Ping An’s life business in Shanghai was 36.8 percent. The figure dramatically sank to zero (or, more precisely, negative 0.1 percent) during 2002–2004. Its market share fell from 49 percent in 2001 to 30 percent in 2004 (see figure 2.1). The plunge of Ping An’s growth and market share was not confined to Shanghai. Its market share at the national level dropped from almost 28 percent in 2001 to 17 percent in 2004. Ping An’s growth in sales reached an

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acute impasse when it finally stopped offering products that were tailored to local preferences. At the same time, the real growth of the life insurance business in Shanghai markedly declined from more than 52.3 percent in 2001 to only about 20.2 percent in 2003. Although more domestic and joint-venture insurers were formed between 2002 and 2004, and more than 100 life insurance policies were available in the market, the Shanghai life insurance market in 2004 experienced negative growth in real terms (negative 2.6 percent) for the first time since its emergence (see chapter 1, figure 1.1). The decline in market growth since 2002, I argue, was due to the conflict between the profit-oriented institutional logic of life insurance and the local cultural logics rooted in the Chinese concepts of life and death. The more insurers indigenized their products according to the local cultures, the more the market expanded, and vice versa. I further analyze the relation between market growth and the extent of indigenizing the product development of life insurance in Chinese contexts in chapter 6, with Hong Kong and Taiwan included for comparison (see also Chan 2012).

Explaining the Pattern of Divergence The ethnographic details presented above demonstrate not only the competition among different producers but also the negotiation between producers and potential buyers over the definition of the new commodity. Instead of allying with the experienced foreign insurers to negotiate with potential buyers, the domestic insurers sided with the latter to battle with their foreign counterparts. Their unreserved accommodation with buyers’ demand was based on an institutional logic of market share, which stands in contrast to foreign insurers’ profitoriented institutional logic. This divergence, I argue, manifests foreign and domestic insurers’ different ways of managing the local cultural resistance to the new concept of risk management. What is left unanswered is why foreign and domestic insurers chose the kind of logic they did. Why didn’t foreign insurers adopt a market-share model in the first place? Likewise, why didn’t domestic insurers follow a profit-oriented institutional logic to avoid losses? It is likely that AIA and other foreign insurers’ lengthy experience in the insurance industry, mostly in developed economies, deterred them from taking the daring and risky strategy favored by the novice Chinese insurers. These longestablished insurers had too much at stake, and such an alternative model was out of the realm of rationality in their naturalized convention. Their “common knowledge” led them “to coordinate on one outcome, rather than another.” (Hall and Soskice 2001:13). On the other hand, the inexperienced, or even ignorant,

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position of the domestic insurers gave them the very possibility of violating the conventional model. Put differently, the Chinese insurers, due to their lack of expertise, were unaccustomed to the peculiar profit-making logic of commercial life insurance. They were unfamiliar with the very idea that profits were possible only through an uncompromising violation of buyers’ preferences and demand. I report elsewhere that the domestic life insurers in Hong Kong and Taiwan similarly accommodated local preferences for money management products despite low profit margins (Chan 2012). This suggests that a profit-and-capital accumulation model of business operation is never adopted as naturally as economists assume. Although a profit-oriented logic is becoming more prevalent and dominant worldwide, it was not and is still not a universal logic for all business models (Fligstein 2001; Thornton and Ocasio 1999). Because institutional logics are embedded in local contexts, and local rules and meanings produce particular variations in interest and action (Fligstein and Mara-Drita 1996; Binder 2002, 2007; Go 2008; Hallett and Ventresca 2006), it is not surprising that Chinese insurance firms defined their organizational interests differently than their foreign counterparts. This sets them apart from the foreign players in responding to local demand and cultural obstacles and explains why they adopted a market share approach in the first place. Furthermore, their difference can be explained by Daniel Kahneman and Amos Tversky’s (1979) classic hypothesis of decision making under different risk scenarios: people in a gaining situation tend to take a risk-averse stance for a sure gain over a probable larger gain, whereas people in a losing situation tend to be risk seeking for a probable larger loss over a sure loss. This hypothesis was supported by institutional economist Douglass North’s documentation of the life insurance development in America in the second half of the nineteenth century. According to North (1952), the relatively small life insurers were daring enough to launch innovative but controversial products (including tontine policy and industrial insurance) to compete with the established big insurers, which insisted on offering traditional policies that were actuarially more certain. While the “old big three” adopted a conservative strategy to maintain family protection as the primary function of life insurance, the smaller insurers ventured to swing the meaning of life insurance to be associated with profit making. Therefore, established big firms are less likely to take risk than newly emerged smaller firms (see also Murphy 2010). This hypothesis can be applied to explain the divergence between transnational and domestic insurance firms in China as well. Neil Fligstein (2001) argues that actors in firms are not always profit maximizers and their strategies are often oriented toward enhancing their firms’ survival instead. Facing the advent of the experienced transnational corporations, the Chinese insurers’ primary concern was indeed survival rather than profit maximization.

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None of the domestic insurers, in my observation, placed profit making as their priority over market share when they began. But Ping An stood out because, ironically, it was the most vulnerable and faced the most uncertainties about its survival. Unlike China Life, which had the support of the state, and China Pacific, which was originally a division of a state bank before becoming independent, Ping An was formed as a brand-new private company. Struggling for survival, no doubt, was this new insurer’s foremost mission. Meanwhile, the stake of this brand-new private insurer was low compared to others. It had no historical burden and did not have much to lose. Thus, Ping An’s inexperience and dire need for survival, paradoxically, gave it the initial leeway and flexibility to venture into some unprecedented daring strategies. Foreign and domestic insurers fighting against each other over the concept and product development of life insurance manifests only one of the many contested scenes of the formation of a Chinese life insurance market. The competition between individual life insurance providers and variations in managing their sales agents and forging their organizational cultures are the focus of chapter 3.

3

Manufacturing Sales Agents Cultural Capital and Management Strategies

IN OCTOBER

1 9 9 8 , the Hartford–based American insurer Aetna, Inc. offi-

cially launched a joint venture with China Pacific Insurance Company in Shanghai: Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna). Three months later, in January 1999, the Munich-based German insurer Allianz AG and Dazhong Insurance Company inaugurated their joint venture in the same city: Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong). Although these two joint ventures commenced their operations at about the same time, their paths quickly diverged. At the end of 2001, Pacific-Aetna reported a premium income of 210 million yuan (~ US$25.4 million); while Allianz-Dazhong reported an income of only 55.3 million yuan (~ US$6.7 million). By the end of 2004, the sales volume at Pacific-Aetna reached 607.4 million yuan (~ US$73.4 million), capturing 3.5 percent of the individual life business in Shanghai, the largest share among the joint ventures. In contrast, Allianz-Dazhong’s sales were merely 188.3 million yuan (~ US$22.8 million), which constituted about 1 percent of the market. Divergent product development between domestic and foreign companies, as detailed in chapter 2, accounts for the disproportionate market share of the domestic companies. However, it does not explain the differences in business growth within each camp, particularly among the foreign firms. Given that these firms all attempted to sell risk management products, why did some outperform others? In fact, as mentioned in chapter 2, Pacific-Aetna was most reluctant to localize its products, since it was the last joint venture to respond to the local preferences for dividend insurance. Why, then, did Pacific-Aetna’s growth exceed that of other joint ventures? A possible answer has to do with the size of its sales force and the sales agents’ commitment and morale. In 2001, Pacific-Aetna had the largest sales force of all

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the joint ventures, with more than 5,000 agents. Allianz-Dazhong had a sales force of less than one-fifth of the size of Pacific-Aetna. Because life insurance carries a peculiar logic of pricing human life and often faces public resistance, life insurance companies everywhere heavily rely on active solicitations by their sales agents (Zelizer 1979; Oakes 1990; O’Malley 2002). The life insurance sales agents have long been described as being “as necessary to the business of life insurance as fuel is to the locomotive” (Zelizer 1979:121, citing John Dryden 1909). Maintaining a large productive sales force, therefore, is no less important than product development. Recruiting, organizing, and socializing insurance sales agents is always a key aspect of “institutional work” (DiMaggio 1988) for life insurance firms. This chapter focuses on the management of sales agents by various life insurance companies in Shanghai and takes a comparative approach to analyze their variations. Although all life insurance firms in Shanghai struggle to socialize their sales agents to take on a specific psychological attitude conducive to their sales performance, some have been more successful than others. In my observations, the agents from Pacific-Aetna displayed the highest level of commitment and spirit, followed by those from Ping An Insurance Company of China, Ltd. (Ping An) and American International Assurance Company, Ltd. (AIA), while the agents from Allianz-Dazhong appeared most demoralized. To explain this pattern of differences, I compare the strategic management of sales forces in these companies. I grouped them into two pairs for a systematic comparison: AIA and Ping An representing foreign versus domestic firms, and Pacific-Aetna and Allianz-Dazhong representing highly localized versus less localized joint ventures. As Neil Fligstein (1997) puts it, the possibilities for strategic action are the greatest when an organizational field has no structure. A preinstitutionalized organizational field permits the greatest variation among firms’ organizational practices (DiMaggio and Powell 1983). It is where top executives take on the role of “institutional entrepreneurs” (DiMaggio 1988) to exercise their greatest degree of agency. This chapter focuses on this agency, relating the top managers’ agency to their cultural backgrounds and investigating why some were more successful than others. The importance of culture and ideas in constituting decision making is now recognized by institutional economists. Arthur Denzau and Douglass North (1994) argue that, under conditions of uncertainty, shared mentalities and ideologies guide choices, not instrumental rational calculations. Likewise, Mauro Guillen (1994, 1998) argues that people make choices about how to organize by attending not only to instrumental reasons but also to moral and even aesthetic considerations. His cross-national comparative studies confirm that intellectual dispositions, or the mentalities of managers, in different countries affect their choice of organizational practice. According to Fligstein (1996),

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top managers’ conception of control—a general organizing logic that offers an interpretation of a context and implies a course of action—both enables and constrains firms’ strategic choices and actions. Based on these insights, I propose that the cultural capital of the top managers in Shanghai affected their labor management approaches and the effectiveness of their management in this specific local context. My use of the concept of cultural capital is faithful to Pierre Bourdieu’s (1984, 1986) definition in which “capital” takes time to accumulate and the embodied form of culture (or the habitus) is of paramount importance in constituting one’s action. The embodied form of cultural capital refers not only to mentalities, knowledge, and sense of morality but also to bodily know-how, skills, and manners. These cultural properties are inscribed in the body and mind of individuals so that change, though not impossible, is difficult and takes time. In examining how the top executives’ cultural capital affected their institutional work, I go a step further to ask where their cultural capital comes from and why some cultural properties are more effective than others. While Bourdieu (1984) maps individuals’ cultural capital in relation to their class positions, I attempt to map transnational executives’ cultural capital in relation to their home countries’ institutional and cultural affinities with the host country. My argument is that the divergent strategic management of the sales agents of different life insurers can be attributed to their different compositions of top managers and the resultant different pools of cultural capital. Whether a pool of cultural capital is effective in organizing a productive local sales force depends heavily on where the top executives come from. My findings illustrate that those coming from Taiwan bore the cultural capital most instrumental in orchestrating a high-spirited sales force, whereas those from Germany carried the least useful cultural capital. Therefore, the cultural capital cultivated from an institutional and cultural context sharing affinities with the local context is, in general, more instrumental than that cultivated from a very different environment.

Dirty Work and the Necessary Evil Insurance agents often bear the stigma of “dirty work” as they actively seek out prospective buyers by talking about death and misfortunes ( Zelizer 1979; Drew, Mills, and Gassaway 2007). They go door to door to sell something people generally do not want. They face not only rejection but also contempt, disrespect, frustration, and uncertain income. Given the stigmatized nature of being a life insurance sales agent, insurers use various social psychological techniques to mold agents’ attitudes and ways of thinking (Oakes 1990; Leidner 1993). Nevertheless, the dropout rate of insurance sales agents is high everywhere. For

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example, Robin Leidner (1993) reports that the average five-year retention rate of insurance sales agents in the United States is only 18 percent. In China, the deeply rooted cultural taboo on the topic of death and misfortunes poses an even greater challenge for insurance companies when recruiting and maintaining a productive and spirited sales force. Furthermore, sales jobs have not traditionally been considered a respectable occupation in Chinese society, and making a living based on direct commissions is generally new to the Chinese labor force. Selling an unwanted product for commissions is regarded as socially disgraceful. Not surprisingly, the cultural stigma, coupled with income uncertainty, made insurance sales jobs unattractive to the local labor force. Although there was no official record of the agents’ annual turnover rate, many managers and senior agents I interviewed reported a rather consistent estimate of about 80 percent in Shanghai. Recruiting and retaining sales agents have always been difficult tasks. Given this state of affairs, who would be drawn to this occupation? Leidner (1993) finds that more young men than women are insurance sales agents in the United States, because the job requires an aggressive, competitive, and “gotta win” attitude. In contrast, in Shanghai, more women than men were involved in insurance sales on average, though there was variation across insurers. Ping An and Pacific-Aetna had more women, whereas Allianz-Dazhong had more men. AIA had a relatively balanced ratio of both. Most agents were high school graduates, and most had worked for state-owned enterprises (SOEs) before joining the industry. Although some people voluntarily left SOEs to venture into the private sector as sales agents, a fair amount of people were involuntarily laid off by their work units and therefore had little choice but to join the sales force. Because the proportion of women in the laid-off pool was higher nationally, particularly in Shanghai, this in part explains why more women than men became insurance agents (for more details about why people joined the insurance sales force, see Chan 2007). Because selling life insurance requires individuals to be proactive, aggressive, and competitive, it stands in opposition to a socialist workplace. How did the Chinese sales agents adapt themselves to the new workplace? The answer, which I often heard in everyday conversations between managers and their sales agents, was xintai, or psychological attitude. Holding a hao de xintai, or a desired psychological attitude, was believed to be the key to success. A desired psychological attitude embodies a range of subjective and practical cultural elements: a belief in the good of life insurance, an indomitable work ethic, a proactive character, a habit of reaching out, a desire to win, and an ability to maintain positive thoughts in the face of rejection and meager income.1 This desired psychological attitude contains a set of specific framing and feeling rules (Hochschild 1979) comparable

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to the positive mental attitude and the self-transformation agenda that scholars describe for the American case (Biggart 1989; Oakes 1990; Leidner 1993). The self-transformation agenda, in Nicole Biggart’s (1989) findings from direct selling organizations, aims to align sales agents’ self-control with organizational interests. If successful, the agents would exercise self-control and yet not feel the organization’s control over them. Thus, all insurers in Shanghai were determined to mold their agents into having the desired psychological attitude, but some were more successful than others. The studies of American insurance sales agents by Leidner (1993) and by Guy Oakes (1990) have contributed to our understanding of the mechanism by which the agents are socialized and managed, but neither of them examines variations in the effectiveness of molding sales agents into the ideal type. They both hint at the importance of ideology in the making of salespersons but fall short of explaining why the ideological works of some insurers produce more committed and motivated sales agents than do those of others.

Divergent Images of Insurance Sales Agents in China The contrast in the public images of AIA and Ping An’s sales agents is perhaps best described through the agents’ own words. A 24-year-old man, who was carefully making a choice between working for one of these two companies, made the following comment on the difference between AIA and Ping An: These two companies have very different corporate cultures. Look at it here. Look at this [AIA] office. It’s bright. The desks are orderly. The floor is clean. No one is smoking in the office. This is AIA. The agents here wear Western suits and behave themselves. Well, the agents of Ping An also wear Western suits. But they wear a Chinese style of Western suits. If you go to their office, you’ll see people there gathering in groups. They smoke, chat, play cards, and sometimes quarrel. You know, there are some plants outside the door of the agency office [of Ping An]. If you take a close look at the plant pots, you’ll see ashes and cigarette butts.2 Although this prospective sales agent seemed to disapprove of the agents from Ping An, he finally decided to join this domestic company. The reason, he professed, was because “the atmosphere there [in Ping An] is more relaxing, and Ping An already has a large market share and is a brand name in Shanghai.” Another agent, Han Xiewei (about 40 years of age), who joined AIA in 1998, also made a choice between the two: “I observed each of these companies carefully. I compared their systems and products. . . . I finally decided to join AIA

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mainly because of its system. Its system was better developed. It’s a more civilized institution. . . . Ping An still bore the culture of an SOE.”3 These two informants’ consistent narration of the difference between AIA and Ping An is interesting, given that AIA made a conscious effort to localize itself and Ping An was striving to modernize itself. When AIA started its business in 1992, this American firm highlighted its origin in Shanghai and proclaimed that its arrival was a “return to home” (hui laojia). Ping An, on the other hand, aggressively recruited overseas expatriates to advise its organizational operation, so as to shake off its Chinese character. Nevertheless, the difference between AIA and Ping An was still obvious, as summarized by the young man who finally joined Ping An: “AIA is a Western model and Ping An is still very Chinese.” On the other hand, any observer who visited the agency offices of PacificAetna and Allianz-Dazhong during 2001–2002 would have been surprised by the contrast in their sales agents’ morale. I visited two of the agency offices of each insurer on a regular basis during this period. The sales agents of Pacific-Aetna, at both offices, all greeted me with enthusiasm and curiosity. They eagerly told me what brought them to the insurance industry, why they joined this particular company, how great their upline agents were, how life insurance benefited society, and how life insurance imbued their work with meaning. Mr. Chao, a sales team manager for more than 100 sales agents, enthusiastically welcomed my studies and proudly told me: “I had worked for AIA before I joined PacificAetna. . . . My experience at Pacific-Aetna has been so different! I think it’s really the place for me. Many people here feel the same way as I do.”4 Chao’s downline agents, whom he called his “children,” usually looked energetic, passionate and committed. They hugged, appreciated, and encouraged each other in the hallways. They gathered in groups to honor each other’s achievements and to boost each other’s spirits. They expressed gratitude to the company for giving them a platform for career advancement. I did not see such an upbeat morale in any other insurers’ sales agents. Of the 18 agents I met with or interviewed during 2000–2002, 13 were still with the company when I returned in the winter of 2004. Distinctively different from the sales agents for Pacific-Aetna, the agents for Allianz-Dazhong did not seem to care much about my visits and studies. They worked individually at their own desks rather than gathering in groups. When asked why they joined the insurance industry, the young agents said the insurance business had a lot of growth potential in China and that it could provide them with a path for building a career. The middle-age agents said they were laid off by the SOEs and had no other options. When asked why they joined this particular company, many of them said because this transnational corporation was new to Shanghai and might provide more opportunities for career development. They

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did not seem to care about the particular meanings of life insurance, nor did they show a particular commitment to the company. Of the 17 agents I met with during 2000–2002, only three were still there during my visit in 2004. How can we explain these contrasting images between AIA and Ping An and between Pacific-Aetna and Allianz-Dazhong? Although organizational structures can be a profound shaping force for organizational cultures, the fact that the organizational structures of the insurance companies in Shanghai are rather isomorphic suggests that we need to go beyond the organizational structure hypothesis.5 As I detail the organizational cultures of various companies in the following sections, we will see that they are largely correlated to the managerial composition of these companies. I show that the top managers’ home countries and their cultural backgrounds were important factors shaping the variation of the organizational cultures. I list the major differences in organizational features and management strategies between the four insurers in table 3.1.

AIA as a Proud Big Brother With its China branch headquarters in a historic, neo-Renaissance-style structure called the AIA Building that faces the Huangpu River, AIA enjoyed enviable privileges that no other foreign insurers could even begin to match. While one can only speculate as to the reasons behind AIA’s special privileges in China, its origins in Shanghai is likely to be a key factor. In 1919, Cornelius Vander Starr, a young American entrepreneur, opened American Asiatic Underwriters (AAU), offering fire and marine insurance in Shanghai. Around the same time, Starr founded Asia Life Insurance Company in Shanghai to market life insurance. AAU occupied many floors of the historic building (named the North China Daily News Building then) since 1927.6 In 1931, Starr established AIA, with its regional headquarters in Shanghai, to target specifically Southeast Asian markets. He moved the headquarters of AIA to Hong Kong after the People’s Republic of China (PRC) took over China. In 1967, the American International Group, Inc. (AIG) was formed to hold the shares of Starr’s domestic companies in the United States, and AIA became its subsidiary in 1970. Being the first and only wholly foreign-owned and literally the first commercial life insurer in the PRC, AIA was recognized as a lao dage (senior big brother) in the life insurance industry. 7Although it carried the slogan of “a return to home” to emphasize its bond with China in general and Shanghai in particular, it maintained a foreign image and took pride in being an American company. It introduced a legal-rational, profit-driven organizational model that was fundamentally different from the SOE model of the People’s Insurance Company of China (PICC). It implemented a series of organizational practices that were appearing in China for the first time: from company structures

Table 3.1 Summary of Differences among Insurers Studied AIA

Ping An

Pacific-Aetna

Allianz-Dazhong

Year of establishment in Shanghai

November 1992

November 1993

October 1998

January 1999

Top managerial composition

Hongkongese and Taiwanese

Local Chinese and Taiwanese

Taiwanese

German and local Chinese

Public image of the company

Western, American, market leader

Local, Chinese

Highly localized

Western

Management style

Mostly legal-rational

Paternalistic, punishment-oriented

Relational, familial, and emotional

Highly legal-rational

Profiles of sales agents

Early on, educated young adults; later, young and middle-aged with various educational levels; relatively balanced ratio between men and women

Various educational levels and backgrounds; mostly middle-aged; more women than men

Various educational levels and backgrounds; mostly middle-aged; more women than men

Elite group, educated young adults; majority, mostly middle-aged with various educational levels; more men than women

No. of sales agents in 2001

4,850

17,670

5,168

934 (continued)

AIA

Ping An

Pacific-Aetna

Allianz-Dazhong

Primary occupational rhetoric

Professional, benevolent, and missionary

Money and career

Family, business, and philanthropy

Professional

Training focus

Risk management concept of insurance; philanthropic meaning of insurance; appearance and manner

Money management concept of insurance; specific product features; networking with clients

Risk management concept of insurance; philanthropic meaning of insurance

Risk management concept of insurance; appearance and manner

Agent ethos

Individualistic; low morale

Collective and hierarchical; high morale

Collective and sharing; very high morale

Individualistic; very low morale

Relation between management and sales agents

Hierarchical but tension filled; “superior” management and “inferior” agents

Hierarchical but taken for granted; authoritative management and submissive agents

Harmonious; mutually flattering

Tension filled; mutually frustrated

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and actuarial knowledge to new labor management techniques and a proactive door-to-door marketing approach. For the newly established domestic companies, AIA provided a prototype of a commercial life insurance company. For the joint ventures that subsequently entered the market, AIA became a reference for how to set up a profitable business in the Chinese context.

The Hongkong and Taiwanese Management Teams AIA’s localization manifested through its managerial composition, which was almost entirely Chinese. Taiwanese and Hongkongese managers sat at the top level, and mainland Chinese, mostly local Shanghainese, occupied the middle and lower levels. “The management strategy of AIA is ‘using the Chinese to manage the Chinese’ (yi hua zhi hua),” a senior sales agent of AIA said. The management of AIA (and all life insurance firms in China) is divided into internal and external affairs, or the so-called in-house management and the sales department, respectively. In-house management is in charge of everything from product development and investment strategies to advertising and information technology. It typically has quite a bit of power and control over various aspects of the company’s management. Only sales, which includes recruitment and management of sales agents and selling of the products, belongs to external affairs. At AIA during the time of my observation, the general manager (Mr. Hsu, a Taiwanese),8 held the highest executive position and was in charge of external affairs. He headed the Taiwanese managerial team for sales activities. The in-house management, which consisted of more than a dozen highly specialized departments, was in the hands of a Hongkong team headed by a deputy general manager from Hong Kong. Why did AIA divide the managerial body into Hongkong and Taiwanese teams? Furthermore, why was the general manager in charge of the sales department instead of the in-house management? A senior agent of AIA explained: The deputy general manager from Hong Kong is responsible for the inhouse management, because the headquarters in Hong Kong didn’t trust the management approaches of the locals or the Taiwanese. So, they sent a Hongkong manager to take care of the internal management.  .  . . The headquarters in Hong Kong imposed a very strict control on the general manager.9 Another agent added: This division makes sense. Taiwanese know the local cultures better and so they are better at sales and marketing. . . . Hongkongese are very rule-abiding

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and, so, they are good at setting up the administrative body of the company. But their rule-abiding attitude does not work well for sales and marketing. The Hongkong managers like to follow rules and observe every single step in the procedures; whereas the Taiwanese know how to take advantage of loopholes and jump from step one to step ten. . . .10 I was convinced by these two agents’ accounts of the rationale behind AIA’s managerial divide. Indeed, the Taiwanese-led sales forces proved to be more productive and aggressive than those led by Hongkong managers. Pacific-Aetna, which was entirely headed by a group of Taiwanese, had higher sales volume than did the Hongkong–managed Manulife-Sinochem Life Insurance Company, Ltd., a Sino-Canadian life insurer that ventured into Shanghai two years earlier than Pacific-Aetna. Likewise, the sales growth of a Sino-French joint venture, AXA-Minmetals Assurance Company, Ltd., headed by Hongkong managers, also lagged far behind Pacific-Aetna. Hongkong managers were not as adept at sales and marketing in China as were their Taiwanese counterparts, because, as I analyze in the last section of this chapter, they came from a cultural and institutional environment that was quite different from the local context.

Sales Agents as Independent Professionals and Missionaries Following its practice in Hong Kong, AIA was the first to establish a professional image of the company and their agents. It targeted university degree holders to be their in-house staff and sales agents. Many educated young adults were drawn to AIA because it was one of the very few internationally known foreign enterprises in Shanghai in the early 1990s. Those who wanted to learn foreign skills and knowledge were enthusiastic about being part of this foreign insurer’s in-house staff. On the other hand, not many people wanted to be sales agents. In the face of contrasting responses to the two different lines of recruitment, AIA tried to persuade some of the people who applied for in-house staff to become sales agents. Yin Wan was one of those. He recalled the moment when he was recruited by AIA in 1992: Actually I wanted to be a staff member in the training department. I was a teacher before . . . .but I didn’t know what insurance was. The general manager asked how I could be a trainer if I didn’t have any front-line experience. I thought he was right. So, I took the job of being an agent (laughs ironically). . . . Sometimes we joke that we were cheated into joining AIA (laughs). . . .

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Yin Wan sounded regretful, though in a jokey way. He continued: [AIA] sent out 36 employment letters to the candidates but only 23 showed up. I was one of those. I think some of them decided not to come after they had found out what insurance was really about (laughs). . . . I didn’t know well enough what insurance was (laughs).11 Indeed, most of the senior agents of AIA I interviewed had similarly joking but regretful responses to the questions of how they became insurance sales agents and why they chose AIA. The 23 educated young adults mentioned above, mostly males, accepted sales jobs without any idea of what insurance or life insurance was. As AIA tried to make sales agents look professional, they were among the tiny number of local Chinese who put on “Western suits and ties” at that time. AIA’s first agency office was located in the Portman building, an expensive, upscale office building in the hub of Shanghai city. Working in this office in the early 1990s was enviable. Nevertheless, when these nicely dressed sales agents were going door to door to sell people insurance, they were seen as “aliens.” The public labeled them derogatorily as “Mr. Running on the Street” and “Miss Running on the Street.”12 Constructing a professional image for the sales agents proved to be unrealistic. First, the concept of “professional” was itself new to the local public, so its meanings were fuzzy (Michelson 2007a, 2007b). Second, although the “Western suits and ties” made the agents appear well bred, their unstable income and job nature were far from any definition of “professional.” AIA was aware of the inadequacy of using the rhetoric of professionalism to motivate the agents. It supplemented this occupational rhetoric with a missionary, benevolent meaning. Similar to what Viviana Zelizer (1979) documents about the presentation of sales agents in the emergent market in the United States, selling life insurance was described as being a job of love and humanity. AIA attempted to convince the sales agents that they carried an altruistic, philanthropic mission. To constantly remind the agents of their missionary role and to boost their ego to take up such an important mission, the agents were required to attend morning assemblies, the so-called morning calls. Because cheering and chanting slogans were common practice in the life insurance industry in Taiwan, the Taiwanese managers brought this practice to AIA in Shanghai. In 1993–1994, their agents cheered and chanted upbeat slogans every morning to psych themselves up in the collective assemblies before going out. AIA pioneered a commission-based income system and a proactive agency sales method to replace the salary-based and passive selling approach adopted by PICC. Commission rates varied among products and payment durations. Typically, an

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agent received a first-year commission of 20–35 percent of the first-year premium for most of the whole life policies sold, and the commission rates for these policies descended annually in proportion until the sixth year, when typically no commission was given. For those policies renewed yearly, such as accident insurance and term life, the commission rates ranged between 15 and 20 percent per annum. At the same time, the agents who had downline agents were entitled to an overriding commission, with the rates depending on the generation to which the downline agents belonged in that sales group’s family tree and the sales volume of these agents. This pyramid structure is similar to that of a direct selling organization (Biggart 1989). AIA’s commission structure was basically adopted by all other life insurance providers in China, though slight adjustments and modifications were made. While the management of the sales agents was headed by Taiwanese managers, the training for the new agents belonged to internal affairs and, hence, fell into the hands of the Hongkong team. According to the senior agents who joined AIA in 1992, the first trainer was Chinese British, named David, who had lived in England for a long time and then worked for AIA in Taiwan and Hong Kong. Being considered a training expert for the AIG, David was sent from AIA headquarters in Hong Kong to set up the training program in Shanghai. He brought the training materials from Hong Kong and taught the new agents about the risk management concept of insurance and related sales talks. Presenting life insurance as a savior for families and a means by which widows and orphans could live with dignity and self-respect, he bestowed a benevolent mission on the sales agents along with an emphasis on dressing and acting professionally. AIA’s ambition to recruit highly educated young people to be sales agents has faced an even greater challenge since 1995. Apart from the fact that the nature of the job was generally unattractive to highly qualified people, AIA was under pressure to expand its sales force rapidly when Ping An aggressively expanded theirs. Thus, it had no other option but to lower its recruitment criteria. Nonetheless, AIA never gave up the ideal of training a “professional” sales force. It implemented a more comprehensive training program for the new recruits and a number of onthe-job training sessions. I attended one of the training series for the new agents in January and February 2002. The more than 40 hours of training began with education on the basic risk management concept of life insurance and the imperative role of sales agents. It was followed by an introduction to various products and training on a series of sales techniques, which included how to dress, how to smile, how to shake hands, and, most important, how to talk and deal with resistant prospects. The agents were taught to believe that they were like missionaries on the one hand, and professionals on the other. In reality, nevertheless, they were far from being recognized as missionaries or professionals by the public.

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The morale of AIA agents was in general downbeat, largely due to two structural factors. First, as described in chapter 2, AIA’s products were not as competitive as Ping An’s, especially in 1996–1997. Many agents either left for Ping An or left the industry. Second, the structure of AIA’s bonuses provided a disincentive for working as a team and resulted in an individualistic ethos among the agents. In my observation, the majority of AIA agents worked independently and rarely interacted with their fellow agents, largely because yearly and quarterly bonuses were given to encourage sales incentives other than organizing and training downline agents. Therefore, AIA agents preferred to work on their own. The individualistic ethos of the AIA agents was expressed not only in their apathetic attitude toward each other but also in their low attendance at the morning assembly. In the agency office that I visited regularly, the morning assembly was held every Monday at 9:15 a.m. Yet, normally less than half of the agents attended, among which one-fourth were late. Even those who showed up were not particularly engaged. For instance, during the assembly some agents were filling out forms, talking on the phone, chatting with each other, or reading newspapers. This atmosphere was in sharp contrast to that found at Ping An and Pacific-Aetna. To motivate their agents, AIA began to organize sales contests, offer free trips to the winners, and propose a series of symbolic awards, such as club memberships, reward certificates, and annual meeting admissions, for those whose sales volumes reached their targets. These ritualistic activities, to some extent, achieved normative control in the high-performing agents, boosting their loyalty and identification with AIA.

Tensions between In-house Management and Sales Agents The AIA agents as a whole suffered low status, but this problem came not only from societal value and public opinion. AIA itself did not treat their sales agents with respect. First, it was the only company that stated in (the front page of ) the agency contract that the sales agents were not employees of AIA. This statement clearly excluded the agents from any employee benefits. Second, it did not allow the agents to freely enter its headquarters (the AIA Building) in Shanghai. Entering the headquarters was regarded as an exclusive privilege for the in-house staff. The agents had to sign in and out at the reception desk and to give a reason for entering the building.13 AIA’s attempts to maintain a distance from the sales agents were obvious. In 2001, AIA had 637 in-house staff and 4,850 sales agents, but the staff held disproportionate power, status, and benefits over the agents. Apart from the fact that the sales agents were not entitled to employee benefits, such as health insurance

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and pensions, they were in a very weak position in the symbolic power field (Bourdieu 1993). An incident related to my presence in the training sessions unmistakably displayed this point. I was introduced by a sales agent to Shen Hingfu, the sales team manager of the agency office where I conducted my observation on a regular basis. Shen joined AIA in 1994 and was one of the few senior agents who were degree holders. He was heading one of the largest sales teams, with more than 150 sales agents. When I learned that a training series was to be held for his new agents, I got his permission to attend the training. When the trainer, who was an in-house staff member, saw me, he asked who had given me permission. He was not satisfied when I told him that it was the sales team manager who granted me permission. He insisted that the training was exclusive for AIA’s agents and that I needed to obtain a formal permission from the headquarters. However, when I named a low-ranked in-house staff member at AIA whom I knew as a friend but had nothing to do with the training, the trainer immediately changed his attitude to me. He graciously welcomed me and eventually became very helpful. I wondered if there were any personal conflicts between Shen and the trainer, but there were none to my knowledge. The incident simply dramatized the feeble position of AIA sales agents, regardless of their rank, seniority, and sales performance. Tensions between the managerial body and the sales agents were commonly attested, as I often heard complaints from both camps. The sales agents complained that AIA’s commissions were unattractive, that the products were not competitive, that the system was unfair to more senior-ranking agents, and that the attitude of the in-house staff was arrogant. The staff, on the other hand, complained that the agents were spoiled, not very self-disciplined, and “low quality” (suzhidi).14 Not surprisingly, the annual turnover rate of AIA’s sales force, according to some senior agents, has been as high as 80–90 percent since the late 1990s.

Ping An as an Authoritative Parent We have seen that Ping An as a novice company refused to closely follow the product development of foreign insurers. In terms of organization, nevertheless, Ping An was the most proactive in imitating the modern, Western foreign model. Moreover, it has been the most progressive in internationalizing its managerial personnel and the most ambitious in entering into the global arena. As early as 1991, three years after Ping An was founded, it hired the then internationally prominent consulting firm Arthur Andersen to be its accounting consultant. The following year, Ping An set up its first overseas branch in the United States in Delaware. This American branch was opened even earlier than the one in the Chinese capital of Beijing, which was opened in May 1994. In 1993, two of the largest U.S.-based financial corporations, Morgan Stanley and Goldman Sachs,

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became shareholders of Ping An. However, since the composition of the top managers of this domestic insurer was substantially different from that of AIA or any other foreign firm, the cultural capital embodied in these managers for accomplishing the institutional work was different. Despite Ping An’s effort to establish itself according to the legal-rational template, it was, after all, a corporation with “Chinese characteristics.”

Local Chinese and Taiwanese in Management Ping An was set up in Shenzhen in 1988, with capital collected from a number of SOEs that then became its shareholders. A local Chinese, Ma Mingzhe, was appointed as the general manager. Lacking any experience in the life insurance industry, Ma hired a number of experienced life insurance managers from Taiwan between 1994 and 1996. They included actuaries, underwriters, sales and marketing experts, and agency development managers. Upon their arrival, they were surprised to find that Ping An was practically ignorant of how to run an insurance business. They advised Ma on how to restructure the organization and specialize the functions of various organizational units, guiding Ping An to establish various departments. The organizational practices of Ping An, nonetheless, still appeared to be less institutionalized and systematic than those of AIA. It was seen as bearing “SOE characteristics,” “SOE culture,” or “Chinese characteristics.” What are the meanings of all these terms? Intriguingly, my informants were more capable of saying what they were not than what they were. The SOE characteristics were said to be the opposite of what might be found in an orderly, clean, and smoke-free working environment with a disciplined, well-mannered, and neatly dressed staff. Furthermore, an organization with “Chinese characteristics” was said to refer to one with a highly centralized and paternalistic operation, with the division of labor among different organizational units unclear and underdeveloped. Ping An was aware of its “Chineseness.” In 1997, it consulted the global business consulting firm McKinsey & Company on how to reform its organization. Based on their advice, Ping An rebuilt its organizational structure according to a more specialized, finely structured, and systematic model. Since then, it has been making tremendous efforts to be a modern corporation. In 1999, it hired the former vice president of Lincoln National (UK) PLC, Stephen Meldrum, to be its chief actuary and serve as a member of the investment management committee and a senior consultant to the general manager. Between 1999 and 2001, Ping An sought expatriates, both Caucasian and overseas Chinese, from the United States, Britain, Australia, Singapore, Taiwan, and Hong Kong. These expatriates headed various divisions, such as strategic development, human resources, advertising, and

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technological development. By the end of 2001, 27 expatriates occupied half of the top managerial positions at Ping An. A local magazine amusingly and ironically described the managerial body of Ping An as “Eight-Power Allied Armies” (Baguo Lianjun).15 Nevertheless, the deputy general managers and half of the top managers at Ping An were still local Chinese, and the majority of the expatriates came from Taiwan. Therefore, the top managerial body of Ping An was composed of mainly local Chinese and some Taiwanese expatriates.

Sales Agents as Money-Making Crowds Although Ping An initially mimicked AIA in recruiting degree holders to be their sales agents, it soon gave up the “professional” model and instead aimed at being “big.” With its market-share institutional logic, as described in chapter 2, Ping An quickly expanded its sales team by recruiting a large number of people of various educational levels and backgrounds to be their sales agents, including those who were laid off by the SOEs. These former SOE workers were not as educated as the young agents of AIA, but they had more elaborated guanxi (interpersonal relationship) networks. As I present in chapter 4, Ping An agents took the lead in aggressively exploiting the Chinese etiquette of renqing (interpersonal obligation) that defines the Chinese norm of reciprocity to sell insurance. Some educated young people were also drawn to Ping An at the beginning, as its commission rates were, on average, 5 percent higher than those offered by AIA.16 Subsequently, when its yanglao (retirement) and child insurance policies became popular, Ping An had no difficulty recruiting agents. Despite its less “modernized” public image compared to AIA’s, quite a number of agents left AIA for Ping An during 1996–1997. This is a story told by a senior agent at AIA: There were two brothers who both worked as insurance agents. It was the older brother who first started working for AIA. He made a fair amount of money. It was not especially high or especially low. It was just average. The younger brother followed his older brother to work as a sales agent. But he chose to join Ping An. In just a year .  .  . .[t]he younger brother earned three to four times what [the older brother] did! The older brother was shocked. . . . How could his brother have made so much money?. . . . Ping An really dealt AIA a blow.17 When Ping An’s products were popular, there was no need to confer a sacred role on sales agents. Instead of imbuing sales work with the symbols of benevolence and philanthropy, Ping An stressed the promising incomes that sales work could

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offer. Interestingly, Ping An was most explicit about the capitalist nature of the life insurance business, while AIA attempted to downplay it. The statement, “This is a capitalist game and so we should follow the capitalist rules,” was heard several times in Ping An’s training sessions but never appeared in any of the transnational insurers’ training. Money was used as the main motivator for the agents to work hard. Ping An did not offer symbolic awards like club memberships or certificates, nor did it offer free trips for the top agents, yet the agents were upbeat. They were more than satisfied with their jobs, as many of them sold more than 100 policies per month and received impressive commissions. According to an agent who worked for Ping An before 2000, the monthly income of Ping An agents in 1996–1998 was 10 times the average income in Shanghai. Naturally, the number of Ping An sales agents multiplied during this period. In 2001, Ping An in Shanghai had 853 in-house staff members and 17,670 sales agents. The size of its sales force was more than three times that of AIA’s. Thus, the dominant occupational rhetoric that Ping An used to manage its sales agents focused on money and career. Selling life insurance was portrayed as establishing one’s career through making a promising income. However, the agents identified themselves according to this occupational rhetoric only when their sales went well. Their morale suffered a setback in 1998–1999 due to the lack of competitive products. To motivate the agents, Ping An began to launch sales contests and award the winners free trips. At the same time, it began to bestow nonmonetary meaning, namely, a benevolent mission, on the work of selling life insurance. Therefore, the level of monetary rewards and the need for symbolic rewards and missionary meanings of life insurance seem negatively correlated. When the sales agents received less monetary benefits, the insurers offered more symbolic rewards in an attempt to cultivate nonmonetary incentives. As Ping An’s products were predominately for money management, the content of their training for the sales agents was also distinct from that of AIA. While AIA’s training taught its agents the concept of risk management and played up the missionary role of the agents, Ping An’s training did not elaborate much on the concept of life insurance. Instead, the trainers spent most of their time detailing the features of each product and explaining how their products were similar to and different from savings, bonds, and stocks. The agents were trained to compare the pros and cons of putting money in Ping An versus putting money in savings banks. They were taught to put the household’s only child and family savings at the center of their sales talks. Furthermore, instead of teaching the agents how to dress and behave professionally, Ping An’s training taught the agents how to offer face and favors to their prospects and existing clients in order to mobilize the etiquette of renqing to induce purchase and invite referrals.18

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Ping An agents all worked in groups. The group culture was forged by the agency structure and facilitated by the physical setting of the agency offices. Normally, an agency office hosted a sales team with a team manager. The sales team was composed of several subteams, and each subteam contained a number of groups. The agents in each group were the downline members of the group leader. The group leaders were the downline agents of the subteam managers, who were the downline agents of the team managers. The hierarchy was organized in a very systematic way, and the structure was like a family tree.19 The agency office was partitioned into rooms, and each room accommodated a subteam. In the agency office where I conducted my regular observation, the average size of a subteam was more than 100 agents, and the average size of a group was a little more a dozen agents. The equipment and facilities at Ping An’s agency offices were the shabbiest among the companies studied. The room given to the over one hundred agents of each subteam was about 800 square feet. Each group of the subteam was given a rectangular table, measuring about 3 × 5 feet. Only the subteam manager had an office desk and a telephone. All the members of a group sat around their table every morning for the morning assembly. Very often, the agents had to pull their seats away from the table to squeeze each other in. Having 100 agents in a small room resulted in a very noisy environment. On the other hand, it created a somewhat intimate, warm, and casual atmosphere. The headquarters required all of its agents to attend the assembly at 8:30 every morning Monday to Friday. The morning assembly began with singing the Ping An song and chanting some Ping An slogans. During 2001–2002, the subteam managers were given the discretion to decide what they would like to do after the slogans.20 After the morning assembly, the leader of each group usually held his or her own group meeting. The leaders and their downline agents shared with each other both their successes and failures and, at times, complained and voiced their grievances about their prospects and about the toughness of the job.

Authoritative In-house Management and Submissive Sales Agents Ping An’s management of its sales agents was, in general, paternalistic and authoritative. It was based on an assumption that the sales agents could not behave themselves without discipline from above. First, all the sales agents had to give Ping An 1,000 yuan (~ US$121) as a security deposit for protecting the company’s property. It would be returned to the agents when they left the company without violating any company rules. The paternalistic management style of Ping

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An was further displayed by its punishment-oriented system. It adopted a “pointdeduction system” (koufen zhi) to control and regulate the agents’ behaviors. In its agency system handbook, it listed 45 incidents for which the agents could be punished through point deduction. For example, 1–5 points were deducted for not attending trainings, meetings, or the morning assemblies without a valid excuse; 2–5 points for printing business cards without or prior to the company’s authorization, or for making a mistake on the policy number of a receipt; and 5–20 points for not obeying management, quarreling or fighting in the agency offices, insulting others, or other disruptive behaviors. The paternalistic control was further fortified by a rule that the supervisors of agents who received point deductions could themselves receive reductions, too. For instance, a group leader would be deducted 2 points if his or her group had an aggregated deduction of 10 points. Likewise, a subteam manager would receive a 1-point deduction if his or her team had an aggregated deduction of 10 points. This overriding punishment scheme was based on the assumption that an upline agent, who was like a “parent” of a downline agent, should be responsible for the misdeeds of his or her “offspring.” This scheme not only was blatantly paternalistic and hierarchical but also was based on the logic of collective responsibility and the legacy of family shame. An agent would be disqualified for any honor or award if he or she was deducted 5 points in a year, a 10-point deduction would take away any chance of promotion that year, a 15-point deduction would bring a demotion to the agent, and a 20-point deduction meant the agent would be fired. At the same time, the in-house staff of Ping An communicated with the sales agents in a rather authoritative manner. A training manager from the headquarters was placed in each agency office. At the agency office where I conducted studies, the sales agents all seemed intimidated whenever the training manager, a man in his late 40s, walked by.21 Occasionally, some in-house officers visited the agency office unannounced to check on the attendance of the morning assemblies. An inhouse officer once came to the subteam where I attended assemblies on a regular basis. The following extract from my ethnographic field note records his interaction with the agents: An in-house officer suddenly appeared today during the morning assembly. He walked to each table to take attendance. When he walked close to ours, Dai Hong (the group leader) seemed nervous. The officer found that only 6 [out of 14] downline agents of Dai’s were present. He questioned Dai in an accusatory tone, “Why only 6? Where are the others?” Dai replied, in a very low voice without making any eye contact, “Two of them are on a trip the company awarded them, and another three have applied for a day off.” The officer wrote down what she said and asked her

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to sign. With some reluctance, Dai signed. No one knew the name of this officer or his rank. They only knew that he was from the agency management unit. Dai looked both worried and upset. She murmured to her group members that she was having sheer bad luck, as it just happened that the attendance rate was low today. . . . This was true. Normally, about 10–11 of her agents attended the assemblies.22 Surprisingly, the agents of Ping An seemed rather submissive. It looked as if they took for granted that the in-house staff were in a position of higher authority, and the in-house staff ’s authoritative communication with them was also somewhat taken for granted.

Pacific-Aetna as a Warm Family Using a logo of a baby angel to symbolize its mission, Pacific-Aetna presented itself as a caring and compassionate institution not only to its clients but also to its sales agents. Headed by a group of Taiwanese managers, Pacific-Aetna adopted a full Taiwanese model. It represented another form of organizational culture with “Chinese characteristics.” Instead of applying an authoritative and paternalistic management model, the managerial body at Pacific-Aetna applied a familial, relational, and emotionally based model. The top managers endeavored to create a family atmosphere in order to cultivate a sense of belonging and loyalty. At the same time, they attempted to make the agents believe that they were their own “bosses” to boost their motivation and commitment.

The Taiwanese-Headed Management The managerial composition of Pacific-Aetna was the simplest among the four companies. The general manager, Mr. Chang, and the two deputy general managers were all Taiwanese. They brought a managerial team with them and came directly from Taiwan. One of the deputy general managers was in charge of the in-house management, and the other headed the sales and marketing department. Other Taiwanese managers headed the training, actuarial, investment, and information technology departments. Beneath the Taiwanese managers were all locally hired Chinese. Although Pacific-Aetna’s organizational structure was not significantly different from that of AIA or Allianz-Dazhong, it did display an organizational culture that was distinct from all other joint ventures in Shanghai. Its unique culture was brought from Aetna in Taiwan. The Taiwan Branch of Aetna Life Insurance Company of America was established in 1988, the year after Taiwan opened its

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life insurance market to American companies. In 10 years, Aetna strove to be the second largest foreign life insurer in Taiwan, next to AIA’s Nan Shan Life Insurance Company, Ltd. (Nan Shan). Strictly speaking, Aetna grew the fastest among all foreign insurers, because Nan Shan was originally a domestic insurer bought by AIA in the 1970s (Chan 2012). Aetna’s success in Taiwan explained why the headquarters in Hartford, Connecticut, deployed a full Taiwanese team to Shanghai. The key to its success, Aetna Taiwan Branch proclaimed, was its corporate culture that “put human beings and human souls the center of the corporate management.”23 It presented itself as a warm family and strove to empower the sales agents by rhetorically treating them as “bosses” or “business partners.” This managerial strategy was brought to Pacific-Aetna in Shanghai by the Taiwanese managers, who, in my observation, were most skillful in marshaling their sales agents to take on the desired psychological attitude.

Sales Agents as Family Members and Bosses When Pacific-Aetna was founded in Shanghai, it recruited a large number of agents from AIA and Ping An. Unlike AIA, Pacific-Aetna did not place much importance on the agents’ educational level and cared less about teaching the agents how to dress in a professional way. It hired more middle-age female agents than did any other joint venture. The socioeconomic backgrounds of their sales agents were more like the agents from Ping An than those from other transnational insurers. Its agency system operated like a direct selling organization in encouraging the agents to recruit downline members. Many high-performing agents were promoted to managerial sales positions within three years. Instead of using a punishment-oriented model, it deployed a reward-oriented approach to encourage agents to recruit and train their downline agents. When an agent got a promotion, his or her upline agent would be awarded a bonus, in an amount commensurate with the duration of his or her service in the company. Therefore, the reward system of Pacific-Aetna was structured to encourage agents to recruit and organize their downline agents and to work with them as a collective unit. It also encouraged long-term commitment to the company. The agents who had worked for the company for up to eight years would receive additional bonus, again, in an amount determined by their length of service. Compared to AIA, Pacific-Aetna was more generous in offering fringe benefits. It entitled all of its agents, after a three-month probation period, to pension insurance, medical insurance, and festival bonuses. The festival bonuses were obviously a localized strategy that served more a symbolic purpose. For example, a 100 yuan bonus was distributed to each agent during the Lunar New Year, on Labor Day, and on National Day.

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Following Aetna in Taiwan, Pacific-Aetna in Shanghai held its morning assembly in a lively, fun, and dramatic way. Like AIA, Pacific-Aetna let the sales team manager of each agency office determine the frequency of the morning assembly. The format of the assembly, nevertheless, was designed by the head of the sales and marketing department, whom the agents called Manager Ge. Manager Ge brought Aetna’s morning assembly from Taiwan to Shanghai. A typical morning assembly went as follows: At 9:00 a.m., loud and upbeat music was played, signaling that the assembly was to start. The sales agents then rushed to the sides of four long tables, each measuring about 24 feet × 4 feet, in the meeting hall. One of the sales team managers would lead the agents in a “morning drill.” The drill was an eclectic mix of a bit of stretching, dancing, and aerobic exercises that as a whole looked quite funny. After the morning drill, the rest of the assembly was not much different from those at Ping An. Senior agents and guest speakers shared personal stories about their selling experiences, particularly about their difficulties and the ways they overcome them. The commission rates that Pacific-Aetna offered their agents, however, were more or less the same as those offered by AIA and Allianz-Dazhong. Compared to Ping An’s products, Pacific-Aetna’s were not as popular. Thus, the monetary rewards the sales agents of Pacific-Aetna received were not particularly high. To motivate the agents and to keep up their morale, Pacific-Aetna provided better office facilities and applied various relational and emotional strategies. Two distinctive strategies were observed. First, it created a familial atmosphere in the company and the agency offices. The entire corporation was described as a “big family” (dajiating). The sales teams, subteams, and groups were called “clans” (jiazu). The heads of the sales teams and subteams and the leaders of the sales groups were called “parents” (jiazhang). As all the agents were recruited by other agents, everyone had a parent and everyone belonged to a clan. When agents recruited their own downline members, they extended the clan vertically. If one of the downline agents was promoted to the managerial sales position with his or her own sales group, the clan was extended horizontally. Once a sales agent was promoted to a managerial sales position, this agent was given a small partitioned room of about 70 square feet with an office desk, a telephone, a few chairs, and a couple of file cabinets. Each partitioned room held one clan. Usually, each clan held its own group meeting every day after the morning assembly. Sometimes two to three clans under the same parent together held parties, celebrations, and training sessions. Hugs, verbal support, and mutual help were the norms that characterized the interactions among the agents from a clan. Another strategy that the Taiwanese managers deployed was the rhetoric of business designed to make the agents feel like they were “bosses.” The Taiwanese

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managers strove to downplay their status and privileges in front of the agents. They encouraged the in-house staff to address the sales agents as “partners” (huoban) in their daily routine. The top managers themselves, including the general manager, whom the agents called Manager Chang, also addressed the agents as “partners.” In ceremonial activities, these managers called the agents “my bosses” and, at times, explicitly said their own incomes depended on their sales. At its annual awards presentation ceremony in May 2002, the managers invited a famous Taiwanese singer, Zhou Huajian, to entertain the sales agents. They told the agents that they had spent a hundred thousand U.S. dollars to invite Zhou for a single reason—in order to make the agents happy.24 To further entertain the agents, the top managers wore heavy make-up to appear as women at the ceremony. Manager Chang dressed as Snow White and Manager Ge wore a miniskirt and danced the hula. All these efforts succeeded not only in amusing the agents and eliciting joyful screams and laughter but also in making the agents feel important and flattered.25 Manager Ge, the sales and marketing manager, was particularly adored by the agents. He was said to be qinmin, or close to the commoners, a term used to describe an emperor who cared about his subjects in imperial China. He often visited the agency offices, did the morning drills with the sales agents, and at times invited senior agents to lunch. During my research at an agency office of PacificAetna, Manager Ge came to visit twice. On both occasions, he delivered emotionally charged speeches at the morning assemblies. To reinforce the image that the sales agents were the “business partners” and to convince them that they were on an equal footing with the managers, Manager Ge claimed that none of the top managers were provided with a private car by Aetna as the top managers of the other insurers were. He claimed that they were not given any special privileges and that they rode in a van to work every day. To assure the sales agents that they were not the only ones who were sacrificing their family time by working seven days a week, Manager Ge delivered the following speech: Fifteen years ago I was like one of you sitting here. I wore a Western suit every day and rode my 20-year-old motorcycle around Taipei, sweating all summer. Why did I work so hard? I was working for the welfare of thousands of families! My job was important. It was so important that I could not let myself to stop even for one minute. . . . I left my wife and my twoyear daughter, who was just able to call me “pa pa,” back in Taiwan and came alone to Shanghai. My wife begged me not to go. She said, “How could you leave us alone?” (Manager Ge pauses for a while to invite sympathies for his wife). . . . Why did I come here? It’s not only about money. It’s about the meaning, the value of this job.26

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Like AIA, Pacific-Aetna underlined the philanthropic function of life insurance and the missionary role of the sales agents. The personal and emotional approach that Manager Ge exercised seemed working well. Among all the sales agents, those of Pacific-Aetna were the most ideologically committed to the benevolent meanings of life insurance. Many of the senior agents of Pacific-Aetna I interviewed not only felt that they were “bosses” but also felt like they were “saved” by Pacific-Aetna. At one clan’s celebration party, the following scene transpired: Wei Pingzhi, the parent of this clan, made some opening remarks to the party. . . . “Our sales volume from the last contest has reached 3.7 million FYP [first-year premium]. We’ve broken the sales record of this agency office!” The agents applauded and cheered. . . . Wei continued, “Our Wan Ganxie . . . .led her agents . . . .to visit prospects day and night. They left in each home visit their sweat and footprints. . . . Our Zhang Yanqing was sick during the contest. . . . But he insisted on approaching strangers. He has finally achieved good results. And our Wu Yunan, although she has been suffering from high blood pressure, she still keeps going. When she falls, she stands up and continues. . . . And . . . .all of you have worked very hard. You have overcome your family obstacles and health problems. You put our collectivity as your top priority. . . . Sisters! Let’s unite and work together for the betterment of the world!” The agents applauded. Two of them wept. . . . Wei Pingjiing wept and said, “I really appreciate Aetna for giving me the chance to be my own boss.” Wu Yunan said the same and wept, “Aetna has helped me to find the real meaning of life. Aetna has given me a new life and a new spirit! I have to work hard to repay what Aetna has given me.”27 This emotional scene did not occur at every collective gathering at PacificAetna. Nevertheless, it only occurred at this company. Wu Yunan, about 50 years of age, was a medical doctor before she joined Pacific-Aetna. She was always grateful to the company for giving her the opportunity to do something “meaningful.” A year later I saw her wearing a wool hat in the office. She said she had been suffering from a chronic headache because she had been working extremely hard recently in order to obtain a promotion. No doubt PacificAetna had been most successful in orchestrating the desired psychological attitude. It did so by blending the rhetoric of business with a familial atmosphere to channel the agents’ framing and feeling rules (Hochschild 1979). Forging an identity as a “boss” facilitated the generation of a capitalist spirit with relentless pursuit for material and symbolic success. At the same time, the familial

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atmosphere gave the agents emotional strength and resources to surmount their daily difficulties. To present itself as a “humanized” institution to the public, Pacific-Aetna set up a team called “caring angels” with the mission of visiting the clients who were hospitalized. The team consisted of a number of in-house staff members, mostly young women. The sales agents welcomed this unique service provided by the in-house management to please their clients. Furthermore, the agents were thankful that their company packaged its products according to the local cultural frame that made their sales talks to the local prospects easier. Although the products PacificAetna offered were mainly for risk management and secondarily for money management, this insurer framed its products in the vocabulary of local preferences. For instance, it framed part of the insured amount as “repayment of principal” to make the products sound like savings or investments. Knowing that retirement is a major concern of the local people, it called the annuity products “retirement insurance.” In publicizing its products, Pacific-Aetna used lively cartoons and colloquial wordings to explain and simplify the terms of the products. Thus, by combining its experience in the insurance industry with its local cultural knowledge, Pacific-Aetna strategically localized the packaging of products without compromising profit margins.

Mutual Flattering between In-house Managers and Sales Agents The sales agents of Pacific-Aetna were most committed to their company. All of the sales agents I met with or interviewed in 2000 still worked for this company in 2002. In 2001, Pacific-Aetna had 5,168 sales agents, which was the highest number among all transnational insurers. The interactions between the in-house staff members and the sales agents at Pacific-Aetna seemed quite harmonious compared to other companies. At times, staff members and sales agents flattered each other. As we have seen, the top managers flattered the sales agents by downplaying their status, calling them “bosses,” and entertaining them. However, a hierarchy of status and privileges that marked the boundary between the top managers and the sales agents undoubtedly existed. While the sales agents at times believed that they were the “bosses,” they had no authority or power to connect me to any of their in-house managers for interview (see appendix A for my entrance to this insurer). The agents obviously treated the top managers as their bosses, and their feeling of inferiority to these managers, for example, was expressed by their excitement, thankfulness, and being flattered by having Manager Ge come over for a visit or having a lunch with him. These thankful and flattered feelings, nonetheless, reinforced their identification with the company, which ultimately translated into hard work.

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Allianz-Dazhong as a Foreign Masculine Man In contrast to Pacific-Aetna’s soft and emotionally charged image, AllianzDazhong represented itself as a sturdy, macho man to the public and as a modern, Western organization to its sales agents. Dark blue was the color this SinoGerman joint venture consistently used as the background for all of its publications. Its mission was symbolized by a picture of the world’s sixth largest suspension bridge, the Tsing Ma Bridge in Hong Kong, with strong currents underneath and the word “risk” on the top. Allianz-Dazhong was the most aggressive among the transnational insurers in advocating a “Western” managerial model when it started its operation in Shanghai. It later made an attempt to localize its organizational practices and company image. Nonetheless, given that Allianz AG had no prior experience operating in China, Taiwan, or Hong Kong and that the top managers were Germans, the localization remained superficial and ineffective.

The German-Headed Management Allianz-Dazhong was one of the only two life insurers in China headed by a nonChinese during my research period.28 It had the highest proportion of Caucasian expatriates in the top managerial body. Most of them came from Germany. The operation of the company was headed by a board of management, which consisted of two Germans and two Chinese. One of the Germans served as the general manager, and the other as deputy general manager. The two Chinese served as deputy general manager and assistant general manager, respectively. Therefore, the two Germans together assumed higher power than the two Chinese. Moreover, because the two Chinese managers had no experience in the life insurance industry, the Germans were in charge of the operation. Allianz-Dazhong had the highest proportion of top managers holding a Ph.D. degree, including the general manager, Dr. von Canstein. Dr. von Canstein had worked for Allianz AG for more than 20 years, but he had never visited China before heading this joint venture in Shanghai. In setting up Allianz-Dazhong, he endeavored to establish an organizational culture that was comparable to the German ideal. He used a Chinese word, kai, which means “open,” to describe his management theory. With the ambition of establishing a democratic management model, he invited his staff from different levels to open their minds to think for the benefit of the company.29 He wanted to set up a corporate culture in which employees were accountable, responsible, independent, proactive, task oriented, open, and democratic and separated their work lives from their private lives and personal feelings. In a 45-minute interview in the summer of 2000, Dr. von Canstein repeated five times that the Chinese needed to learn to be “accountable.”

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The major challenge for the in-house management here is to get people to be accountable, to get them to be responsible. . . . In other cultures, people understand better what their tasks are. People in other cultures see that “Ok, this is my task. So, I need to finish it. . . .” We need to enhance communication. And we need to enhance the “mistake culture.” When you make a mistake, just say, “Sorry, I made a mistake. I will do it right next time.” We want to establish openness and trust. . . . So, there is a lot of training we have to do. . . . We want them to be proactive, responsible, and accountable. We are using a practical approach of management. We have to keep on controlling, pushing, and initiating . . . . Irresponsible means you expect things to be taken care of by somebody else. They have this attitude that if I do nothing, then I commit no mistake. Then they are inactive.30 While stating what his managerial team had to do, Dr. von Canstein was indeed complaining of what the local employees were lacking. Some of the work ethic he was advocating, such as daring to make mistakes and a democratic ethos, was quite alien to the work attitude and habits of the local people at that time. Dr. von Canstein was praised by his Chinese staff as nice, friendly, humble, and approachable. He was indeed the most approachable general manager among all of the four companies studied. Unfortunately, Dr. von Canstein’s German management model did not seem to work well. The premium incomes of Allianz-Dazhong in 2000 and 2001 were the lowest among all joint ventures. This Sino-German company began to localize its managerial body in 2002. It reduced the number of Caucasian expatriates from the initial 10 down to 3. It replaced the British actuarial head with a Taiwanese. It appointed a Hongkongese from Allianz’s branch in Singapore to be the head of the sales and marketing department and a Singaporean to be the sales and marketing operating manager. However, the Singaporean approach to managing the sales agents did not seem to work well either. It was still too “foreign” from the local sales agents’ perspective.

Sales Agents as Elites and Commoners When I first visited the agency office of Allianz-Dazhong referred by the company’s public relations assistant, I was surprised to see how spacious, neat, and tidy the office was. The furniture was not only brand new but also of better quality than that of other companies. The office, which was about 1,500 square feet in size, was located on the 33rd floor of a commercial high rise in downtown Shanghai. It was airy and bright, with lots of windows. Unlike other agency offices, where lots of posters and slogans were hung on the walls or the ceilings,

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there was only one slogan in this office. It said, “Doing what unsuccessful people will not do, you will succeed!” A warning sign, “Smoking is prohibited anytime; violators will be fined 50 yuan,” was posted on the wall. There were about two dozen desks divided by glass partitions along the windows, and another half a dozen long tables with seats located in the middle of the office. Some of the partitioned desks were still empty, awaiting future senior agents to take over. The sales team in this office, composed of about 40 active agents, was called “Venus Team” (Jinxing Tuandui).31 Most of the agents were young, and at least 70 percent of them were under 30. There were more male than female agents, but all of them were degree holders. The males wore suits and ties; the females wore skirts and jackets. The colors were quite monochrome, mostly black, gray, or white, but these young agents spoke confidently and regarded their job as a professional career. Just one level down from the Venus Team, on the 32nd floor of the same building, another three sales teams shared an office space about the same size as the Venus Team’s. I visited one of them, named the “Aries Team” (Baiyang Tuandui). The office setting of the Aries Team was conspicuously different from that of the Venus Team. It had about the same number of sales agents but had very limited office space. Except for the team manager, there were no partitions for any of the agents. The room had fewer windows and so was darker than the one upstairs. There were more slogans hanging on the ceilings and the walls. One of them said, “Have more courage and fewer complaints.” Another said, “Have more action and fewer grievances.” These slogans seemed to suggest that the agents had quite a few complaints and grievances. The agents on the 32nd floor were relatively older, about 60 percent of them between 30 and 50 years of age. But again, there were more males than females. These agents also wore suitlike outfits but were less formal and in different colors. Their demeanor varied. Some of them looked upbeat and confident, but most seemed loosely motivated. Therefore, there was a clear stratification of the sales force in Allianz-Dazhong. The Venus Team was an elite team developed according to Dr. von Canstein’s ideal model. Its average rate of productivity was highest in Shanghai, and the company had invested more in its office facilities and training to make its agents feel important and respected.32 However, this team constituted less than onetenth of Allianz-Dazhong’s sales force. All other sales teams of this company were more or less like the Aries Team, a disappointment to Dr. von Canstein. When Allianz-Dazhong set up its sales force at the beginning, it recruited only fresh university graduates who had not previously worked for any other insurers. This Sino-German company did not like the way the sales agents in Shanghai were selling and therefore preferred to recruit those without any prior experience in insurance sales. Dr. von Canstein also expressed his disapproval of

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the pyramid, family-tree-like structure of the agency system that created the family group culture. The recruitment of sales agents therefore followed the German model at first. Sales agents were recruited by the company’s human resources department, and they were all subject to the supervision of the head of sales. The agents initially all worked independently and individually. Those who had outstanding sales records were then promoted to become sales team managers. The human resources department assigned new recruits to be their downline agents. These managers’ incomes were then linked to the sales performances of their downline agents. However, as selling life insurance was never too appealing to the general public, it was extremely difficult for Allianz-Dazhong to expand its sales force without mobilizing the sales agents themselves to recruit downline agents. As a result, Allianz-Dazhong had to adopt the pyramid system to encourage agents to recruit downline members. Allianz-Dazhong had the ambition of introducing a strictly professional way of selling. It wanted to distinguish their agents from the others. Instead of encouraging their agents to go door to door to approach strangers, Allianz-Dazhong initially did not allow the agents to knock on someone’s door without first making an appointment. It taught the agents that making appointments was a sign of respect. Nonetheless, the salient discrepancy between an ideal professional image and the realities of facing countless rejections day by day inevitably demoralized the agents. During my observation in 2002, the sales agents not only went door to door but also disguised themselves as survey conductors from Allianz-Dazhong to approach potential prospects and to obtain their personal information. This tactic was first used by Ping An’s sales agents and was later adopted by some others. Thus, while the in-house managerial body was implementing a particular model of practice, the sales agents were exercising another according to practical imperatives. What I observed at Allianz-Dazhong’s agency offices was quite far from the German managers’ ideal. As there was no practice of holding weekly or daily morning assembly for the sales agents in Germany, the German managers at first did not like the idea of holding morning assemblies. They simply did not see a need for it. Nevertheless, their insurance sales management consultancy, Insurance Marketing Magazine International, a Taiwanese consultancy, successfully persuaded the German managers to adopt the morning assembly practice. Thus, morning assembly was required, and, as at AIA and Pacific-Aetna, the frequency and format were left to the team managers’ decisions. I attended the morning assemblies for both the Venus Team and the Aries Team. The formats at both places were about the same, but their atmospheres were very different. In both offices, the team managers hit a drum to signal that it was time for the assemblies. The agents took their seats and listened to the managers’ and the guest speakers’ speeches. While the agents

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at the Venus Team were quite attentive, the agents at the Aries Team seemed poorly disciplined. At times the agents of the Aries Team were even rude to the speakers: When the agents heard the drum, some of them frowned and appeared annoyed. . . . Some agents were chatting with each other while the team manager was speaking. The manager asked if any agents would volunteer to share their stories of successful sales. However, no one responded. Seemingly a bit embarrassed, the team manager suggested to a female agent who just sold a policy this week to share her successful story with others. However, the agent was reluctant to do so, saying “There is nothing to share.” The dead air lasted for a minute or two until a male agent volunteered to take her place. . . . The team manager led the audience to applaud his generosity, but only half of them did. When the agent was about to start his story, another female agent shouted at the team manager, saying something like the assembly was useless for their sales.33 I was surprised to see such aloof and even rude attitude of the sales agents in a morning assembly. Although the agents of AIA were also unenthusiastic during the assembly, they never behaved rudely to each other or to the team manager. I wondered if it was because this team manager was unpopular. I later found that the agents’ poor attitude actually came from their overall dissatisfaction with the company’s management.

Frustrations of In-house Managers and Sales Agents The agency system of Allianz-Dazhong was indeed the most organized and elaborated of all the companies I observed. Its agency system handbook contained 45 pages, with systematic and detailed explanations of various awarding schemes and promotion standards. The various bonuses, altogether 18 kinds, were as attractive as those offered by Pacific-Aetna. The overall fringe benefits provided by AllianzDazhong were better than those of AIA and Ping An. But why did the agents seem so dissatisfied with the company? When I approached the agents of the Aries Team, the majority of them simply ignored me. They were reluctant to talk, and some of them looked at me suspiciously. The few who were willing to talk to me all expressed their grievances about the company. “It is difficult to sell Allianz’s products. Ping An’s products are more popular. China Life’s products are easiest to sell,” Zong Bai, a man in his 50s, said. It was curious to me why Zong did not simply join Ping An. He said:

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I chose Allianz because it was a foreign company. I thought the quality [of the company’s system and products] would be higher. It looked like a high-end company at the beginning. But now it’s in terrible shape. The training here is useless. Allianz keeps changing people and management. It keeps changing the rules. Today they have this set of rules, tomorrow they have another. . . . It’s terrible! Yes, I’m going to go to another company.34 Quite obviously, the German managers, who lacked local knowledge, could only run the company with a trial-and-error method. This frustrated the sales agents. Not only did the agents of the Aries Team complain, but the agents of the Venus Team complained as well. The team manager of the Venus Team, Elisa Zhou, spelled out her dissatisfaction: This company doesn’t know how to do business in China.  .  . . When I joined this company in 1999, the training it offered was useless. The trainer was a German. He only had theories. . . . He didn’t know how to sell in a Chinese market. . . . The current [sales and marketing manager] came from Singapore. I don’t like her. . . . [S]he made jokes that nobody laughs at.35 Despite the excellent office facilities, the Venus Team had difficulty expanding. Three months after my field research with the Venus Team, Elisa Zhou took one of the most productive senior sales agents with her and left for another joint venture. The dropout rate of Allianz-Dazhong’s sales agents seemed to be the highest among the insurers studied. While it was established at about the same time as Pacific-Aetna, it had only 934 sales agents in 2001. Allianz-Dazhong was indeed at a loss for how to manage the local sales force. It started off with a German model and had increasingly adopted a Taiwanese approach. Yet it failed to synchronize the two very different models. The general manager admitted that he had encountered countless culture shocks. In particular, he had difficulty with the local culture of mixing work with personal life. “There was no such challenge in Germany. . . . People there separate their business and private lives. Here, people have more of a family-like feeling. They behave differently if ‘I like you,’ or if ‘I don’t like you.’ Their personal feelings and relations affect their work. There’s just too much personal distraction here.”36 Here, the general manager’s conception of control, which is an “interpretive frame” used to interpret and justify certain actions vis-à-vis others, is obviously part of his cultural capital acquired outside the local context. As we have seen, the managers at Pacific-Aetna deliberately created a family atmosphere to channel the agents to mobilize their (positive) personal feelings and emotions to buttress their work

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lives, while the managers at Allianz-Dazhong did the opposite. The German managers wanted a perfectly instrumental rational workplace but failed to understand that sterilizing a Chinese workplace by trying to eliminate guanxi was not only unintelligent but also infeasible. Their lack of local cultural knowledge and practical skills was bluntly revealed by a senior agent at Allianz-Dazhong: The German managers are too simple and straightforward. They are ignorant of the complications of the Chinese politics. . . . They don’t know any Chinese [language], and they don’t have close Chinese friends. Sometimes they are fooled by their Chinese staff, simply because they don’t understand any Chinese. Nor can they read the cues of some Chinese behaviors. . . . They are nice but too ignorant!37 The agent did not disclose how the managers were fooled by their staff. Nonetheless, it is not difficult to imagine how helpless the German managers could be in managing and controlling the local staff when they were illiterate to the local language and culture.

Managers’ Cultural Capital and Agency Management In explaining the variations of firms’ microlevel strategic choices, particularly the styles of top management, comparative institutional analyses convincingly argue that macrolevel institutional factors, such as locational institutional resources and the legal frameworks in which firms are embedded, are crucial (Lehrman 1994; Fligstein 2001; Lehrer 2001; Casper 2001). This chapter compares various life insurance companies’ microlevel strategic management of their sales agents under the same macrolevel institutional context. Not only did the insurance firms operate in the same institutional environment, but also they were all newly established and shared very similar organizational structures. The striking differences across the organizational cultures of AIA and Ping An and of Pacific-Aetna and Allianz-Dazhong call for explanations. To explain their variations in outcomes, I suggest that the answer lies in the composition of the “institutional entrepreneurs” of various companies. The variation in agency management across the insurers displays a systemic pattern based on the identity of the top managers. The local-Chinese-headed Ping An followed an authoritative approach and operated under an SOE shadow, despite its bold effort to westernize its organizational structure. The Taiwanese-headed PacificAetna adopted a familial, relational, and emotional approach in its agency management, and its corporate culture resembled a direct selling organization. Both

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the Hongkong-cum-Taiwanese-headed AIA and the German-headed AllianzDazhong strove to craft independent, professional sales agents and to create a modern, rational corporate culture, though Allianz-Dazhong’s attempts thus far have failed. We have seen that when the transnational insurers were confronted with local cultural constraints, the managers from Taiwan were most effective in reconciling the tension, whereas the managers from Germany were least capable of doing so. While Fligstein and Peter Brantley (1992) find that a CEO’s background does affect a firm’s financial performance, this study finds that top managers’ cultural backgrounds, to a large extent, affect transnational firms’ performances in a specific locality. Who the top managers are and where they come from result in quite different outcomes because, I argue, the cultural capital they bear largely shapes their managerial strategies. My proposal is in line with Fligstein’s argument (1990, 1996) that top managers’ cultural bearings, through their conception of control, can serve as valuable resources. Yet simultaneously, they impose cognitive and habitual constraints on the managers as well. Building on this argument, I go a step further to ask why some top managers’ cultural bearings serve more as resources (as for PacificAetna’s managers), while others’ cultural bearings become constraints (as for Allianz-Dazhong’s managers). My argument is that the cultural capital of the Taiwanese managers was acquired in an institutional and cultural context that shares more affinities with the institutional and cultural context in Shanghai, whereas the cultural capital of the German managers was acquired in a fundamentally different institutional and cultural environment. To apply the above argument to understanding the different outcomes in agency management, a comparison of Pacific-Aetna and Allianz-Dazhong is most illustrative. First, the local sales agents bore a cultural imprint that influenced not only their subjective values, ideas, and beliefs but also their practical skills, habits, appearances, and demeanor when they joined the insurance industry. Some of these preexisting cultural bearings were useful for insurance sales, but some were a hindrance. The managerial bodies of the insurers all attempted to eliminate or suppress the agents’ cultural bearings that could hinder effective sales, to reinforce those that could be productive, and to cultivate new cultural bearings in them. However, their selections of desirable and undesirable cultural bearings differed. While the German general manager complained about his local employees’ blurring the boundary between personal and work relationships, the Taiwanese managers purposefully blurred this boundary by creating a familial atmosphere in the workplace. The latter proved to be more effective in orchestrating the desired psychological attitude, because the Taiwanese came from an institutional and cultural background that shared similar worldviews with the local people. The shared worldviews define which actions are legitimate and which

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outcomes are most desired. These common templates suffused the Taiwanese managers with cognitive and normative abilities to understand the interests of the locals and to mold a collective identity that more or less met the locally constituted interests of the sales agents. Another institutional task of the top executives was to change some of the agents’ preexisting attitudes and to create new cognitive and emotional resources. To accomplish this, the trainers and marketing managers needed to have the “social skills” (Fligstein 1997) to mobilize existing local cultural tool kits to achieve their purpose. The managers from Pacific-Aetna used affective discourse to draw out the agents’ emotions. They mobilized familial cultural symbols to integrate the agents into harmonious collectivities. Applying a familial rhetoric to guide the agents to regard the company as a big family facilitated mutual help among the agents and reinforced commitment to the company (Biggart 1989; Kunda 1992). To cultivate a strong work ethic and a habit of reaching out, the Taiwanese managers deployed a business rhetoric to address and communicate with the agents. Because only meanings that can be naturalized are effective (Carruthers and Babb 1996), and because rhetoric has to interact with reality (Zbaracki 1998), the Taiwanese managers were fully aware that using a professional rhetoric would not work well in the Chinese context for insurance sales jobs. The discrepancy between the definition of a professional and the actual sales work is too salient, making the use of such rhetoric too artificial. Instead, the rhetoric of business works well in a sociocultural context like Shanghai, where being a capitalist and getting rich are glorified. Being a “boss” is certainly associated with profits and money making. But it is more than that. In his study of a Taoist temple in Shanghai, Der-Ruey Yang (2005) found that it became fashionable even among young priests to address each other as “boss” (laoban). Being a “boss” embraces a respectable social status and a good sense of the self. The Taiwanese managers proved to be most sensitive to such a longing among the local people. At the same time, they artfully presented a denial of the hierarchical system of privileges not only by addressing the agents as “bosses” but also by making fun of themselves to entertain the agents. With their local knowledge, they understood that pre-1949 China was still a traditional society in which hierarchies of classes, social status, and privileges were conspicuous. They knew that these hierarchies have been rebuilding themselves in post1979 China, making the symbolic and practical relations between bosses and workers, and between those on the top and those on the bottom, extremely hierarchical. Furthermore, the hierarchies in the insurance firms in China gave inhouse managers, let alone the top managers, much higher organizational privileges and power than the sales agents. It is in this context that the dramaturgical performances of Pacific-Aetna’s managers to negate such hierarchies were especially appealing. Thus, the “institutional entrepreneurs” who had better knowledge of

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the social psychology of the mainland Chinese and maintained a demeanor appreciated by these locals proved to be more successful in molding the local agents’ psychological attitudes. On the other hand, the cultural and institutional baggage borne by the German managers was least relevant to the cultural and institutional environment in Shanghai. The German managerial body came with an ideal of building a sales force that could work independently with task-oriented habitus and democratic spirit. This ideal was quite alienating to the local labor force. Although Allianz-Dazhong was later willing to localize, the cultural and institutional distinction between Germany and Shanghai made this insurer’s localization rather superficial. The hiring of a Singaporean to handle the agency management as a sign of localization was just one of the examples demonstrating the German managers’ lack of local knowledge. The case of Allianz-Dazhong illustrates how the incompatibility between the top managers’ cultural capital and the local cultural context could result in unproductive organizational strategies and ineffective localization. Because culture is not transportable from one institution to another (Swidler 2001), the German managers who came from an institutional setting very different from that in Shanghai found themselves most frustrated in implementing their ideal model, despite their experience in the life insurance industry. Yet, if the compatibility between the top managers’ cultural capital and the local institutional and cultural conditions was a pivotal factor, why didn’t Ping An’s agency management seem more effective than Pacific-Aetna’s? To address this question, I propose a rudimentary theoretical model, as illustrated in figure 3.1. This model explores where the top managers’ cultural capital comes from, apart from class background as hypothesized by Bourdieu (1984, 1986). The four insurance firms I studied all operated in the same location and hired from the same pool of local Chinese to staff its middle and lower levels of management. However, they differed in two crucial aspects. One is the backgrounds of their top executives; the other is the corporate characteristics of their parent firms. As I elaborated above, the institutional and cultural environments in which the top executives worked previously contribute significantly to constitute their cultural capital (figure 3.1, arrow A). The corporate characteristics of the parent firms also play a role in shaping the local management strategies. For example, given that AIG has a long history on Chinese soil and its subsidiary AIA has its headquarters in Hong Kong, it is likely to have a corporate culture and strategy different from that of Allianz AG, which originated in Berlin and had no experience in China. Their divergent corporate traditions are passed down not only through systems and structures but also through socialization of the firms’ leaders. Thus, part of the disparity among the top managers’ cultural capital comes from the parent firms’ corporate

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cultures and strategies (figure 3.1, arrow B). This cultural capital informs and organizes the top managers’ management strategies (figure 3.1, arrow C). Nonetheless, because a firm’s microlevel strategies are largely shaped by macrolevel institutional environments in different locations, the same insurer may develop different corporate cultures in different locations. For example, I observed that Aetna in Hong Kong shared more similarities with AIA in Hong Kong than with Aetna in Taiwan. The variation in Aetna’s branches in Hong Kong and Taiwan can be attributed to the top managers’ different styles, which in part are a function of these managers’ interactions with the immediate institutional and cultural environments. Therefore, managers’ cultural capital also interacts with the local practitioners and exercises its power under the local institutional and cultural conditions to produce variations in management strategies in a specific locale (figure 3.1, arrow D). Figure 3.1 is instrumental in elucidating why the cultural capital of Ping An’s managers could be less valuable than that of Pacific-Aetna’s managers. Although Ping An’s local managers came from the same institutional and cultural environment where the firm was building, so their cultural capital should have been most useful in the local context (i.e., thick arrow A), this newly emerged private insurer did not have a parent firm that could pass on effective corporate strategic skills to the top managers (i.e., thin arrow B). Instead, their local managers acquired part of their cultural capital from their former workplaces, mainly the SOEs. The local executives managed their sales agents in line with this past experience, where decision making was highly centralized and hierarchical. Note that the authoritative and paternalistic agency management model was not unique to Ping An. In my observations, the other large domestic insurer, China Life Insurance Company, Ltd., shared the same management style. Moreover, Hongmei Li (2006), in a study of foreign and domestic advertising firms in China, reports a parallel finding that the Chinese firms displayed a patriarchic management approach, in which the boss, who was regarded as a “father,” commanded absolute authority over his employees. With their past socialization, it is difficult to imagine that the middle-aged local Chinese executives could break their cognitive and habitual limits to descend in status to flatter or even to entertain the sales agents, as the Taiwanese managers did at Pacific-Aetna. Nonetheless, their authoritative and paternalistic approach worked only when the agents could make good money with their popular products. When their products were no longer competitive and the agents’ morale was going downhill, a paternalistic approach could hardly boost their spirit. Furthermore, another question is why Pacific-Aetna outperformed AIA in motivating the sales agents. Why did Hongkong managers display rather different cultural bearings from Taiwanese managers? I argue that the difference between the Hongkong and Taiwanese managers is rooted in the institutional

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institutional and cultural environments in managers’ home regions

A

interaction

top managers’ cultural capital C

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institutional and cultural environment in the locality

D

B parent firms’ corporate characteristics

management strategies in a locality

Extralocal context

Local context

Figure 3.1 Sources of Top Managers’ Cultural Capital and Its Impacts on Management Strategies

environments where they came from (arrow A). Although Hong Kong has been under China’s sovereignty since 1997, its institutional setting was largely under British influence, being highly governed by law and instrumental rationality. The Hongkongese’s rational, rule-abiding style had given them less flexibility and creativity in managing the sales agents in Shanghai. Furthermore, the British education in Hong Kong severely deprived the Hongkongese of Chinese cultural knowledge and skills. For example, many Hongkong Chinese could not speak Mandarin in the early 1990s. As shared language facilitates communications that foster shared mental models (Denzau and North 1994), the Hongkong managers’ lack of a common language with the local Chinese not only constrained their strategic choices but also prevented them from sharing the locals’ subjectivities. On the other hand, despite Taiwan’s struggling for political independence from China, its cultural and institutional arrangements shared more affinities with mainland China’s. Its economy closely resembled the pre-1949 Chinese economy that was dominated by small family firms (Biggart and Guillen 1999). Interpersonal relations and networks played a crucial role in such a small-firm economy (Hamilton 1996b, 1998). Although the institutional arrangements in post-1979 China were substantially distinct from the pre-1949, there was evidence of some resemblance (Hamilton 1996a). With the relative institutional proximity between mainland China and Taiwan, the Taiwanese managers were equipped with cultural capital more instrumental for dealing with mainland Chinese labor under local institutional constraints. In short, I argue that the composition of the top executive bodies and the cultural capital embodied by these executives are the critical factors that shape the strategic labor management of these firms. This study expands the application of the concept of cultural capital to a transnational context. I propose that the top

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executives’ cultural capital comes from two major sources: the institutional and cultural environments of these executives’ home regions and the corporate characteristics of their former workplaces. The managers who come from a more proximate institutional and cultural environment bear cultural capital more useful and relevant to the local context. Among the three extralocal contexts the top executives came from, Taiwan, Hong Kong, and Germany, Taiwan shares the most institutional and cultural specificities with China, and Germany the least. This explains why the Taiwanese-headed Pacific-Aetna outperformed the Hongkongcum-Taiwanese-headed AIA, which still outperformed the German-headed Allianz-Dazhong. At the same time, part of the managers’ cultural capital is passed down from their former workplaces, which are normally the insurers’ parent firms. This explains why the Taiwanese managers of Pacific-Aetna adopted a familial and emotional approach analogous to a direct selling organization model, whereas the local Chinese managers exercised a paternalistic approach analogous to an SOE model. Through the cultural capital of the “institutional entrepreneurs,” this chapter describes how local and extralocal sources of cultural and institutional properties interplay. It maps out a pattern of variations among individual insurance firms’ strategic management of their sales agents and differences in outcomes. Chapter 4 describes how the local sales agents selectively mobilized properties from the local cultural repertoire to “force” their products upon an unwilling clientele.

4

Making Transactions Selling Strategies and Sales Discourses In the case of life insurance the trick was to sell futures—pessimistic futures. — VIVIANA ZELIZER, Morals and Markets, 1979 Selling life insurance is all about being a likeable person. The trick is to sell yourself and to have the prospects like you as a person. — A senior life insurance sales agent and trainer in Shanghai, 2002

A P A R T F R O M R E C R U I T I N G and organizing a sales force, life insurers have two major institutional tasks when commercial life insurance is new to a population. First, they have to overcome the problem of trust; second, they have to create a sense of need for this new commodity. This chapter asks both how and why. How do insurance sales agents in Shanghai sell life insurance? Why do they sell the way they do? How do cultures of different forms, in relation to institutional arrangements, shape the way the agents sell their products? To address these questions, I focus on the microprocesses that make transactions possible, asking how life insurers, through their sales agents, deal with the issue of trust and create a sense of need for their products. I begin by detailing the two very different marketing models deployed by American International Assurance Company, Ltd. (AIA) and Ping An Insurance Company of China, Ltd. (Ping An) when they first arrived in Shanghai and explain why neither of these models was sustained for long. I explore why sales agents from all insurers subsequently shifted to marketing the “self ” to earn trust and compliance. I analyze how their strategic interactions with prospects capitalized on the local cultural repertoire, particularly the principle of reciprocity that lays the foundation of the Chinese guanxi. In doing so, I highlight the general pattern of, and variation among, individual sales agents in mobilizing cultural resources. Next, I describe how the agents from domestic and foreign insurers used subtly different sales discourses to create a sense of need for their products, and why the one used by domestic insurers was more effective.

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I examine how this effectiveness relies on the appropriate mobilization of local cultural symbols in relation to the cultural taboo on death and the prevailing institutional conditions.

How to Get Started? Viviana Zelizer (1979) describes that life insurance sales agents in the emerging stages of the American market presented themselves as priests and missionaries in order to earn trust and compliance. To convince the public of the necessity of life insurance, they used death as their “solicitor” to invoke a sense of fear and presented life insurance as a “protective shield” over the dying. The subject of “death” was not taboo but instead was stated explicitly in all insurers’ advertisements (see also Murphy 2010). In dealing with the cultural resistance to pricing human life, they imbued this new commodity with quasi-religious and philanthropic meanings, adopting a discourse of moral obligation to persuade prospects that they needed funeral or other protective types of life insurance. Likewise, Timothy Alborn (2009) documents that insurance sales agents in nineteenth-century Britain endeavored to sanctify life insurance by capitalizing on evangelical Christianity and the Victorian novel’s obsession with the concern about death in order to raise the unpleasant topic of premature death, to scare individuals with miserable stories of unanticipated death, and to shame uninsured men for failing to fulfill their inherent marital responsibility. Today, life insurance agents in Europe and America still face a population that is generally not interested in buying their products (Oakes 1990; O’Malley 2002). To deal with this lack of interest, sales agents present themselves as professionals and closely follow routinized scripts to induce desirable responses from prospects (Leidner 1993; Oakes 1990). When AIA arrived in Shanghai in 1992, it faced a population with no idea what life insurance was. How did they sell their products?

The AIA Model: Professionals and Standardized Scripts Previous chapters describe how AIA, upon its arrival in Shanghai, attempted to implement an American model by offering risk management products and creating a professional image for their sales agents. Likewise, its primary marketing strategy resembled in every respect the one in contemporary American society. AIA brought in a standardized sales process that included seven steps: recruiting and qualifying prospects, preparing for interviews, contacting prospects, interviewing prospects, dealing with rejections, closing sales, and servicing clients. This multiphased sales process was almost exactly the same as what Guy Oakes (1990) and Robin Leidner (1993) found in the sale of life insurance in the

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United States. AIA’s sales manuals contained detailed instructions teaching the agents what to do at each step, including how to dress, how to shake hands, how to hand over business cards, how to debate with prospects, what to say and what not to say, and how to catch prospects’ impulses to close a sale. These instructions provided scripts for each phase of a sale for different categories of prospects and for handling prospects’ different responses and rejections . The scripts about creating a sense of need for life insurance and handling rejections were comparable to those in the United States. They attempted to imbue the meanings of life insurance with moral obligations for the family, emphasizing “protection,” “love,” “respect,” “self-reliance,” “family responsibility,” and “human value.” While premature death is a taboo subject in China, the agents were taught to tell stories about misfortunes happening to others to make such misfortunes seem distant and yet real. They were taught to approach “strangers” to prospect for buyers, a method called mosheng baifang fa (“visiting strangers method,” similar to a cold-call method). The young and educated agents AIA recruited from 1992 through 1994 were receptive to their training and closely followed the sales scripts. They went door to door to tell “strangers” stories about misfortunes that happened to families without life insurance. Yin Wan, an agent who joined AIA in 1992, recounted how he sold life insurance at that time and the responses of the prospects: Well, it was very difficult! It was very difficult to convince them that accidents could happen to them. People saw accidents happen, but they insisted that that kind of misfortune would not happen to them. Our job as an agent was to teach them that accidents were neutral, that accidents could happen to everyone. We told them that buying life insurance was a way to show love and care for their family. You know, the Chinese do everything for the benefit of their family. . . . But it was difficult. They didn’t want to hear about misfortunes. . . . [T]hey didn’t want to think about that. They simply said they were not interested, or they didn’t need any.1 Obviously, AIA attempted to raise people’s sense of risk and to impose on them a new form of risk management. However, when the topic of “death” cannot be discussed and people share a disposition to avoid thinking about fatal misfortunes, it is especially difficult to make them feel that they need insurance. There were many examples showing that AIA’s scripts failed to create a sense of need for this new commodity because they were irrelevant to local situations. To quote an example from an AIA training kit: “When a family loses the father, the mother has to go out and work to raise the family. Therefore, the mother becomes ‘a part-time mother.’ This is a loss forever. If the family wants to maintain love and care forever, [the father] has to prepare in advance.”2 This script was

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irrelevant to the local situation, as married women often work in contemporary China, and being a working mother does not carry any disparaging associations. To facilitate the use of scripts, AIA’s training department brought in a number of colorful leaflets from Hong Kong as sales aids. However, the stories in those leaflets were likewise distant and irrelevant to the local people. For example, one leaflet lists “The Three Big Risks of Life” with three pictures intending to raise the audience’s sense of risk. One of them says “Death” with a Christian cross signifying a tomb, another says “Disability” with the back of a young man sitting on a wheelchair facing a wall, and the last one says “Aging” with an old gray-haired man (who looks like a Caucasian) picking garbage from a garbage bin. Another leaflet shows a shiny red sports car. It asks, “Would You Insure This Car?” The leaflet is intended to teach the prospects that their lives are more precious than the car and that if they as owners would be willing to insure the car, they should likewise insure their own lives. Commensurating the value of human lives into a monetary term is especially conspicuous in another leaflet that pictures a “money copying machine” printing out money to analogize the earning capacity of human lives. This leaflet is an attempt to alert the prospects that they will not be able to make money if they suffer an accident or illness. The agents reported that they initially brought these leaflets with them, but soon they found that they were “useless.” It is quite obvious why. Using the Christian cross and the luxurious sports car were all out of the cultural frame and the daily life of the Chinese in mainland China. Even sitting on a wheelchair was not a common practice among the majority of the disabled Chinese in the early 1990s. Furthermore, the sports car and the copying machine analogies portrayed human lives in too commodified a light. These leaflets simply reveal AIA’s lack of local cultural knowledge upon its entry. The sales agents of AIA soon gave up the “ideal” marketing model that their company coached, especially when they witnessed the much more efficacious strategy adopted by their key competitor in the field.

The Ping An Model: Guanxi and Renqing As opposed to AIA’s cold-call method, Ping An began with a yuangu fa (“preexisting relationship method”) to prospect for clients. Instead of approaching strangers, Ping An agents aggressively utilized their guanxi networks by approaching their close friends and relatives to sell them insurance.3 In doing so, they activated the cultural schemas of intimate relationships to overcome the problem of trust and mobilized the etiquette of renqing, or interpersonal obligation, to manage the lack of a sense of need for life insurance. Cultural schemas and etiquette are some of the ingredients of a cultural repertoire. Cultural schemas refer to the cognitive terrain in which categorization,

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attention, and perception are constituted (DiMaggio 1994; Cerulo 2002; Steensland 2006; Vaisey 2009). In Paul DiMaggio’s (1997) definition, schemas are both representations of knowledge and mechanisms for information processing. As representations, they entail images of objects and the relations among them. As mechanisms, they simplify cognition and promote efficiency at the expense of synoptic accuracy. The cultural schemas of preexisting close relationships invoke the images of the “ought-to-be” relations among “friends” and “relatives” and provide cognitive shortcuts to simplify the interpretations of their motives and behaviors.4 Therefore, cultural schemas as such entitled the agents to the benefit of the doubt from their friends and relatives, especially when the general public was unaware of what life insurance was and regulations were not yet formalized. When the general public had some idea about what life insurance was but did not feel a need for it, the etiquette of renqing, which is the essential element of the Chinese norm of reciprocity governing socially acceptable and appropriate behaviors for interpersonal relationships, became a more powerful resource for the agents to capitalize upon. Although the first product Ping An offered was also a personal accident insurance policy similar to AIA’s, this domestic insurer did not bother to spend much time educating the public about the risk management concept of life insurance. Instead of telling stories of misfortunes that happened to other families, Ping An’s sales agents simply told their friends and relatives that insurance was good and that they joined the insurance industry because it could benefit people. They did not lie to their friends and relatives, since they themselves did not really understand the logic of life insurance either. These friends and relatives, who had maintained trusting relationships with the agents and who were not aware of the commission-based income system, had no reason to doubt what the agents said. Cao Shenjie (~ 40 years of age) explained to me why she did not know what kind of insurance she bought in 1995. Oh, I had no idea at all what life insurance was when I bought this policy. The sales agent is one of my good friends. . . . One day she called me, saying that she wanted to come to visit me. Of course, I was happy to see her. She told me that she was now selling life insurance. I said, “ah, what is life insurance?” She said it was a protection. She didn’t say much. And I didn’t ask much. You know, she is my good friend, I trusted her that she would not sell something bad to me.5 The trust Cao had in the agent was based on a set of cultural schemas that define “a good friend.” Examples of these schemas include “a good friend will not cheat me,” “a good friend will not sell something bad to me,” and “a good

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friend cares about my interests.” Such framing allows friends or relatives to interpret each other’s motives in a positive light to generate “reflexive trust”—a sense of trust provoked by the cultural schemas of intimate relationships without forethought. The cultural schemas of intimate relationships most effectively induced life insurance transactions when the prospects did not know what life insurance was. Soon after the public learned that the money they paid for life insurance might not be returned if no misfortune happened to them, they were much less interested in this new commodity. Although Ping An responded to the resistance by redefining life insurance as money management and offering products that served primarily a savings function, the interest rates offered on these products were not competitive enough to appeal to the prospects. And yet, many continued to purchase life insurance. Why? Wu Jun (34 years of age), who bought a yanglao (retirement) policy from Ping An in 1995, told me about his reasons: “The agent is my friend. I didn’t want to disappoint him. He’s my friend. I should give him some face. I actually didn’t feel that I needed insurance. The interest rate at savings banks was higher at that time. . . . But that’s okay. He’s my friend. If I can help, I ought to help him.”6 This is what the Chinese call renqing baodan, a purchase driven by a prospect’s voluntary or involuntary rendering of interpersonal obligations for maintaining and reproducing her or his relationship with the agent. Because renqing can manifest in different forms, such as sympathies, affections, face, or favors (Y. Yan 1996, 2003; King 1994), a renqing baodan can be driven by expressing sympathetic or affective feelings for the agent, giving face to the agent, doing a favor for the agent, or repaying a favor to the agent (Chan 2009b). Wu Jun’s purchase was driven by a little bit of everything, including a sympathetic feeling of not wanting to disappoint his friend, a sense of obligation to give face to his friend, and a feeling of obligation to do a favor for his friend who needed help. Therefore, existing guanxi facilitates life insurance transactions not only through cultural schemas but also through the enforcing power of renqing. Among the different manifestations of renqing, the sales agents most often asked for face-giving from the prospects. Although the Chinese concept of “face” has multiple meanings in different contexts, Erving Goffman (1967:5– 12) has provided generalized definitions of “face” and “face-giving” that are derived from the Chinese usage. Accordingly, “face” can be defined as the socially approved and positively evaluated attributes a person claims for himself by the line others assume he has taken during a particular contact. “Face-giving” refers to arranging a better line for a person or a group of persons than the person or the group might otherwise have been able to take. If someone “loses face,” the person loses social standing in the opinion of known or knowable

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social circles (Hertz 2001). Giving face expresses the interpersonal obligation that defines the signification of a relationship and cements social relations. Thus, refusing to give face is akin to refusing to present gifts, which can be tantamount to declaring war and irrevocably harming the relationship (Mauss [1950] 1990; Komter 2007). When mobilizing the etiquette of face-giving tactfully and properly, the sales agents normally had no difficulty selling their products to friends or relatives. Although relying on guanxi and renqing to sell appeared to contradict the professional model of marketing that AIA endeavored to create, this foreign insurer, seeing Ping An seizing the market, had no option but to let their sales agents use Ping An’s approach. As a result, selling life insurance to friends and relatives without having them feeling a need for it became so common that people in Shanghai described this phenomenon as a “renqing baodan market.”

The Limits of Guanxi and the Decline of Renqing Baodan The prevalence of renqing baodan faded toward the end of 1990s. Given the high annual turnover rate of the sales agents, as noted in chapter 3, the decline of renqing baodan cannot be fully explained by the structural problem of exhausting existing intimate circles. Moreover, if the agents simply needed to expand their pool of prospects, they were free to do so in addition to selling to close intimates. During my research period, I observed that insurance agents felt quite ambivalent about approaching their existing close friends and relatives. Selling to those in intimate guanxi networks became undesirable and negatively labeled as “unprofessional.” What happened? I propose elsewhere that it was the disclosure of the commission-based sales system to the public that put a twist in network sales (Chan 2009b). Making a living based on commissions, a practice introduced by AIA, was new to the local population.7 Knowing that the local people might not accept the idea of people making a living on commissions and that a substantial proportion of their premium payments would go directly to the salespersons, insurers and their agents tried to conceal their payment system. However, under pressure to sell, some agents were too eager to offer discounts to their prospects and unintentionally leaked information about the commission system. Such information was then circulated by word of mouth. Toward the end of the 1990s, more life insurers joined the market and pushed the demand for sales agents. In order to recruit aggressive and ambitious agents, the new companies not only disclosed the commission system but also exaggerated the income of insurance agents in recruitment advertisements. Chang Pingkai, a young agent of China Life Insurance

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Company, Ltd. (China Life), described how his relatives responded after reading the advertisements: [The recruitment advertisements] posted that insurance agents could earn one million in five years. This is a lie. . . . But my clients called me after they saw the ads. They said I had made a fortune. . . . Some of them, mostly my relatives, asked if they could get some huikou (rebates). It was very embarrassing. Even if they didn’t ask me for that, they knew that I got 40 percent of the premiums they paid. This made me feel embarrassed and uncomfortable.8 The transparency of the operation of the commission income system, together with rumors that many insurance agents made a fortune, changed people’s perception of the motives of their close friends or relatives who sold them insurance. Prior to this time, the cultural schemas of intimate relationships framed the prospects’ interpretation of the agents’ motives in a positive light. When the commission sales system was made known, another line of cultural schemas that defined commercial oriented sales set in. These schemas, such as “commercial sales are profit oriented,” “commercial sales are designed to make money,” and “commercial sales exaggerate the value of a product,” are in conflict with the ethical-affective definition of intimate relationships. A person can be profit oriented, but he or she should not apply this orientation to good friends and relatives. Ma Xiaojun (mid-40s) bought two policies from her good friend a few years ago. Upon learning about the commission system, she felt that her friend had taken money out of her pocket: When I bought these policies, I didn’t know what they were. I trusted the agent. She’s one of my very good friends. I believed that she was selling those to me for my benefit. . . . I just bought what she recommended. . . . At that time, I didn’t know that she actually took 40 percent of the premiums I paid into her own pocket. . . . I was a bit shocked, honestly. How should I put this . . . it’s fine that she was selling insurance to make a living. But I don’t feel good when she’s making money off of me.9 When the commission income system was revealed, it was like an “inopportune intrusion” that exposed the backstage of the salespersons’ performance (Goffman 1959). This intrusion changed the perceived symbolic meanings of agents’ behaviors, which affected not only prospects’ perception of the agents’ motives but also the feelings and self-image of the agents themselves when they approached their friends and relatives. When it became publicly known that agents lived on commissions, the agents felt, in their words, that they were “begging for money”

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when selling insurance to their close friends and relatives. Dai Hong, one of the senior agents of Ping An, told her fellow agents that she had this worry when she was about to meet a wealthy prospect: “He has millions of dollars. We are pretty good friends, and so it’s especially difficult for me to talk about insurance to him. He might think that I want to make money off of him.”10 Because conducting business with existing friends is a way of drawing economic gains from the ethics of social relationships, the parties involved constantly have to negotiate and manage the movement between ethically binding sentiments and the economic calculation of gains. Thus, the relation between guanxi and economic transactions is much more complicated than the common notion that the former always facilitates the latter. Despite a noticeable social trend of using guanxi for self-interests in China in the last two decades (Gold 1985; Yang 1994), the boundary between personal and business relationships has never completely dissolved. While the role of guanxi in economic life in China is indisputably influential, its use is highly contextual. The extent to which business rationales and activities are morally legitimate to take place in a preexisting personal relationship is subject to the meanings and social rules attached to the category of the relationship (Zelizer 1996, 2005a ; Chan 2009b).

What Next? Selling the “Self” and Making Guanxi The undesirability of renqing baodan, however, does not mean that sales agents cease making use of guanxi and renqing in their marketing strategies. During my field research, the sales agents from all different insurers devoted most of their time and energies to establishing friendships with existing clients, acquaintances, and referred prospects. They were marketing the “self ” and making guanxi with these people, not only to gain trust and recognition but also to distinguish themselves from other competitors so as to win over the prospects. While making the “self ” likeable is also a common practice of the insurance agents in the United States (Leidner 1993; Oakes 1990), marketing the “self ” in an effective way is culturally specific. Leidner (1993) and Oakes (1990) observe that American insurance agents attempted to win over the prospects by creating a friendly atmosphere, telling jokes to make them laugh. The social convention of reciprocity, Leidner reports, is least employed by agents to induce conformity.11 The common way of marketing the “self ” in China, however, is rather different. The Chinese agents attested that the most effective way of being a likeable person was what they called “affective investment” (ganqing touzi). Affective investment, which cultivates relational bond and elicit indebted feelings and empathies, is a strategy anchored in both the principle of reciprocity that lays the foundation of

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the Chinese guanxi and the significance of kinship that structures Chinese guanxi networks. The cases I present in this chapter demonstrate that, when marketing the “self,” the variation among agents from different insurers was not as obvious as the variety of strategies deployed by individual agents. Most agents marketed themselves as helpful friends by actively rendering favors to the prospects to induce indebted feelings, some interacted with the prospects as if they were kin to bring out empathies and affections from the prospects, and some strove to present themselves as professionals. In what follows, I give examples of each.

A Helpful Friend Dai Hong, the Ping An agent who felt ambivalent about approaching her wealthy friend, wore a purple tweed suit and a pair of short black boots. Her short straight hair was moussed to make her look spruced up. And her platinum earrings made her look feminine. Dai and I arrived at Fujian Industrial Bank at 2:00 p.m. to meet with her prospect for the first time. The prospect, a 40-year-old divorced woman, was a branch manager of the bank. Dai was able to make an appointment with this manager because a number of her staff members were Dai’s clients and they strongly recommended her. Dai and I waited for 15 minutes before a staff member led us to the manager’s desk. The manager was busy handling some paper work but greeted us and apologized that she had her hands full at the moment. Dai apologized for disturbing her and asked her to take her time. We sat by the desk of this manager to let her finish her work. Twenty minutes later, she finally had a few minutes to talk to Dai. Before Dai mentioned anything about insurance, the manager said she already bought a policy from AIA a few years ago. But the agent from whom she bought the policy had left AIA. It was about time she had to pay the annual premium, but no one from AIA ever contacted her. Dai offered to handle the payment for her and help her to open an automatic payment account at AIA. The manager was thankful that Dai was willing to help even though the policy belonged to AIA. Knowing that the prospect was quite busy, Dai and I had not stayed long. Dai briefly mentioned to her that Ping An had a couple of very good yanglao policies. She left some product leaflets for this manager, who in turn gave her 1,564 yuan (~ US$189) for the payment to AIA.12 On our way back to the agency office, Dai was indeed very eager and anxious about how to get this prospect to buy some “big policies” from her. She told me that this manager must be making more than 150,000 yuan per year (~  US$18,123), so she could afford a total premium up to 30,000 yuan (~ US$3,625, which is 20 percent of her salary). However, she maintained an

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unhurried composure in front of the prospect, telling me that to deal with those with high purchasing power, she had to be patient and go one step at a time. Dai, about 40 years of age, was married and had a 13-year-old son in high school. She joined Ping An in 1998 and had been a high-performing sales agent. Her strategy of rendering favors to prospects and her dramaturgical performance in front of them had won applause. She was renowned for her not-too-eager manner, nonutilitarianistic attitude, and helpful behavior. She paid visits to her existing clients as often as she could and was always ready to explain to them the terms of their policies, including those that were purchased from someone else. Her helpful and nonpushy gestures earned not only her clients’ thankfulness but also indebtedness to her generosity. In return, they spoke highly of her and connected her with their friends. Being a helpful friend was the most conventional way of selling the “self.” The agents all emphasized that they had “to be friends to the prospects first before talking about insurance.” Some of the agents, nevertheless, went further than being helpful friends.

A Filial Daughter-in-Law Chang Qing, another agent of Ping An in her mid-20, sold her “self ” in a way very similar to Dai’s, but in certain situations she behaved as if she was fictive kin to her clients in order to elicit affections and deeper feelings of indebtedness. Occasionally, she took her 30-month-old son with her to be her sales aid. On the birthday of one of her clients, Chang took her son with her to visit the client. She taught her son a Chinese blessing, “Wishing you health and to live a hundred years,” to say to her client. She bought a scarf that cost 10 yuan (~  US$1.2) as a birthday gift and arrived at her client’s residence early in the morning. Her client, more than 50 years of age and suffering from a deformed leg, was very moved when she saw the agent and the little boy. The boy was barely able to say “wishing you health,” but this client was extremely delighted to see his attempt. She bent her waist to reach the face of the little boy to show affection. She kept asking Chang why she would have done such a nice thing to her. She was very touched by Chang’s gesture, as Chang had visited her just two weeks before on Women’s Day to give her a carnation. The client felt much indebted to her kindness. Not sure how to repay these favors, she went to her bedroom for a few minutes and came out with tears in her eyes. She walked over to the boy and put a note of 100 yuan (~ US$12) into his pocket. Chang courteously refused to take the money. During their chat, the client told Chang that the last wish in her life was finding a wife for her 28-year-old son. She said if she could have a daughterin-law like Chang, she could be at ease for the rest of her life.13

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Chang shared this story to her fellow agents in a morning assembly at her agency office the following day. She proudly told other agents how she successfully created a personal relationship with a client and how her efforts paid off. “When we want to build a relationship with our clients, we should not be stingy about giving. You see? I bought a scarf that cost only 10 yuan. But what did my client do? She gave me 100 yuan! You see the payoff ? It’s ten times of what I paid! Whenever we help our clients, they are going to help us even more. You know, we Chinese care about renqing.”14 Chang then asked her fellow agents to help her to find a potential girlfriend for her client’s son. She said if she could find a good wife for her son, the client’s whole extended family, relatives, and even her expected grandchildren in the future would all be her clients. Indeed, this client had been very helpful to the agent. Besides referring her relatives to Chang, she even went further to help to convince them of the importance of buying life insurance. Interacting with clients as fictive kin in order to cultivate empathies and motivate them to help in the selling process is found not just among the agents from the domestic firms but even among agents from the seemingly least localized joint venture.

A Naive Little Sister Wearing a similar hairstyle as Dai Hong, Zhang Ying, age 24, was making a promising income as an agent of Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong). She joined the insurance industry right after her graduation from Fudan University, one of the top universities in China. This young agent always wore a dark pantsuit, which made her look career oriented. Nonetheless, at times she presented herself as a naive little sister to please and to earn sympathies from her clients and prospects. For more than a year Zhang had tried to sell a “big policy” to one of her clients, Hang Ganzhi, who was making a good income. However, she was not able to close the sale because Hang’s wife, Li Yun, was reluctant to buy from her. Knowing that her client would need to get the approval from his wife if he wanted to purchase a “big policy,” Zhang made many efforts to please his wife. She called his wife upon learning that she was pregnant, addressing her as “Sister Li Yun.” But Li remained unenthusiastic. Zhang then bought a book called “How to Raise Your Lovely Baby” and sent it to her along with a greeting card. Li did not reply. After the baby was born, Zhang visited the couple. She brought a “big policy” proposal with her. On her way, she bought a bunch of lilies and a can of formula that altogether cost 230 yuan (~ US$28) as gifts. When Zhang presented the proposal to the couple, the wife remained silent. Her client, who used to be very friendly to her and treated her like his little sister, was critical and asked her a lot

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of questions concerning the policy. Zhang realized that Hang was actually pretending to be critical and asked all those questions for his wife’s benefit. Sometimes Zhang simply put on a pitiful face when he was too critical. The client and the agent were thus actively engaging in dramaturgical interaction with each other in front of the wife. After Zhang’s presentation, the couple said they needed a few days to think over the proposal. Before she left, Zhang deliberately walked over to the couple’s wedding picture. She exclaimed in a naive tone, “Sister Li Yun, you are so beautiful! You two are such a perfect match! I can’t imagine ever having a picture like this.” Two days later, Zhang received a call from headquarters, saying that Li Yun wanted to terminate her husband’s existing policy in Allianz-Dazhong. Anxious and worried, Zhang called Hang and made an appointment to see him. She had prepared a specific script based on the couple’s situation that was intended to convince them of the importance of retaining the policy. However, right before she arrived at Hang’s office, she decided that the script might be too banal. So she changed her strategy. Instead of talking about insurance, she talked about her feelings. Looking upset, she said: “Brother Ganzhi, is it true that Sister Li Yun doesn’t like me? Tell me the truth, please.” Hang said it was not true and asked her what happened. Zhang said: “Sister Li Yun called our headquarters the other day. . . . If she liked me, she would have called me instead. Sister Li Yun does not seem like me. Did I do something wrong? I felt hurt when I got the phone call from the headquarters that sister Li Yun wanted to terminate the policy.” Hang comforted her, saying that it was only because his wife’s brother was an insurance agent that they once had difficulty choosing. He said he was very pleased with the proposal she presented and had successfully convinced his wife to agree on a new purchase from her. The annual premium was more than 30,000 yuan (~ US$3,625).15

A Knowledgeable Salesman Shao Xinluo, a 28-year-old agent of Ping An, was ambitious about establishing his career and proving his ability. He sold industrial machines before becoming an insurance agent at Ping An in 1996. By 2002, he was head of a sales group of 30 agents. Wearing a dark gray suit and a dark blue tie with the Ping An logo, Shao was counseling his downline agents and teaching them how to deal with “big shots” during my first visit to his office. He proudly told me that he only sold “big policies.” The biggest policy he sold cost 300,000 yuan (~ US$36,245) per year. He described to me how he did it: The key is to get the prospect’s recognition. . . . The client with this big policy is an owner of an electronic manufacturing enterprise. He is making

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millions. In order to earn his trust and recognition, I spent a lot of time reading magazines and books to learn more about this manufacturing industry. I equipped myself with adequate knowledge so that I was able to communicate with him. When I read some magazines that seemed very interesting and useful, I sent them to him. He might have already had those magazines, but what I did was to show him that I had similar interests as his, and that I cared about him. When he found that I could have a dialogue with him about electronic manufacturing industry, he began to accept me.16 Shao said he studied music, information technology, and automobiles in order to impress his prospects in those professions. In other words, he made an effort to expand his cultural capital to make connection with the “big shots.” Another agent of Ping An, Cao Jin, has been using the same strategy as Shao. Cao told his downline agents that the biggest taboo in selling life insurance was talking about insurance when they first met with the prospects. Having a common interest in a conversation with the prospects is more important than trying to change their concepts or saying how good your products are. Facing different prospects, you have to use different methods. BUT NEVER TALK ABOUT INSURANCE AT FIRST! I have been reading a lot of this and that to equip myself with very broad knowledge. . . . I am able to communicate with prospects from different backgrounds. When the prospects feel that you have good knowledge about the issues that are of concern to them, they will recognize you and trust you. Once they trust you, they will listen to you and buy whatever you recommend.17 Being knowledgeable seems to be more important for male agents than their female counterparts to gain the prospects’ recognition. The last case I describe below illustrates that a woman can be seen as a presentable professional without the need for broad knowledge. Nonetheless, she needs something else.

A Professional Saleswoman “Have you ever tried to carry Chu Siujuan’s briefcase? Do you know how heavy it is?” a male agent of AIA asked me. Chu Siujuan, an agent of AIA in her early 30s, was admired by her clients as “very professional.” She wore make-up, had her long straight hair hanging down all the time, and very often wore a bright blue, red, or black suit. Chu’s briefcase was a black rectangular leather box measuring about 6" × 12" × 18". It was heavy because it contained not only a number of product

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leaflets, policy application forms, policy contracts, a premium calculation handbook, a stack of blank paper, a calculator, and some other stationery but also a photo album and a number of award certificates. Chu carried all of this with her every day. On a Saturday afternoon, Chu and I went to a residential estate in the suburbs of Shanghai. While we were riding on the bus, Chu was reviewing the details of the policy she was about to sell. She was pondering what kinds of questions the prospects might ask and how she should respond. The prospects included a young couple and a middle-age man, who might be their relative. They were referred to Chu by one of her clients. The couple met with an agent from Ping An the week before but asked Chu to prepare a proposal for them so that they could make a comparison. They were waiting for us at the shop owned by the middle-age man. Before we went in, Chu walked over to a corner on the street, pulled out a small mirror, and checked her make-up. With a confident smiling face, Chu (and I) walked into the shop. Chu greeted them and opened her briefcase right after we sat down. She presented a business card to the couple and another to the man. Without a serious look at the business cards, the prospects put them down on the table. The woman said they wanted to buy a savings policy with a dividend component. After Chu had presented the details of the policy proposal she had prepared for them, the prospects pondered for a while. Suddenly, Chu’s folded business card accidentally caught their eye. On the inside of the card, it listed all the major awards Chu had received since 1995. Chu told them how AIA maintained a high quality control of their agents (implying that the agents from Ping An might not be as good). She explained to them how she had won those awards, recognitions, and titles, saying that it was because she had achieved high sales volumes. Then, she showed them a number of her award certificates and the photos taken of her receiving awards and with the general manager of AIA. She did so to assure the prospects that she was an excellent agent, to show off her achievements to earn trust from the prospects whom she had just met for the first time.18 Chu’s style of marketing herself was closest to the ideal type of “professional” defined by AIA and Allianz-Dazhong. Chu never bought any gifts to her prospects and clients. She usually began her sales talk with the risk management function of insurance. What made her well received by prospects was her commitment to the job and her good command of the details of the insurance products. She worked 12–14 hours a day, seven days a week. She was single and never had time to date. She was known by the clients as a responsible agent. When she received phone calls from clients whose agents had left the company, Chu provided the same kind of services for them as for her own clients. Her clients usually repaid her by connecting her to their friends. Unlike Shao and Cao, Chu did not attempt to impress the prospects by broadening her knowledge. Instead, she worked

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around the clock and used the awards conferred by her company as the means of demonstrating her ability.

Reciprocity, Fictive Kin, and Gender Roles in Making Guanxi Although the above examples do not cover the full variety of agents’ strategic interactions with prospects, they represent the most common ones. Most of the dramaturgical strategies that sales agents deployed to interact with prospects, I suggest, are organized primarily by the norm of reciprocity, specifically the principle of symmetric obligations that governs “not-too-close” relationships. Mobilizing one’s social networks and capitalizing on the norm of reciprocity to facilitate economic transactions is, of course, not confined to China (Granovetter 1985; Biggart 1989; Dore 1983; Sako 1992; Uzzi and Lancaster 2003; Guseva 2008; Bandelj 2008). The Chinese sales agents, however, intersected the use of the norm of reciprocity with fabricated kinship sentiments and gender role stereotypes. I argue elsewhere that close relationships, defined by an ethical-affective principle, are generally not the optimal type of social tie for negotiated economic exchanges (Chan 2009b). While the presence of a strong sense of trust can certainly reduce transaction costs, the elements of affection and asymmetric obligation are unfavorable to instrumental, self-interest–oriented economic transactions. Instead, the “not-too-close” relationships, including former schoolmates, former colleagues, former neighbors, ordinary and distant friends, distant relatives, business clients, and referred prospects, are the best type of relations for economic exchanges. These relatively loose relations allow calculative and economically driven exchanges and yet still possess a certain degree of trust, affection, and obligation. Favors in these relationships are expected to be more in balance. The socially acceptable time lag that allows one party to owe the other party a favor is normally shorter in loose relationships than in close relationships. The Chinese sales agents tactfully capitalize on this principle by actively presenting gifts and rendering favors to prospects or clients in order to make them feel indebted and obligated to repay their favors. “The Chinese are afraid of being cared for. When someone cares for them persistently, they feel indebted to that person,” a Ping An agent said. The importance of repaying a favor, which is rooted in the Confucian teachings of how to maintain social order, is stipulated in the common aphorism lishang wanglai (gifts coming and returning). Furthermore, the Chinese norm of renqing encourages returning more than what you have received. It is expressed unmistakably in the Chinese aphorism nijingwoyichi, wojingniyizhang (you respect me for a foot, I respect you for 10 feet).19 Chang’s client offered 100 yuan to the little boy when Chang’s gifts cost much less is just

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one of the examples enacting the principle of repaying more than the amount received. When this principle is applied to sales agents and prospects or clients, the repayment of favors from prospects or clients, more often than not, involves buying a policy or referring someone to the agents. In fact, sales agents rely considerably on referrals when prospecting new clients. Referrals help to screen out uninterested prospects, and the problem of trust is less of an issue with the presence of intermediaries. Nicole Biggart and Richard Castanias (2001) maintain that collateralized social relations serve as a presumptive guarantee for managing risky transactions. This is especially the case in Chinese contexts where trust is vested in interpersonal networks and institutional trust is embedded in personal trust ( Tang 2005; Wong 1996). Furthermore, referrals are often the only way through which the agents can reach those in higher social and economic levels (Bian 1997). This explains why agents spend a lot of time rendering favors to their existing clients, making the clients feel obligated to refer their friends and relatives to the agents. An even more powerful way of creating lasting guanxi with clients or prospects, as Chang demonstrates, is to mobilize the norm of reciprocity together with the bonds of kinship. Despite the argument that postreform China has been shifting from a group-based to a network-based society (Gold 1989; Lin 2001), kinship continues to be of paramount importance to Chinese business practices (Peng 2004; Bian 1997; Lui 1998). Blood ties in the Chinese guanxi hierarchy often belong to the strongest tie category, even though contacts between members may be infrequent. Therefore, if sales agents are able to establish fictive kin relationships or sentiments with their clients or prospects, these relationships and sentiments will significantly facilitate the agents’ selling, either by helping the agents to prospect potential buyers or by purchasing policies from the agents as renqing baodan. Both Chang of Ping An and Zhang of Allianz-Dazhong actively offered asymmetric favors to their clients and tactfully interact with them as if they were fictive kin. But they did it differently. Chang mobilized her son to participate in the dramaturgical stage to solicit not only indebted feelings but also a familial sentiment from her client. This is a very powerful tool. She moved the client to tears, which called out her client’s affective feelings for her and her little boy. On the other hand, Zhang presented herself as a younger sister to her client. When confronted with difficulty with the client’s wife, she acted naive and a little silly to draw the client’s sympathies and to minimize the wife’s apprehension. The different strategies that Chang and Zhang used to establish fictive kin relationships with their respective clients, I suggest, are tied to a simultaneous process of invoking gender stereotypes (Lan 2006). Zhang’s portraying herself as a naive little sister worked well only because she was single and her client was a man who was older than she was. On the other hand, although Chang was also a

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young woman, her married status required her to behave more maturely. More important, when her target was a lady in her 50s, it would be expected that Chang, as a younger person, would offer favors and care for the elder. Playing the role of a daughter-in-law resonated well with Chang’s gender role in relation to her client. Although variations exist, a general pattern of interactions as organized by gender roles and age can be discerned. Middle-age female agents tend to act like mothers to the young prospects and clients. Middle-age male agents act like elder brothers to the young targets, especially to the females. Young female agents present themselves as daughters or little sisters most effectively to mature men and as daughters-in-law to middle-age women. Young male agents act like sons to middle-age women and as younger brothers to middle-age men. Furthermore, the pattern of gifts giving and the creation of a professional image are also influenced by gender. Note that Zhang delivered gifts to her client’s wife in an attempt to please her, but she did not offer any gifts or favors to her client when orchestrating a sibling-like relationship with him. As gift giving to the opposite sex may carry meanings that involve romance, the sales agents are mindful of the consequences of sending gifts to prospects of opposite sex. Thus, female agents buy gifts and render favors more often to their female clients and prospects than to the males. To please men, female agents either act naive or professional. They act naive to fulfill the general gender stereotype that paints women as subordinates so as to draw sympathies. On the other hand, some female agents, like Chu of AIA, act professionally to gain respect from male prospects. However, due to the gender stereotype that the personal attributes of females do not match well with a professional image, female agents seem to rely more on external proofs to build their professional image. For instance, Chu relied on institutional awards and certificates to prove her ability, while both Shao and Cao of Ping An built knowledge to serve the same purpose. The cases above illustrate that while marketing the “self ” and making guanxi are a must, there is no single formula for doing so. Despite the popularity of capitalizing on the norm of reciprocity and the kinship culture, and despite the general pattern of embedding the marketing of the “self ” in gender roles, each move and its effectiveness are often subject to the agent’s creativity in mobilizing the appropriate cultural elements in specific structural and situational conditions.

Discourses on the Need for Life Insurance Unlike the renqing baodan that occurred in the agents’ close social circles, transactions in fabricated guanxi usually require the prospects to have a certain sense of need for life insurance. How agents talk to the prospects to move them to sign and pay is critical. Although the Chinese agents found the mechanical scripts

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printed in their training materials to be rather ineffective in arousing the prospects’ interests, they often discussed among themselves which sales talks worked and which did not. AIA and Ping An started off with two very different models of discursive practice in selling their products, one as risk management and the other as money management. When agents from AIA talked about “risk,” “protection,” “love,” “human value,” and “responsibility,” agents from Ping An talked about “saving,” “return,” “retirement,” “dividend,” “profit,” and “good deal.” Their sales discourses were as contested as their products until the end of 2001, when Ping An and other domestic insurers began to place risk management products at the center of their marketing efforts. Then agents from all insurers had to sell something not well received by the local public. However, a general pattern of differences between the foreign and domestic insurers in their sales discourses still existed. Agents from domestic insurers mentioned “protection,” but the central focus of their sales talks was money management. They concentrated their efforts on selling products regardless of the conceptual understanding of their prospects. On the other hand, agents from foreign insurers usually began with a risk management discourse. At times they still attempted to influence the prospects’ concept of insurance. Only when they found that it did not work did they switch to money management. Their variations, I suggest, lay in the subtle differences between their products and the agents’ training. The products from foreign insurers were usually more expensive because the savings components were typically offered at lower interest rates. If these products were presented primarily as money management, they were at a disadvantage compared to those from domestic insurers. Therefore, their agents had to highlight the protective function of their products, making them sound different to prevent the prospects from comparing the details of their products to those of domestic insurers. In the following paragraphs, I present several different styles of sales talks commonly used by the sales agents and describe the responses of the prospects.

Sales Talks That Do Not Work Zhong Xinru, a new agent for AIA, and I visited her prospect’s residence to present an insurance policy that combined life, accident, hospital care, critical disease, and endowment components. The endowment component is a participating type that carries a dividend. Zhong explained to her prospect, a woman in her early 30s, why she needed this policy: This policy has everything. It gives you both protection and savings. It gives the client a large sum of money if she suffers from any of the listed

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critical diseases here, or if she has any accidents. This money can be used for her medical treatment and living expenses, or it will go to her family [if she dies]. For a family of three with a little child like yours, it is necessary for you and your husband to each get a policy like this. Although Zhong used a third person “she” rather than “you” when talking about misfortunes, the prospect did not let her finish, saying that the chance of contracting any critical diseases or having an accident was very low. She added that she did not want the chance to get money from the insurance company either. Zhong pointed out that the prospect could get the money back if she lived to age 88. If not, the money would go to her beneficiary. Then, she began to tell stories that came from the training materials of AIA: I had a prospect, an outstanding young lawyer in his early 30s who earned up to 150,000 yuan (~ US$18,123) per year. . . . He had a pleasant character and a happy family. . . . Two months ago when I visited his office, I was terribly shocked. His colleagues said he was bedridden due to a blood cancer. I visited him in the hospital. His wife was there, desperate and mournful. You know how expensive the medical fees are nowadays, right? He regretted so much not having bought the critical disease insurance from me. They had spent all their savings. . . . But still, they couldn’t pay their bills. His wife borrowed money from relatives and friends. They spent almost 400,000 yuan (~ US$48,327) in total. But he passed away. Now his wife . . . is badly in debt. The prospect remained silent the whole time while Zhong was narrating the story. After finishing, Zhong told another story about another prospect who died in a traffic accident on his way to work one morning. She went on to describe how this prospect’s family suffered afterward and what it meant to have an insurance policy. The prospect, who did not seem to be listening to Zhong, was flipping through a magazine on the table. Zhong asked her, “Do you love your family?” She said, “Of course, everyone loves her family. Who doesn’t?” Zhong elicited this answer for a script about love and responsibility: Buying insurance is an act of love and responsibility for your family. Why do we work so hard everyday? We all work for the well-being of our family, especially our children. . . . But what happens if something makes us not capable of raising our family anymore? Insurance can give our beloved a family protection. It lets us and our loved ones live with dignity and respect.

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The prospect seemed a bit impatient. She said it was about time to prepare dinner and implied that Zhong should leave.20 Zelizer (1979) found that imbuing life insurance with benevolent meanings, and human life with economic values, was an effective discursive practice in making life insurance popular during its formation phase in the United States. Nevertheless, this discursive practice did not work in China. People simply did not believe that they would be the victims of premature death. The following episode demonstrates this point with a debate between Chu, the professional saleswoman of AIA, and her prospects, three men in their mid-40s. Chu was introducing a critical disease policy to Yang. She explained to him that if he bought an insured amount of 300,000 yuan (~ US$36,245), he would pay 2,200 yuan (~ US$266) a year. He would pay until age 59 and get whole life protection. If he passed away before reaching 88, the insured amount would be paid to his beneficiary. If he became totally handicapped or survived until the age 88, then he would receive the payment. Furthermore, if he suffered from any of the listed critical diseases, he could get half of the insured amount for medical treatment and the other half for rehabilitation. While Yang was punching the calculator to see how much he would have to pay as compared to how much he would receive, his friend sitting next to him said: “You don’t have to punch the calculator. You are giving them money for their profit. You will lose. I tell you. You will lose if you don’t die early.” Slightly smiled, Yang asked Chu if she had a different product. Chu said: “Your concept of insurance is not right! Insurance is for protection. How can you tell that nothing will happen?” Again, Yang’s friend challenged Chu. Yang sided up with his friend and said: “If I didn’t have any of these serious illnesses, then I’ll have paid a whole lot for nothing. It doesn’t sound right!” Chu responded: “If there is nothing happens until you reach 88, then congratulations!” She then took some newsletters out of her briefcase, with the intention of showing some statistics to tell these prospects how risky the world was and how vulnerable human lives were. However, Yang and his friends were talking to each other and they simply ignored the newsletters. Yang’s another friend said: “If I knew I would suffer from any of these critical diseases tomorrow, I would immediately buy a policy with an insured amount of a million yuan from you.” Chu said: “How do you know that it won’t happen tomorrow? How do you know?” Yang’s friend replied: “If I knew, I would have bought it!” Chu took pains to convince these men that insurance was not about “returns,” but it was for “in case.” However, because the term “in case” in Chinese is wanyi (wan means ten thousand, and yi

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means one), Yang’s friend responded: “Yes, it is buying a wanyi, a chance of wan-fen-zhi-yi (one in ten thousand).” Yang finally turned down the critical disease policy.21 As discussed in chapter 5, Chinese clients and prospects refuse to buy those policies that do not give them the insured amount when they are alive and healthy, but not because they are selfish or unwilling to leave money for their families. Instead, the cultural taboo has pushed thoughts about premature death out of their cultural schematic frame, so those products are deemed unnecessary and useless.

Sales Talks That Work Lai Jiemin, a senior agent of Ping An, was selling a combined policy similar to the one Zhong from AIA had introduced to her prospect. Lai’s prospect had a similar socioeconomic profile as Zhong’s prospect. However, Lai used a completely different sales talk to convince her prospect that she needed the policy: “This is the newest fenhong (dividend) product of our company. . . . The dividend is given to your policy account annually. Twenty years later, you can take the accumulated dividend out, or you can leave it in our company to let it accumulate.” When the prospect heard the word fenhong, she seemed curious. She asked if the dividend could be taken out annually. The answer should have been “no,” but Lai skillfully activated the usual concern about yanglao to get around the question: “You don’t want to take the dividend out every year. You want to leave it in our company to let it accumulate. . . . Now you don’t need this money since you are young and healthy. You want to leave it in our company to generate a profit. You can then use the profit as part of your yanglao jin (retirement fund).” The prospect seemed convinced. But she was concerned about whether the dividend rate was fixed. She wanted to have a fixed rate. Lai replied: “The dividend rate depends on the annual investment returns of our company. . . . An insurance company is a financial company. . . . The head of our actuarial department, Stephen Meldrum, was recruited from the United States. He is serving on the investment management committee of our company. Our investment returns must be good.” This time Lai drew on the notion that “American things must be good” to handle her prospect’s query. (As far as I have learned, Stephen Meldrum was recruited from Britain, but for some reason, many sales agents mistook him as coming from the United States.) Her prospect seemed persuaded. She asked how much she would receive in total by the time she retired. Lai then went through the benefits for the prospect and the total amount of the premium. The prospect was not interested in the accident component because it had no cash value. She saw this part as a “waste” if no accident ever occurred to her. Lai suggested that instead of taking it out, she cut down

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the insured amount of the accident insurance to 50,000 yuan (~ US$6,041) and pay only 75 yuan (~ US$9) per year. The prospect finally agreed to buy this policy and pay an annual premium of 7,214 yuan (~ US$872) for a total insured amount of about 150,000 yuan (~ US$18,123).22 Throughout the hour-long meeting with the prospect, Lai did not invoke death or other misfortunes, even though the policy served various risk management functions covering sudden death, accident, hospital care, and critical diseases. Arousing the prospect’s interest and curiosity in the first few minutes is crucial. The terms like yanglao (life after retirement), yanglao jin (retirement fund), fenhong or hongli (dividend), touzi (investment), huibao (return), and hesuan (good deal) more often than not elicited interest and curiosity from the prospects. However, emphasizing a return of money to the policyholders meant the insurance products had to compete with other money management tools such as savings, government bonds, and stocks. What makes insurance distinct from other money management tools is its risk management function. Nevertheless, this function is at best presented as secondary, like a bonus attached to a savings plan. For example, agents might say, “This policy can also give you some protection” and be vague about what “protection” means so as to let the prospects interpret it in a way they feel comfortable with. In some cases, the agents even attempt to conceal the fact that the policies carry a rider that serves a risk management function. An agent from China Life told me about his trick: If we sell a pure savings policy to our prospects, the premium is high and the insured amount is very low. We usually add a term life component into the policy to make the insured amount higher. We do see that many prospects need this component for a protective function. However, the majority of our prospects think that this component is a waste of money. When they learn that a small portion of the premium they’d pay is nonreturnable when they are alive, they don’t want it. They think that their money was lost to the insurance company. We normally don’t tell our prospects that we’ve added a term life component. . . . The premium for term life is very, very low. But still, it’s better not to tell them. . . . If you explain to them why they need it, they don’t listen to you.23 Term life is purely a risk management product with an insured amount payable only upon the death of the insured within a stated period. It may seem ridiculous that a sales agent would conceal the fact that the insurance policy carries a rider that serves this risk management function. This finding, nonetheless, indicates just how strong the repulsion is toward buying insurance products for death and misfortune.

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Dealing with the denial of the possibilities of early death was usually more difficult than dealing with the denial of critical illnesses. For the latter, an effective sales strategy that some agents used during my field research was to activate a familial sentiment. An agent from Ping An described how she used this strategy to convince some of her prospects that they need insurance: When my prospects said they would just let it be rather than spend hundreds of thousands for medical treatment if they were so unlucky to have contracted a critical disease, I asked, “Would your wife let you?” “Would you son let you?” When I asked these questions, they usually would think. Then I said their family members would do whatever necessary to get money for their medical treatment. I asked them, “Do you want to let your family worry and bear heavy debts?” I just kept asking questions. Some prospects came to agree that it was not a bad idea to buy some insurance.24 Quite a number of agents from different insurers reported using a similar script to draw out the prospects’ fear of leaving a financial burden on their families due to illnesses. The effectiveness of this script is strengthened by the institutional changes in medical care and other welfare discussed in chapter 1.

Switching Sales Talk from Not Working to Working Because of the features of their products, sales agents from foreign insurers normally started with a risk management sales talk but then switched to whatever might work to move the prospects. This “whatever,” nonetheless, is not random. Let me quote at length one of the cases showing how an agent switched the discourse in her sales talks. This example demonstrates how insurance agents attempted to teach the public about the foreign concept of insurance, on the one hand, and endeavored to arouse concerns and interests by using local cultural symbols on the other. Jin Lang, an agent of Pacific-Aetna in her early 30s, and I went to a computer shopping mall to look for potential clients. Jin approached a young man in his mid-20s who was working in one of the shops. After introducing herself and me to the young man, the agent began with a question: Agent: “You know that now we are having economic reforms and a lot of changes are taking place. Do you think that the employee benefits provided by your employer are adequate to cover your needs in the future?” Prospect (smiles, lowers his head, and speaks in a very low voice): “I haven’t thought of it.”

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Agent: “You haven’t thought of that? (smiles) Although we are now young and don’t have any serious health problems, but life is full of risks. Look at the September 11 incident in the U.S. (the agent looked at me, someone from the U.S.). Who knew that that would have ever happened?” (Prospect’s head is lowered. He plays with the agent’s and my business cards while the agent talks to him. He remains silent and never makes eye contact with the agent.) Agent: “May I ask if you feel that the medical fee you can get from your company is adequate?” Prospect: “I’ve never thought of it.” Agent: “You’ve never thought of it. In fact, there are many risks in our life. Now you are young and you don’t feel the need for medical insurance. But when we grow older, we will have a strong need for medical care. We have to think about our future. You know, our parents worked very hard to raise us. We Chinese said “yang er fang lao” [raising sons for securing the aged life]. If we encounter any accidents, at least we can leave some money for our parents. It is a kind of fidelity. We ought to have a plan.” Prospect (nods his head): “Ng” [meaning yes]. Agent: “I understand that you just started working and might not have too much extra money now. But let me ask you, can you pay yiyuan [a dollar in Chinese currency, about US$0.12] a day?” Prospect: “Yiyuan a day? Yes.” Agent: “If yes, then you may consider getting an accident insurance. Indeed, accidents happen all the time. . . . Don’t think that that’s trivial. The medical fee for a bruised injury is 200 to 300 yuan. Now you said you can pay yiyuan a day. Just yiyuan per day, you can transfer your medical fees to the insurance company.” (Prospect does not say yes or no but still maintains a shy smile.) Agent: “You think there is no problem paying yiyuan a day, right?” Prospect: “No.” Agent: “Then, let me draft an accident insurance plan for you. The plan will include both life and medical components.” Prospect: “Life?” (He seems to not understand what a “life” component means.) Agent: “This product also includes a life component, which means if an accident causes you to lose your life, the insurance company will pay double of the insured amount. Now, you said you can pay yiyuan a day, right?” Prospect: “Yes, I can.” Agent: “Okay, then I will design an insurance plan for you according to your current situation.”25

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When the prospect remained silent or said, “I haven’t thought of it,” which might be true, he was in fact saying “I’m not interested in hearing more about.” However, when the agent used the moral duty of being filial to one’s parents to appeal to the prospect, she broke the ice by getting the prospect to agree with her for the first time in the conversation. Immediately, she asked a simple, practical, and yet symbolic question of whether the prospect could pay yiyuan a day. An answer to this question indicates the minimum economic ability of the prospect. Furthermore, when the question is asked right after the prospect’s agreement on the moral duty of being a son, a negative answer implies that he is not willing to pay yiyuan a day to fulfill that duty. When the prospect did not know what the “life” component of the policy meant, the agent straightforwardly explained that it referred to “losing your life.” However, she did not elaborate further on this topic but immediately switched back to his ability to pay for yiyuan a day. The turning point in this sale thus had nothing to do with a sudden awakening of one’s risks or a feeling of a need for insurance.

Cultures, Institutions, and Sales Discourses The above sales discourses illustrate that the cultural taboo on premature death was less about a deliberate avoidance of saying the word “die” than a subjective, psychological avoidance of thinking about the possibilities of an early death. This avoidance, which filters their selective attention to different kinds of risks, is observed not only among prospects and clients but also among the sales agents themselves. For instance, I observed that Chu, the professional saleswoman of AIA, who was already more keen than most agents on educating her clients and prospects about the risk management concept of life insurance, unintentionally slipped into her clients’ definition of risks when interacting with them: Chu met with Zhang (mid-40s) to sell him a new whole life policy that would benefit mainly the beneficiary. . . . She focused on the benefits that the policy could bring for Zhang’s 16-year-old son.  .  . . When Zhang refused, saying that he wanted his son to be financially independent. . . . Chu got stuck and didn’t know what else to say. She had managed only to leave him the product leaflet. . . .26 On our way back to Chu’s office, I asked her if Zhang would consider putting his wife as the beneficiary if he preferred his son to be financially on his own. Chu responded, “It doesn’t make sense to put his wife as the beneficiary because they are about the same age.” What Chu implied was that Zhang and his wife would pass away at about the same time and so his wife would not benefit from it.

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During an interview prior to this visit, Chu, like many other agents of foreign insurers, emphasized that the main function of life insurance was for managing unpredictable risks and misfortunes such as accidents and critical illness. However, when she was conversing with her client, the idea that Zhang might die long before his wife did not come to mind. Her instinctive alignment with the client was rooted in the deeply ingrained taboo on thinking about premature death and the subjective immunity that they share. This inconsistency between what Chu said in the interview and what she did when interacting with her client reflects the conflicting logics between what she has learned from her company and what she has in her cultural schemas. Using terminology from social psychology, what she learned from the company belongs to “deliberative cognition” that rarely, and only with conscious effort, can override what cultural schemas, or “automatic cognition,” offer (DiMaggio 1997). The possibility of sudden death is out of the cultural schematic frame of not only the prospects but also the sales agents, unless the agents constantly make the conscious effort to expand their frame to embrace it. Hence, it is much easier for the agents to talk about money management because, first, this subject does not necessarily touch on the troublesome topic of premature death or other misfortunes, and second, it is part of the local cultural repertoire constituted by both locally shared worldviews and existing institutional arrangements. As elaborated in chapter 1, yanglao is a major concern of the Chinese, who place a higher value on the quality of life when one is aging than the quality of life when one is young. This in part explains why the Chinese like to save money and why sales talks about yanglao and savings are often well received. However, as Michele Lamont and Laurent Thevenot (2000) emphasize, structural conditions largely inform what aspects of cultural repertoires are drawn upon. The cultural symbols of yanglao, savings, investment, and filial piety turn into resources only in certain institutional conditions.27 At present, the one-child policy has shrunk the average family size and resulted in an aging population. The privatization of medical care has dramatically increased medical fees for all kinds of care and treatment. With these institutional changes, parents who do not want to add financial burdens to their children become even more eager to save enough money for retirement and for the medical expenses they may need during old age. Furthermore, the collapse of the socialist pension system and the uncertainty about the performance of the new pension scheme further magnify people’s concern about yanglao and bring the ethics of filial piety back to everyday life discourse. At the same time, the arrival of the stock market has given Shanghai citizens a new money management tool and an investment fad. Presenting life insurance as a variant of the stock market is a way of maneuvering the concept of insurance to fit into the newly emerged stock market fever culture.

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Although this chapter focuses on sales agents’ strategic interactions with prospects and clients, we have seen that the prospects and clients were not passive in the process. Chapter 5 describes how buyers and potential buyers not only resisted certain new concepts and meanings imposed on them but also persistently insisted on their preferences and actively negotiated with producers and sellers about the meanings and the functions of a new commodity.

5

Buying Life Insurance Multiple Motives but Consistent Preferences

W H A T M A K E S P E O P L E buy a commodity as invisible and intangible as life insurance? Although commercial life insurance is one of the most instrumentalrational commodities that attempts to convert uncertainties into manageable risks, buying life insurance is rarely based on rational economic calculations. In England, commercial life insurance, initially invented as a risk management device, became a risk-taking gambling instrument for the masses in the eighteenth century (Clark 1999). In the United States, life insurance became widely accepted in the mid-nineteenth century when the purchase was driven by both a sense of fear about the future and a sense of responsibility and moral obligation to the family ( Zelizer 1979). Nonetheless, sociological studies of life insurance thus far have focused on the strategies of the life insurance industry ( Zelizer 1979, 1985; Heimer 1985) and the selling culture of insurance agents (Oakes 1990; Leidner 1993). Insurance buyers are either absent or treated as an abstract mass in these studies. As Viviana Zelizer (1988, 2005b) and Paul DiMaggio (1994) point out, economic sociologists have made tremendous progress in examining production and distribution but remain far behind our anthropological colleagues in the studies of consumption, particularly in deciphering the cultural constitution of consumption. Life insurance as a new commodity and buying life insurance as a new economic practice are both cultural objects that require meaning construction not only from providers but also from recipients (Griswold 1994). In this chapter, I approach the meanings of the consumption of life insurance from the buyers’ perspectives through their intentions and interpretations of choices (Griswold 1987). Anthropologists assert the cultural constitution of consumption by questioning the fundamental economic assumption of the neutrality of “utility” (Sahlins 1976; Douglas and Isherwood 1982; Appadurai 1986). The constitutive role of

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culture in choices of material goods is succinctly articulated by Marshall Sahlins (1976:204): “The relation between logics is that the first, the symbolic, defines and ranks the alternatives by the ‘choice’ among which rationality, oblivious of its own cultural basis, is pleased to consider itself as constituting.” This statement challenges the conventional assumption that interests are governed by economic circumstances and argues that culture shapes the very conception of rationality that economists take for granted. Based on a constitutive conception of culture in relation to interests and consumption, this chapter has two objectives. First, it brings life insurance buyers and their subjectivities to the forefront by focusing on their meaning construction for their purchase. In particular, I am concerned with their motives for buying life insurance, their preferences for and choices of products, and the reasons they give for their preferences and choices.1 Second, this chapter explores the cultural and institutional forces behind these motives, preferences, and choices. These two lines of inquiry simultaneously engage the debates between the Weberian and Swidlerian perspectives on meaning and action, particularly on the relation of meanings to motives and choices. A Weberian theorization of their relation is that motives and choices are always anchored in meanings, and hence, it is always meaning that informs motives and steers choices. Swidler’s supporters, on the other hand, may argue that motives and choices can be driven by institutional realities and that meanings arise to make sense of actions. Without making either of these presuppositions, I present a number of empirical cases in which Chinese buyers talk about their purchase of life insurance. Based on the reasons they give for their purchases and their choices of products, I explore the cultural and institutional underpinnings of their motives and explain how their preferences and choices are grounded in local cultural logics.

Why and What? Renqing and Favors We have already learned from chapter 4 that many Chinese were driven by the etiquette of renqing (interpersonal obligation) to buy life insurance from friends and relatives in the early phase of the market’s formation. Some of them bought an insurance policy to help or to express sympathies for the agents, while others did it to give face to the agents. For example, Wei Jinggang (43 years of age), married and with a 14-year-old son, bought an insurance policy from Ping An Insurance Company of China, Ltd. (Ping An) out of his sympathetic feelings for his good friend, Zhao Anpei.

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Xiao Zhao and I have been very good friends for more than 20 years.2 I always regard her as my younger sister. We used to work in the same factory. . . . I saw her getting married, having a child, and . . . later on . . . divorced. Her ex-husband was an irresponsible person. . . . Now she is raising her daughter on her own. It’s not easy. When she told me that she worked as an insurance agent and had to meet a sales quota, I bought a policy from her as I wanted to help her. You know, it’s tough to be a sales agent. I didn’t care what I bought, and I actually didn’t know what I bought.3 This represents a kind of renqing baodan, one where the purchase was driven primarily by the buyer’s affections and sympathies for the agent. More often, however, a renqing baodan was driven by a sense of obligation to give face to the agents. Such statements as, “He is a friend. I need to give him face,” or “She is my relative. I should give her some face,” were heard most often from the clients who bought life insurance due to renqing. Likewise, the prospects who felt indebted to the agents were likely to buy a policy to repay the favors. When asked what made him buy life insurance, Li Fei, a man in his mid30s, said: [The agent] is a very helpful and nice person. Once he did me a big favor by helping my son to get into the high school that we liked. . . . I always felt indebted to him. . . . This time he came to sell insurance. I didn’t care much about insurance. But it was okay to buy some from him. . . . It was a way of returning him a favor.4 Although Li did not have a close preexisting relationship with the agent, his purchase was also a renqing baodan when his primary motive for buying an insurance policy was returning a favor to fulfill an interpersonal obligation, instead of feeling a need for it.

Peers’ Influence and Showing Off Huang Jing, a married woman in her early 30s who worked for a Sino-American technological company, recounted what made her buy an insurance policy from Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong): I bought my first life insurance policy under the influence of my colleagues. . . . They said if I could afford it, I should buy some for my future. . . . They used this analogy to describe the function of life insurance: If you

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don’t have private insurance and instead rely only on your pension, you can only have a bowl of plain noodles; if you have private insurance, you can have a bowl of noodles with some meat in it.5 Peers’ influence was a rather common factor that drew people’s attention to life insurance. Another client in her late 20s, Hua Xie, initially rejected the idea of life insurance but finally bought six policies from four different insurers. What made her change? “Because of my friends! Agents had come to sell me insurance before, but I found them annoying. I began paying attention to insurance . . . when my friends were talking to each other about the possibility of an increase in insurance premiums due to a reduction in interest rate. As my friends were very concerned about this, I was curious.”6 People who refused to listen to the sales agents about the idea of life insurance could be receptive to the very same idea coming from their friends or other insurance clients. Because friends and clients were not supposed to receive any commissions or other material awards by talking about the benefits of insurance, their word was taken more seriously. This largely explains why sales agents endeavored to please their clients. In chapter 2, I stated that some prospects actively approached Ping An sales agents to purchase unit linked insurance, after they learned that their friends and colleagues had this new type of policy. The social psychology of following the masses and the fear of missing the boat were never better demonstrated than with the ardent reception for child insurance. In American society, child insurance has been a controversial commodity since the nineteenth century, because of the problem of pricing the priceless child (Zelizer 1985). Even today, the idea of parents taking out life insurance policies on their children encounters near universal resistance, if not revulsion, in American society (Oakes 1990). On the contrary, parents in China enthusiastically bought child insurance from the start. In 1996–1997, child insurance was very popular in urban China. However, parents in China purchased policies for their children intending for them to receive benefits while living and not for themselves to receive death benefits. Yet, because the interest rates offered by the insurance products at that time were lower than those offered by savings banks, why did the parents still take out child insurance policies if not for the death benefits? Shi Jin, an agent who worked for Ping An before, recounted the “child insurance fad” in 1996–1997: Through guanxi networks, we first visited some elementary schools, distributing a notice to the students that someone would visit their home within the week to introduce insurance to their parents. We then visited these students’ households. . . . Each [child] policy cost 360 yuan. We just intended to sell one to each household. But later on many households bought ten policies or more. Why? Some parents asked how many policies the parents who lived next door bought. When they heard that their

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neighbors bought one, they said they wanted two. When they heard that their neighbors bought two, they wanted three or four. You know what? They all wanted to show that they loved their child even more and to show off .  .  . You wouldn’t believe it. I made tens of thousands in one evening.  .  .  . We didn’t say too much to the parents. Nor did they ask much in detail.7 No clients ever claimed that they bought a number of child policies in order to show off their financial status. However, if Shi’s account is reliable, child insurance was received enthusiastically as an expression of love for the child and to showcase one’s economic abilities (Veblen [1899] 1953). Since one’s economic status cannot be established without socially constructed judgments (Beckert 2009; Aspers 2009), the purchase of a large quantity of child insurance became one of the observables to claim recognition. Meanwhile, it was driven by the social psychology of the fear of lagging behind, which I discuss further later.

Gifts and Promises When people paid attention to the living benefits that life insurance could offer for the insured (instead of the death benefits for the beneficiaries), life insurance also became a trendy gift for loved ones. Buying insurance as a gift for children was so popular that some parents even bought a child policy as a Lunar New Year gift to substitute for the custom of giving their child “New Year money” (yasuiqian).8 People bought insurance policies as gifts not only for children but also for spouses, lovers, and parents. Li Hai (35 years of age) and his wife (28 years of age) each bought an endowment whole life policy from Manulife-Sinochem Life Insurance Company, Ltd. (Manulife-Sinochem) and presented it as a gift for each other on their wedding day in 1998. My wife and I wanted to give each other an assurance about our love, and so we each bought an insurance policy as a promise for each other. Insurance is like something lasting to symbolize the permanence of our love and marriage. . . . It was like we put our love into a safe box. . . . Now people say marriage is not secured, but we wanted to give our marriage security. Insurance was a gift we gave to each other. So, she paid for my policy and I paid for hers. The policy each of us bought was called Hong Fu 99 (Grand Fortune 99).9 It has a good meaning . . . for our wedding day.10 Buying a life insurance policy for one’s beloved, or putting the beloved as the insured and the policyholder without having them pay the premium, was a very common practice among the Chinese.

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Investment and Yanglao What made me buy life insurance? The reasons are simple. First, the return rate offered by the insurance companies was higher than the interest rate offered by banks.  .  . . So, I took half of my money from the bank and invested it in insurance. Second, buying insurance is for yanglao (retirement). I want to have some protection when I am retired. I don’t want my retired life to be too bad.11 Ning Han, a finance and administrative manager for a Sino-American trading company, spoke of the reasons she bought life insurance. In her late 30s, she was married with a 12-year-old son. Her economic condition was far above average, as she was making an annual salary of more than 150,000 yuan (~ US$18,123).12 As an active consumer of life insurance, she bought a number of insurance policies on her own initiative. When asked what made her so receptive to life insurance, she said: “You know, I majored in finance. Of course, I was very concerned about money management. I bought these policies mainly for savings and investment. I didn’t think of unexpected contingencies, accidents, or anything like that.”13 Because of her concern with money management, her household had more than 20 insurance policies. She and her husband each bought four yanglao policies from Ping An in 1995–1997. In 1996, she bought another eight yanglao with dividend policies from China Life Insurance Company, Ltd. (China Life).14 Two of these policies were for herself, two for her husband, two for her son, and two for her mother. “I bought these dividends policies for my son and my mom as a gift for them,” she said. Then in 1997, China Life offered a savings policy with a return rate as high as 9 percent, when the interest rate for savings deposits in banks was less than 6 percent. Ning bought a number of these policies. In 1999– 2000, she bought two unit linked policies at two different times for investment purposes. Ning bought a large number of insurance policies with the hope of generating more returns and accumulating enough money for a comfortable life during retirement. She consciously compared the costs and benefits of buying life insurance to putting money in banks. As an active buyer, Ning had her own ideas about the functions of life insurance, and she chose products that matched her perceived functions. Buying life insurance for yanglao was the most common response to the question “What made you buy life insurance?” Xu Qing, in her late 20s, was a sales representative at a state-owned department store. She and her husband each bought an insurance policy from Ping An. The reason was that “I already have some basic protection from my workplace. . . . But I bought some insurance

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for my yanglao. . . . When we grow old, we have to rely on ourselves. It is better not to put the burden on our child.”15 Buying life insurance for yanglao stands out as a widespread motive that cuts across different social groups and different time periods.

By Chance or Misunderstanding Unlike Ning Han, who had her own ideas about life insurance, Margaret Pang did not have any preconceived ideas about life insurance when an agent approached her in 1999. I didn’t have any ideas about life insurance at all. It just happened that an insurance agent from Ping An approached my boss. My boss didn’t want to deal with her himself. . . . The agent convinced me to buy some insurance. She told me that, first, the interest rate for savings deposits was very low. In addition, interests were taxable. For life insurance, the return rate was a bit higher and the returns were not taxable. Second, she told me that I could get some money back every three years. I like that. I don’t like those keep me waiting for 20 years or so to get the money. . . . So, I treated [life insurance] as a savings plan. . . . But I also bought another policy where I can’t get the money until 20 years later. The agent said this policy was mainly for my child. I don’t have a child yet. But she said when I do have one, my child probably would be about the age for college 20 years from now. The insured amount 60,000 yuan (~ US$7,249) could be used for tuition. I thought about it and found that what she said made sense to me. Pang, a married young woman in her late 20s, was a human resources manager in a joint venture. Holding three insurance policies from Ping An, she was a rather passive buyer. She bought insurance policies initially without a very clear idea or concept of what insurance was. If she had not met the sales agent by chance, she probably would not have bought any. Her case perfectly illustrates that meanings arise through social interaction in concrete settings (Fine 1984; Hallett and Ventresca 2006), especially when her husband challenged her purchase and she defended her action: My husband didn’t like the insurance policies. He said it was unwise to pay the money now in exchange for money in the future. He said the value of the money in the future was unknown. I said, “Well, I already bought it. . .  .” I felt that what the agent said was quite right at that moment. And I was

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able to afford it. It’s no big deal. . . . Now I think it makes sense to have some insurance just in case. Look at the 9/11 attack in the U.S. Who knew that that could have happened? Life is hard to predict.16 Some other passive buyers, nonetheless, bought their policies simply out of some misunderstandings of what life insurance could offer. Cha Jielin, a directselling agent in her mid-40s, bought a policy from American International Assurance Company, Ltd. (AIA) in 1994. She was among the clients who misunderstood the terms of life insurance. “I didn’t know what it was. The agent was a friend, and she said it was for my future protection. I thought the insurance company would pay for my medical fees if I was ill or got a minor injury. I didn’t know that they wouldn’t pay you unless you were dead or permanently handicapped. What’s the use of that?”17 Cha’s motive for buying an insurance policy was for protection. But her concept of protection points to medical coverage for minor and curable illnesses or injuries. This concept of protection is different from the one that AIA attempted to convey. Misunderstandings about what kinds of “protection” life insurance could provide occurred most in renqing baodan in which buyers purchased their policies without knowing what exactly they were buying.

It’s All for Savings Nee Jie worked as a software salesman in an information technology company at age 25. He bought a dividend whole life policy called Smart Financial Management from Manulife-Sinochem. This policy carried two riders, one for personal accident and the other for hospital care. Therefore, the policy served both money management and risk management functions. His main purpose in buying this policy, nevertheless, was to control his spending. I’m making good income and I want to have a binding savings plan. I have been spending quite lavishly and have no money left. . . . I feel a sense of responsibility for my parents. But I have had difficulty saving some money for them. The main function of insurance is savings. Insurance is actually like a stock agent but operates as an insurance company. It is like you hire a big corporation to handle your money. It’s more reliable. When asked if he saw insurance serving a risk management function, he responded: “No. Insurance can’t prevent you from running into any risks. Risks are predestined. . . . I believe in fate. Risk is a probability, but no one knows who will fall into that probability. Insurance can’t change it.” The reason he also bought personal accident and hospital care insurance was that “their premiums are very

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low. The agent strongly recommended these to me. I thought that was okay. I could afford it. If the agent didn’t recommend them, I don’t think I would have got them. . . . I certainly won’t buy an insurance policy that serves mainly a protective function. I’ll get nothing in return.”18 Nee’s perception of risk is intriguing. He believed in both fate and probability. Believing in fate sounds superstitious, because it refers to a predestined, biased arrangement of the occurrence of risks. On the other hand, believing in probability sounds rational, because it implies the neutrality of the occurrence of risks. The coexistence of these two seemingly contradictory beliefs in a person supports the fragmented notion of culture. Nevertheless, the existence of fragmented cultural properties by no means excludes the possibility of the existence of some overarching cultural logics that are shared by all actors. While Nee felt a strong sense of responsibility for his parents, he did not think that the accident insurance could serve to fulfill his responsibility, because the idea that he might die prematurely did not occur to him. As we will see, the idea of “getting nothing in return” and the feeling that insurance products serve primarily a risk management function that is “a waste of money” were conventionally held by the clients and prospects. On the other hand, buying an insurance policy to serve a saving purpose was most common among a wide range of clients, including those who bought critical disease insurance. When asked what made him buy two critical disease policies from Ping An, Cui Ying (40 years of age) responded: “We just had a baby. We want to save money for her. These policies carry some dividends. Ms. Dai (the helpful friend in chapter 4) said we could leave the dividends in their company to let them accumulate. We thought this might be a good way to save a lump sum for our daughter. So, I bought one and my wife bought one.”19 Although Cui and his wife each bought critical disease insurance, which was offered to handle medical expenses incurred by unexpected critical diseases, their primary motive for the purchase was savings.

For Multiple Reasons The above cases demonstrate that different buyers have different motives and incentives for buying life insurance. Yet, some buyers have multiple motives. Ning Han’s purchase of more than 20 policies for the purposes of investment, yanglao, and gifts is an example. Wang Wugan, a 40-year-old father with a 9-year-old son, also bought insurance for multiple reasons. I first bought a yanglao policy from Ping An. It was in 1997. . . . There was no unit linked or anything like that at that time. So, I bought the yanglao policy as an investment. When I reach 60, they will give me some money every month. I think insurance is for future protection. When I can’t work

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in the future, it will be useful. . . . I also bought . . . . critical disease insurance. For this one, the agent was referred by a friend, and so I bought it in order to give face to my friend. . . . I also bought a policy as a gift for my wife. It’s for yanglao. It’s kind of romantic and a way of showing affection. (Laughs) . . . . Just last year, I bought a unit linked policy from Ping An. Actually, my wife wanted me to buy it. I don’t know much about it. She also bought one for herself.20 Thus, Wang had multiple motives for buying life insurance, ranging from investing for yanglao to showing affection and enacting renqing. Nonetheless, there existed a dominant motive for each particular type of product: the yanglao insurance was for his own future protection and a gift for his wife; the unit linked policy was bought upon his wife’s request; and the critical disease insurance was for renqing. Furthermore, among these multiple motives, Wang held a primary one: “The major reason for buying all these insurance policies is for yanglao. It’s a kind of investment. For most of the policies we bought, we felt the need to have them. But we bought a few policies that we didn’t feel the need for. It’s okay simply to give face to friends, even when we don’t feel the need for the purchase.” Note that the kind of “protection” Wang wanted for the future is the same as the one the finance and administrative manager Ning Han wanted: to have enough money for retirement. On the other hand, the policy that he bought as an enactment of renqing (instead of a feeling of need) was the critical disease insurance, which belongs to the risk management category.

Cultural and Institutional Underpinnings of the Motives for Buying Life Insurance The above cases illustrate that the majority of the life insurance buyers in Shanghai are white-collar workers, though the entire clientele covers a wide spectrum of occupations, ranging from taxi drivers to business owners. Their ages range from early 20s to late 50s. Unlike the life insurance markets in Euro-American contexts in which males are the major sales targets and clients, the market in China is composed of a rather balanced ratio of male and female clients. Other than my observations that females tended to be influenced by their peers and that males tended to give face to friends when they considered buying life insurance, they all shared various economic and noneconomic motives. Wang Wugan’s identifiable dominant motive for each particular purchase, indeed, reflects one of the interesting features of the life insurance market in Shanghai. The variation in the motives for buying life insurance is not without a pattern. In fact, prevailing motives for buying life insurance could be identified at different

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times as the market emerged. Before 1996, the purchase of life insurance was more driven by a mix of reflexive trust, enacting renqing, and showing love for the child. After 1996, saving and investing for yanglao became the primary driving force. Then in 2000, making profit was the primary motive for buying life insurance. Yet starting in 2002, managing risks became a more common motive, alongside savings. How do we explain these dominant motives and their changes over time?

Trust, Renqing and Gifts (1993–1996): Cultural Schemas, the Norm of Reciprocity, and the Child-Centered Ethos Among the clients whom I interviewed, about one-fourth bought their first policy in or before 1995. Surprisingly, more than 80 percent of these clients reported that they “had no idea what life insurance was” at that time. These clients mostly bought their very first policy from agents who were friends or relatives. They bought something that was a mystery to them because, as elaborated in chapter 4, the problem of trust for this new commodity was suspended by the cultural schemas of intimate relationships. Through trusting the agents, the prospects came to trust in the insurance companies and the products they were selling. When people came to know a bit more about life insurance but did not feel a need for it, some of them still purchased a policy, again from friends and relatives, to observe the norm of reciprocity through renqing. Another cultural element driving life insurance purchases when the products were not particularly appealing was the child-centered ethos. Almost all of the clients who had a child during my field research had bought at least one child policy, and many had bought several, to express love for their only child.

Savings and Yanglao (1996–1999): Changes in Interest Rates, Cultural Values, and Changes in Pensions and Population Structure Motives and meanings, however, are not static. Motives shift and meanings are redefined when institutions change. Starting in the second half of 1996, reductions in interest rates changed many parents’ primary motive for buying child policies. When the interest rate for a year’s fixed deposits was reduced from 9.18 percent to 7.47 percent in August 1996, Ping An’s Child Lifelong Happiness Insurance, which carried an interest rate of 7.8 percent, suddenly became a competitive savings plan. The purchase of the policy was then driven predominantly by an economic calculation of costs and returns. Parents then bought child insurance because it was a “good deal.” In this case, child insurance was bought not necessarily for the child but as a household savings plan. Therefore, whenever the

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interest rate for savings deposits was about to drop, people lined up outside the headquarters of Ping An to purchase the child policy, as the agent Shi Jin described in chapter 2. Hence, the same action of buying a child policy can be motivated by different rationales with different meanings in different institutional conditions. The consecutive reductions in interest rates not only changed parents’ primary motive for buying child insurance but also changed their motive for buying other types of insurance. When Ping An and China Life’s yanglao policies were initially not competitive compared to banks’ products, people bought these policies for observing the etiquette of renqing. However, when these policies later became competitive long-term savings plans with the decline of interest rates in banks, people bought them with the dominant motive for receiving higher economic returns for yanglao. This finding that motivations change when interest rates change is in line with the institutional argument that any activity may carry multiple motivations, and which motivation is realized often depends upon the specific institutional conditions (Swidler 1986, 2001; Friedland and Alford 1991). Given that the Chinese have an unwavering habit of saving and that China holds the world’s highest savings rate, why are the prospects still so concerned about yanglao? I suggest that yanglao has been the center of the Chinese perception of risk for both cultural and institutional reasons. As the Chinese consider a “good life” as having a comfortable life after retirement, this cultural value prescribes the Chinese’s predisposition to place great importance on their yanglao. Such predisposition is actualized by institutional changes. The uncertainties of pensions as a result of the privatization of the pension scheme, the aging population, and the restructuring of family due to the one child policy all demand the aged population to be financially independent. Thus, culture, along with institutional realities, constitutes buyers’ subjectivities and their constructions of meaning.

Investing for Profit (2000–2001): The Stock Market Fad and the Social Psychology of Catching Up With the introduction of unit linked and dividend insurance in October 1999 and March 2000, respectively, the dominant motive for buying life insurance shifted from saving for yanglao to investing for profit. Although investing for profit can serve the purpose of yanglao, saving was no longer the prevailing motivation. Instead, the Chinese bought life insurance with the hope of making profit. However, investment and parainvestment products were designed to transfer part of the insurers’ risks to the clients. Buying these products, particularly

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unit linked policies, is a risk-taking behavior. Taking risk with the hope of making profit through life insurance was common in British society for more than half of the eighteenth century (Clark 1999, 2002). It was not peculiar to the Chinese. Chinese clients, however, as documented in chapter 2, were not fully aware of the risk involved when they bought the investment products. Therefore, the question is not why they were willing to take the risk, but why they associated the investment and parainvestment products with “profit” but not “risk.” The positive connotation of the term “investment” has both institutional and cultural sources. First, household savings rates in China have been consistently high, and the bourgeoning economy further strengthened the financial position of many urban dwellers. With the dramatic reductions in interest rates in savings banks, people had to find other outlets for their surplus cash. Second, the Shanghai stock index hit its record high in 2000–2001. The indexes reached 2125.72 in 2000 and 2245.44 in 2001, compared to 1756.18 in 1999 and 1422.98 in 1998.21 This created an optimistic atmosphere surrounding investment. However, I observed that the positive connotation of investment was not entirely produced by the strong performance of the stock market. It was also generated by a new genre of “capitalism” and the social psychology of catching up. Although investment was a new concept and a new practice to the Chinese, it was believed to be a core representation, a symbol of capitalism. The stock market became an officially promoted capitalist mechanism along with other marketization agendas in the early 1990s (Hertz 1998). That the state and ordinary people jumped onto this bandwagon both signified and enacted the demise of the old regime and the genesis of the new era. The positive meaning of investment was in part a by-product of the birth of the nouveaux riches who dared to gamble in the newly arrived stock market. Some informants recounted what happened in the early 1990s, when the majority of the commoners were skeptical of the stock market and did not want any of the shares first issued by the government. “The few of them who dared to buy turned rich overnight!” an informant said. Hence, the positive and optimistic interpretation of the concept of investment was buttressed, if not fabricated, by the state. Although some people lost everything, it was the winners who had caught the attention of the media. With the dramatic and almost unpredictable social changes in urban China, the commoners witnessed that being opportunistic could result in dramatic gains. They came to realize how important it was to snatch every opportunity before it vanished. The dramatic socioeconomic changes in China cannot be captured better than they were in this statement: “All that is sold melts into air, all that is holy is profane” (Marx and Engels [1848] 1978:476). Those who had missed participating in the stock market in its earliest phase lost compared to those who had participated. Those who did not buy the yanglao and child policies when the return rates were high lost compared

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to those who did. Therefore, although dividend products might induce lower returns than traditional savings products because the dividend (fenhong) rates were uncertain and fluctuating, buyers were still fond of fenhong, because it is a powerful semiotic code, a sign of a participation in the new capitalist games. Simultaneously, it was an act of catching up. The fervent eagerness to participate in the new capitalist games, I suggest, is related to a social psychology of urgency of catching up. This social psychology, as displayed in urban China (and other postsocialist cities), is orchestrated by rapid internal economic reforms and external globalization pressure.22 At a national level, this social psychology manifests as China’s eagerness to catch up with the world economy.23 At the microlevel, it manifests as individuals grabbing every opportunity for the possibility of upward mobility. In this context, the unit linked policy was presented as a variant of the stock market, which not only gave the first batch of buyers the hope of getting rich someday but also created a fear of missing the boat. Buying unit linked insurance was then exercised as a means for coping with dramatic social changes, increasing social inequalities, and a compression of temporality. Not only are the ordinary citizens afraid of lagging behind and missing an opportunity, but society as a whole is experimenting with everything new to create a miracle in the global context. The feverish reception of the investment and parainvestment products and the eagerness for making profits, therefore, can be understood as a reflection of the social psychology of the nation at the disjuncture of internal realities and globalization pressure. Other phenomena that display this social psychology in urban China include stock market craze (Hertz 1998), the direct selling fad ( Jeffery 2001), and the qigong fever (Ownby 2001; Palmer 2007).

Saving for Yanglao and Managing Risks (2002–2004): Risk Perceptions and Social Insurance Reforms With the “unit linked crisis” and the sudden “awakening” about what investment insurance meant at the end of 2001 and early 2002, the dream of making profits through insurance was spoiled. The unit linked crisis drove domestic insurers to stop offering money management products and to promote critical disease insurance instead. As critical disease insurance was formulated mainly for managing unexpected critical diseases, the purchase, theoretically, required a sense of risk that any of the covered diseases might occur to the buyers. Nevertheless, as local people’s attention to risks often focused on life after retirement, the primary motive for buying life insurance after the unit linked crisis returned to saving for yanglao. Although attractive yanglao insurance was no longer available, saving for yanglao was still a major concern of the Chinese clients, even when they bought the critical disease insurance.

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Apart from yanglao, there was actually a demand for health insurance during my research period. Although thinking about fatal risks is avoided, people generally are aware of the possibility of minor accidents and injuries in everyday life. The only risk management product that the general public really wanted was health insurance that, similar to the socialist medical care provided by the state in the past, would cover outpatient treatments and hospitalization expenses. The insurance companies were aware of this demand. However, they did not trust the medical care system in China, so they estimated the risk too high to be insurable.24 One particular risk management product quite well received by the prospects was AIA’s integrated personal accident (IPA) coverage. This product covers not only compensation for death but also medical fees for minor injuries caused by accidents and daily allowances for hospitalization. The coverage is relatively compatible with the sense of risk of the locals and is analogous to the state provision of medical care in the prereform socialist regime. Zhu Shaoqiu (mid-40s), an IPA policyholder, gave the following reasons why she bought it: The agent wanted to sell me a critical disease product. But I didn’t like it. . . . What I want is a medical insurance that covers everything when I am sick. In the past, we practically had free medical care. Now the medical fees are so high. . . . I bought [the IPA] because it covers surgical fees. If I am hospitalized, the insurance company is going to pay me 50 yuan per day as an allowance. This product is a bit similar to what we had before. But of course, now we have to pay for it, and the coverage is not as comprehensive as what we had before.25 Because medical care used to be provided for free or for a nominal fee before the economic reforms, it was still perceived as a necessity by the majority. When this sense of necessity met with the privatization of the medical care system, it organized local people’s sense of risk. The press frequently reported how patients without cash were refused medical treatments by hospitals. Not having enough money for medical treatment was felt as a noticeable risk. Managing this risk then became one of the primary motives for buying insurance.

Preferences, Perceived Functions, and Choices of Products Despite the multiple motives for buying life insurance and the shifts of the primary motives over time, the Chinese insurance clients all shared the same preferences when it came to the category of products they liked. They all liked products that let them see a return of money when they are alive. By the same token, they all shared the same aversion to purely risk management policies.

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We have seen that it does not matter whether the clients are active buyers like Ning Han, passive buyers like Margaret Pang, or under the influence of their peers like Huang Jin and Hua Xie—they all prefer money management products. It was not by accident that the insurance agent had successfully convinced Pang and that Huang and Hua were effectively influenced by their peers to buy insurance policies. Pang was convinced by the insurance agent when the policies were presented as being like term-deposit savings plans. Huang Jin was convinced by her colleagues that having life insurance was like having “a bowl of noodles with some meat in it.” And what drew Hua Xie’s attention to her friends’ conversations about life insurance was the “interest rate.” Therefore, even though these clients had no previous idea about insurance, it was the savings and yanglao functions of life insurance that interested them. The findings from the interviews are consistent with the findings from my surveys on clients’ and prospects’ perceived functions of life insurance (see appendix A for the detail of the surveys). A total of 63 life insurance clients and 50 prospects participated in the surveys. Although these surveys were conducted in 2001–2002, a time when Ping An began to move closer to the foreign model of defining life insurance as risk management, more than half of the respondents perceived life insurance as a tool for money management (including savings, investment, and child’s education). Table 5.1 illustrates that 51 percent of the life insurance clients and 47 percent of the prospects who filled out the questionnaires said the most important function of life insurance was “saving for one’s own yanglao.” But less than a quarter of the respondents considered “providing a protection for the family in case of the occurrence of accidents” as the primary function of life insurance. The breakdowns of the respondents based on gender, age, income, education, marital status, and workplaces are shown in table 5.2. A few interesting observations

Table 5.1 Perceived Functions of Life Insurance by Clients and Prospects Saving (%) Clients Prospects Total

51 47 49

Accidents Illnesses Investment Child’s BASE (%) (%) (%) Education(%) 22 25 23

19 13 17

5 6 5

3 9 6

63 50 113

Note: Saving = “saving for my own yanglao”; Accidents = “providing a protection for the family in case of the occurrence of accidents”; Illnesses = “paying for medical treatment in case of serious illnesses”; Investment = “investing for profit”; Child’s Education = “saving for child’s education”

159

Table 5.2 Perceived Functions of Life Insurance by Socioeconomic Status Saving (%)

Accidents (%)

Illnesses (%)

Invest ment(%)

Child’s BASE Education (%)

Gender Male Female

56 44

20 25

15 19

4 5

6 6

53 57

7 7 0

5 7 7

53 28 27

Age 20–29 30–39 40–49

40 64 52

22 18 30

27 4 11

Annual Income (RMB) < 18,000 18,000– 36,000 36,000– 84,000 > 84,000

50 58

32 8

4 22

4 8

11 3

28 31

57

23

17

0

3

29

33

33

25

0

8

11

Education High School 2-year College University

42

30

14

2

12

38

59

22

14

4

2

49

40

20

25

10

5

18

Marital Status Single Married w/o child Married w/ child

48 52

20 19

20 29

10 0

3 0

37 21

49

26

9

4

11

48

0

6

17

Work Unit SOE/ Collective

69

19

6

(continued)

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Table 5.2 (continued)

Saving (%)

Accidents (%)

Illnesses (%)

Invest ment(%)

Child’s BASE Education (%)

Domestic private

40

28

Work Unit 24

4

4

24

Foreign/JV

46

24

17

7

7

69

Note: SOE, state-owned entireprise; JV, joint venture

are found in this table. First, saving for yanglao was the most popularly perceived function of life insurance across different social groups, with the exception of the highincome group, who also considered protection against accidents an important function. It is likely that compared to those in the middle class, the upper class worried less about their economic conditions during retirement. However, they were concerned about a sudden loss of their earning ability in case of the occurence of accidents. While life insurance is supposed to be a modern risk management instrument for the middle class, the findings illustrate that the majority of the respondents who belonged to the new middle class (income level between RMB 36,000 [~ US$4,349] to RMB 84,000 [~ US$10,149]) did not perceive managing accidental risks as the most important function of life insurance. Another interesting observation is that a higher proportion (56 percent) of male respondents considered life insurance as savings for retirement, compared to female respondents (44 percent). At the same time, a quarter of the female clients thought that providing protection for the family in case of the occurrence of accidents was the most important function of life insurance, compared to only one-fifth of their male counterparts did. This finding goes against a common notion that males tend to buy life insurance for protecting the family in case they have accidents. Instead, they appeared to be more concerned with their own retirement. This finding calls for further research on gender differences in risk and money management among the Chinese. Lastly, more than a quarter of the youngest respondents (age 20–29) and more than a quarter of those who were married but did not yet have a child considered the most important function of life insurance to be the coverage of medical fees if they suffered from serious illnesses. This can be explained in part by the structural change of the medical care system. Under the new medical care scheme, the younger generations must be responsible for their own medical fees to a larger extent than do older citizens. The expressed preferences for and the perceived functions of life insurance described above are consistent with the types of products purchased. Because

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Table 5.3 Types of Life Insurance Policies Purchased as Reported by 128 Clients Category

No. of policies (%)

Subcategory

No. of policies (%)

Risk management

77 (27.3)

Accident Whole life Hospital care Yanglao

20 (7.1) 9 (3.2) 48 (17) 145 (51.4) (103 [71%] with dividend) 50 (17.7) (21 [42%] with dividend) 10 (3.6) 282 (100)

Money management 205 (72.7)

Child Unit linked TOTAL

282 (100)

systematic official data about the types of insurance policies sold are not available, I used the data I collected from both interviews and surveys to outline buyers’ choices of products. In this sample, a total of 128 clients in Shanghai bought 282 policies.26 The types of products they bought are summarized in table 5.3. One of the most striking features in table 5.3 is that almost three-quarters (72.7 percent) of the policies bought belong to the category of money management. Yanglao insurance was the most popular, with more than half of the policies bought belonging to this category. Child savings insurance ranked second, far exceeding traditional whole life and accident insurance. The popularity of child policies was not confined to Shanghai. A Ping An representative in Beijing reported that some 80 percent of the company’s life insurance policies sold in 1996 were issued to children.27 In addition, table 5.3 shows that 71 percent of the yanglao policies and 42 percent of the child policies bought carried a dividend component. If we categorize the dividend and unit linked policies as investments, then 47.5 percent of the policies bought belong to the investment type. On the other hand, personal accident policies account for only 7.1 percent of the products bought by these clients. These findings are consistent with some official figures made available in Shanghai starting in 2001 (see chapter 1, figure 1.4). Intriguingly, when we compared table 5.1 and table 5.3, there is somewhat of a discrepancy between what people said about the perceived functions of insurance and the accident insurance products they actually bought. About one-fifth of the clients in the surveys considered handling the occurrence of accidents as the primary function of life insurance, but less than one-tenth of the policies the clients bought belong to this category. Why? Apart from the difference in time frames (i.e.

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clients reported their thoughts about the functions of life insurance in 2001–2002, but they might have bought their products any time between 1992 and 2002), another plausible factor is the inconsistency between thoughts and feelings, or the inconsistency between reporting what appears to be sensible and behaving according to one’s habits. Very often, even when the clients (especially the young, educated ones) in my interviews told me that insurance was for protecting against unexpected misfortunes like accidents, they themselves did not hold any personal accident policies. Instead, they held policies that served primarily a savings function. Therefore, in theory, some clients agreed that insurance was a risk management tool and that accidents could happen to anyone. But in practice, they felt that buying a purely protective product was “a waste of money.” Furthermore, as described in chapter 1, saving is still the most commonly adopted risk management instrument. It is likely that clients bought savings products for managing unexpected misfortunes. For example, a consumer survey in Shanghai in 2003 reported that “meeting unexpected contingencies” was people’s primary reason for saving money.28 Saving for child’s education was also found to be very popular in the same consumer survey in 2003. This is consistent with my finding that child insurance was the second most popular product bought by clients. In fact, the popularity of child insurance was not confined to China. Viviana Zelizer (1985) documents that putting the child as the insured was once so popular in American society at the end of the nineteenth century that it sparked off a national child-saving movement. The movement, organized by upper- and middle-class groups, accused life insurers and parents who bought child insurance of speculating on children’s deaths. While a societal value that the “child is priceless” is shared by many societies, the popularity of child insurance did not bring about a similar moral outcry in China. The reason, as mentioned earlier, is that the Chinese child policies were formulated as savings plans more than as compensation for death. No parent ever cared about the compensation for death. Some parents even said they actually preferred not to include this in the policies. Instead, education funds, wedding funds, and even pension funds for the insured children were what appealed to them. Again, this explains why the child insurance was bought as a “gift” for the child, even though the child’s life was put as insured. Among the risk management products bought by clients, those with hospital care coverage accounts for the most. This coverage was provided for by the IPA, the only risk management product that was relatively well received by the public as described above. On the other hand, critical disease products have not been well received, despite the fact that critical diseases, such as heart disease, cancer, and diabetes, are on the rise and the privatization of medical care has made intensive medical treatments a luxury.29 An informant, Yang Mao (57 years of age), lamented why he would never consider buying critical

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disease insurance: “It’s useless! They won’t give you any money unless you are paralyzed, lying in the hospital awaiting death. They won’t give you any money if you are healthy. . . . It’s a waste of money!”30 The sentiment against purely risk management policies, such as critical disease, term life, and personal accident insurance, was noticeable and was expressed by a feeling that it was a “waste of money.” Not only was this feeling a common sentiment found in those in their 50s, but it was also expressed by 25-year-old Nee Jie, as described earlier, who believed that he would “get nothing in return” from personal accident and hospital care insurance. Compared to critical disease products, term life insurance was even less popular. Because the perceived chance of premature death was so small that it was practically inconceivable, buying term life insurance was naturally felt to be a waste of money. This is why some agents tried to conceal the term life component from buyers when making sales. The same applies to selling personal accident insurance. Many buyers of this component were rather passive. Because the premium of a personal accident rider was very low and the insured amount was high, some agents simply added this rider to the main policies as they did with term life without the prospects’ consent. When the prospects learned that a personal accident component was added to their main policy, they typically tried to keep this component as low as possible, since they believed that the premium paid for this part was not returnable.

The Cultural Logics of the Preferences and Choices Some agents, mostly those from AIA and Allianz-Dazhong, commented that the Chinese want to get their money back when they are alive rather than leaving the money for the beneficiaries because “they are short-sighted and selfish.” The underlying reason for the Chinese penchant for products that give returns when they are alive, I argue, lies in the Chinese cultural logics rooted in the concepts of life and death. It is the local concepts and perceptions that together constitute a resistance to conceiving of life insurance as management for unexpected misfortunes, and instead produce a local interpretation as an alternative money management device. This local interpretation excludes the acceptability of certain types of products and favors certain others. The Chinese call purely protective insurance “nonreturnable” (bu huanben) or “spending” (xiaofeixing) insurance. In other words, they regard the premiums they paid as giving money away without any return. In fact, the purchase of a purely protective policy has an invisible return—a sense of security or, as American insurers advertise, “a plan for if.” However, the purchase brings about a sense of security only if one feels insecure without such a purchase; it is perceived as a

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“plan” only if one sees a possibility for the if to happen. Tom Baker and Peter Siegelman (2010) found that young college students in the United States had an optimistic bias about their health condition that deterred them from taking out health insurance. It is understandable that young college students hold this optimistic bias that “bad things will not happen to them.” However, this optimistic bias cuts across different age groups and educational backgrounds among the Chinese. Fatal accidents and premature deaths seem to be out of their automatic schematic reference frame. Consequently, they feel that the premium for that impossible if is a waste of money. When people do not believe that they will die before their children are grown and financially independent, naturally they do not feel the need to rely on risk management insurance to make them “responsible.” Instead, they all want to have their money back when they are alive, because taking care of one’s own yanglao issue prevents a financial burden from passing on to the next generation. An alternative explanation for the disproportionate preference for the kinds of products that make payments to the policyholders is that people in general did not trust insurance companies, and they wanted to see a return of money before they died. However, if people did not have a sense of trust in the insurance companies, they would not have bought the yanglao policies that would not make payments until, usually, more than 20 years later. Trust was indeed an issue early on when the term “life insurance” was completely new to the public. As I described in chapter 4, that was why sales agents approached their friends and relatives to rely on the cultural schemas of intimate relationships to sell at the beginning. During my field research, nonetheless, people in Shanghai were already quite familiar with the insurance companies. They generally trusted the foreign companies because, they believed, large transnational corporations were financially solid. At the same time, they trusted the domestic companies because, they believed, the state would not let them collapse and would back them up in case of need. When AIA promoted the idea of “love for the child” in selling life insurance, this foreign insurer intended to construct a means of realizing this love that was very different from the local’s. The logic of love for the child embedded in AIA’s products held that working adults should insure their own lives so that in case they die prematurely, their dependents, especially children, would receive money from the insurance companies. However, the Chinese way of using insurance to show love for their child was to buy an insurance policy in the name of the child so that the child would become the policyholder. Putting the child as the insured was always the first response of the informants whenever the phrase “protection for the child” was mentioned. This response is

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deeply ingrained, as expressed by informants’ bypassing the contents of my questions or misunderstanding my questions regarding protection for the child. The following extract of my field notes is telling: Shin Sheng and Yin Fang are a newly wedded young couple in their mid20s. Both of them graduated from the prestigious Fudan University. The husband, Shin Sheng, is a lawyer and the wife, Yin Fang, is a graduate student in sociology. The researcher : “What do you think is the main function of insurance?” The husband : “Of course for savings. . . .” The researcher : “How about if you have a young child? Will you consider buying a protective type of insurance just in case?” The husband : “If I have a child, I will get a policy for her or him.” (He means putting the child as the policyholder). The wife (spirited): “Yes, don’t you know that there are many child insurance policies?” The researcher : “I mean, if you have a young child who is financially dependent on you, will you get a policy that the child can be the beneficiary in case something happened to you?” The wife: “Now we have insurance that is tailored for children. We will buy some for our child.” (Again, she is talking about putting the child as the policyholder.) The researcher : “Well, I mean what would happen to the child if the primary earner of a family lost her or his earning capacity?” The wife (excited): “The education insurance for the child is quite good! The child can get money when she or he reaches a certain age. The insurance gives some education funds to the child until she or he graduates from a college.” The husband (to his wife): “I know what she [the researcher] meant. She meant putting the child as the beneficiary so that the child can get the 100,000 yuan (~ US$12,082) [which is the usual insured amount] in case I passed away.” The researcher : “Yes, exactly, that’s what I was asking.” The wife (dispirited): “Well . . . .I don’t feel we need to get this kind of insurance.”31 Yin Fang repeatedly mistook my questions, because putting the child as the policyholder comes as an answer so naturally that it belongs to the category of “automatic cognition” (DiMaggio 1997). Because schemas function both as representation and simplifying mechanism, they affect how people perceive

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information (e.g., the researcher’s questions) and direct their selective attentions. Putting the child as the beneficiary of insurance is a new concept. It is a concept that comes from the insurance industry. A local conventional way of showing affection for someone is giving that person the entitlement to possess something or to use something. The idea that insuring one’s own life signifies “love” for the child is an alien concept. When a parent dies early, that is a tragedy. Linking the early death to the availability of a lump sum of money and linking the availability of the money to a sign of affection are all too indirect and so new that they require “deliberate cognition” (DiMaggio 1997) to make sense of it. Deliberate cognition rejects the handy representation and the shortcuts that automatic cognition offers. That is why it required effort on the part of the informants to process the questions I asked. Yin Fang’s misunderstanding of my questions is not idiosyncratic in the Chinese context. Putting the child as the insured is not only a common practice of the ordinary people but also a normative practice of the state. Wang Wugan, the client who had multiple motives for buying different kinds of insurance, told us something interesting about the state practice: The researcher : “In Shanghai, if one of the parents dies or loses working ability due to an accident, are there any social securities for the child and the single parent?” Wang: “Yes, the state provides a universal child insurance policy for every child. So, every child is insured. In case the child has any accidents, she or he is protected.” [Wang mistook the researcher’s question.] The researcher : “So, you meant compensation is payable upon an accident happened to a child?” Wang: “Yes.” The researcher : “Then what will happen if it is not the child that is involved in an accident but the parents are? I mean, who will take care of the child if the child’s parents die?” Wang: “I see [your question]. We have welfare houses for orphans. The children will be provided with free education.” The researcher : “How about if only one of the parents, say the breadwinner, dies and the child is left with a single parent?” Wang: “Then the parent has to take care of the child.”32 Again, Wang misinterpreted my question in his first response. What is equally interesting is that the state gave each child an accident insurance policy, instead of giving one to each parent. Whether the motive of the state was to protect the children or simply to present a gift to them is unknown. Nevertheless, the state

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shows love and care for its people using the same logic that parents do for their child. This logic is related to the local interpretation of life insurance as a new instrument for savings.

Culture, Institution, and Action The Chinese insurance buyers purchased life insurance with multiple economic and noneconomic motives. Multiple motives exist because of the availability of multiple cultural symbols for meaning construction. However, prevailing motives for buying life insurance vary over time, because they hinge on the interactive interplays of cultural symbols with institutional conditions and product features. As the Chinese life insurance market evolves, how culture and institution affect the consumption of life insurance varies among different motives. For example, buying life insurance as an act of renqing is a fulfillment of a normative demand and, simultaneously, an economic act. In this case, culture constitutes not only the motive but the economic transaction itself. The meanings of the transaction are already given by the publicly shared meanings of renqing. The motive for savings and yanglao, on the other hand, are construed by the Chinese concepts of a “good life” and a “good death,” and the habits of risk and money management. Culture, in this sense, constitutes the prospects’ predisposition to care about yanglao and to favor savings, and such a predisposition is actualized by institutional realities, namely, the reductions in interest rates and the uncertainties of the new pension scheme. Culture, therefore, manifests in various forms when constituting the motives for buying life insurance in different ways. In some cases, it gives meanings to products and to the act of buying. In others, it shapes the actors’ predisposition and habits. It may also directly cause transactions to happen as renqing does. While culture is constitutive in various motivations for buying life insurance, the primary motives change over time largely due to institutional changes. The primary motives for buying life insurance changed from enacting renqing or showing love to a quest for economic gains when the interest rates offered by savings banks dropped. The motive for making profits through insurance prevailed when the stock index was climbing, and the concerns about yanglao and medical care were intensified with the individualization of the pension scheme and the privatization of medical care. Elaborating on Gary Fine’s statement that “culture is situated” (1995:130, emphasis original), I suggest that the selection of cultural symbols for meaning constructions is institutionally situated. Cultural symbols exist in the form of repertoire, but each is mobilized piecemeal to defend actors’ existing patterns of life (Swidler 2001). Thus, culture lays the bedrock and supplies symbols for meaning construction, but it leaves the selection of symbols to institutional realities. In this respect, our findings support Swidler’s theory of culture.

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Nevertheless, culture does more than act as a tool kit. Despite the mutability of the motives for buying life insurance and their associated meanings, the market is not without a shared dominant conception of life insurance and a persistent pattern of preferences. The Chinese share a collective bias against risk management insurance, the so-called “nonreturning principal” insurance, and a collective favor for money management insurance, the so-called “returning principal” insurance. Such collective biases cannot be explained by institutional realities. The new institutional conditions brought about by the dramatic economic reforms should have created a demand for both risk management and money management insurance products. Given that urban dwellers have been facing increasing risks with the collapse of the “iron rice bowl” system, an institutional proposition asserts that certain cultural symbols would be mobilized to favor risk management insurance products (so as to cope with the new institutional realities). Quite the opposite has occurred, as the Chinese have been collectively rejecting risk management products throughout the market’s formation. The resilient resistance to purely risk management insurance and persistent penchant for “returning principal” insurance, I argue, are created by the cultural taboo on premature death, the definition of a “good life” and a “good death,” and the selective attention to risks—all rooted in the Chinese concepts of life and death. When the local receivers have to define life insurance as a new commercial entity, they are circumscribed by their existing schematic frames to a range of possibilities for their interpretations.33 Therefore, culture in the Weberian sense does shape the Chinese consumption of life insurance by prescribing predispositions to consistently and persistently favor certain types of products and reject certain others. The predisposition demarcates the range of life insurance products that make sense to the Chinese. This argument is in line with that of Frank Dobbin (1994), that different national cultural meaning systems carry prescriptions for how to achieve social ends as well as warnings against the sorts of practices that are disruptive and inefficient. However, predispositions guide the choices of insurance products but do not directly cause the purchase. For example, a concern with yanglao does not necessarily result in a purchase of a pension product if traditional familial support is the common practice or if a promising pension is provided by the state. The actual purchase of particular kinds of insurance products requires a set of institutional realities that are immediate to the lived experiences of the actors. The purchase of yanglao products, child policies, and hospital care insurance requires a certain form of retirement scheme, welfare program, family structure, and medical care system. Thus, culture as shared ideas and beliefs prescribes the range of possible and sensible actions. It is within this culturally prescribed boundary that culture as a repertoire of different elements constitutes action according to institutional demands.

6

How Culture Matters Culture, Market, and Globalization

THE ETHNOGRAPHIC DETAILS presented thus far have displayed the micropolitics and the macrodynamics in the making of a life insurance market in mainland China. In this concluding chapter, I hope to use the Chinese case to shed light on the questions I posed at the beginning: What is the role of culture in the making of a life insurance market? How can a particular market emerge in the face of cultural barriers? How does culture shape economic practice in general? What are the mechanisms through which culture works? What is the relation between the development of life insurance and rationalization? Furthermore, how can various modern capitalist enterprises be globalized in different cultural contexts? To what extent does local culture wield the power to selectively adopt and reject certain imported modern capitalist ideas and practices in the course of globalization? All these questions are addressed in the sections that follow. In addition, I present the changes in some insurers’ strategies two years after my field research and project the development of the market.

The Interactive Multiple Processes of Culture in the Making of a Life Insurance Market This project brings together two different concepts of culture—one as a shared meaning system and one as a practical tool kit or repertoire—to understand the formation and the characteristics of the emergent Chinese life insurance market. The basic findings and arguments can be summarized as follows. The economic and institutional contexts in urban China in the early 1990s were favorable to the introduction and development of commercial life insurance as a new risk management institution. The cultural context, however,

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was rather mixed and not as conducive. Despite the presence of some facilitative cultural elements, the Chinese concepts of life and death resulted in certain taboos, moralities, values, and perceptions that were incompatible with the ideological logic of life insurance. Such incompatibility resulted in a mismatch between what the local people wanted according to their cultural logics and what life insurers could offer according to the profit-oriented institutional logic of life insurance. The local Chinese preferred money management products, but risk management products were more profitable to insurers under the constraints of the local institutional conditions. The foreign and domestic life insurers handled this incompatibility differently. The former adopted a profit-oriented model and attempted to change local preferences; the latter adopted a market-share model and simply yielded to local preferences. The disparity between foreign insurers’ product development in one camp and domestic insurers in another, I argue, represents their divergence in handling the local cultural resistance to the risk management concept of life insurance. However, variations were found within each camp of insurers in their sales volume and sales agents’ morale and commitment. The variations reflected who headed the companies. Taiwanese–headed Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna) stood out as a competitive joint venture, with its sales volume growing impressively since its inauguration. The Taiwanese managers deployed an emotional, relational approach to organize and manage their sales agents, who turned out to be most strongly committed to their job and to the company, compared to agents in the other companies. The localChinese–headed Ping An Insurance Company of China, Ltd. (Ping An), on the other hand, used a paternalistic, authoritative approach to manage their sales agents. The agents nonetheless were in high spirits when their products met local preferences. The agents of the Hongkongese-cum-Taiwanese–headed American International Assurance Company, Ltd. (AIA) were only loosely motivated. AIA’s attempt to marshal a professional sales force was not successful. However, the sales agents from the German–headed Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong) were even more demoralized. The German managers attempted to create an instrumental-rational workplace culture, which frustrated and alienated their sales agents. Thus, where the top managers came from appeared to have an effect on their labor management, which significantly affected the morale and commitment of their sales agents and, consequently, their sales volume. I argue that Taiwanese managers were the most skillful in motivating the sales agents, whereas the German managers were least capable of doing so, because the cultural capital embodied by the former was more relevant and thus was a resource, whereas the cultural capital

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embodied by the latter was irrelevant and thus was a constraint. I further relate the enabling and constraining nature of their cultural capital to the institutional and cultural environments, and the workplace cultures, from which the managers came. When the sales agents approached target prospects to sell them life insurance, they largely capitalized on facilitative cultural elements, such as the etiquette of renqing (interpersonal obligation), the child-centered ethos, and the stock market fad. At the same time, they framed their products in accordance with the local preferences, namely, that life insurance was a new money management instrument. In order to avoid the topics of death and misfortune and to present the new commodity as compatible with the local definition of a “good life” and the local habit of saving, the sales agents redefined buying life insurance as analogous to saving for yanglao (retirement). In doing so, they succumbed to the local cultural logics but, simultaneously, appropriated the incompatible cultural elements for serving their interests. The Chinese life insurance clients and prospects, nevertheless, were not all passive and subject to manipulations. They had multiple motives for buying life insurance, ranging from fulfilling the interpersonal obligation of renqing and showing love to their one and only child, to saving for yanglao and investing for profits, to managing certain kinds of risks. These multiple motives, however, shifted over time under certain institutional and cultural influences. And despite these multiple motives, the Chinese prospects and clients insisted on a money management definition of life insurance and persistently adhered to the products they preferred. Their insistence on their own definition of life insurance and their adherence to money management products, I argue, were constituted by the local cultural logics rooted in the concepts of life and death. Figure 6.1 illustrates the mechanisms by which the two forms of culture shape the formation of the life insurance market in China. I coin these mechanisms an “interactive multiple-process model of culture in market formation.” From this case study, it is apparent that shared cultural values and ideas among the Chinese, rooted in their concepts of life and death, produce a taboo on thinking and talking about premature death. Moreover, these values and ideas define a “good life” as living well toward the end and a “good death” as dying in full life, assign economic obligations to living family members, and filter selective attention to fatal risks. These folklore, values, moralities, and perceptions are incompatible with the probabilistic assumption of risks and the commensuration logic on which commercial life insurance operates. Together they compose public resistance to receiving life insurance as an instrument of risk management (figure 6.1, arrow A). This resistance manifests as a preference for payments to the insured, adherence to savings as the primary mode of risk management, a feeling of purely risk management products being a “waste of money,” and a denial of the possibility of

Culture as shared ideas & values

Taboo on premature death “Good life” and “good death” Obligation b/w the living & dead Selective attention to risks

Concepts of life & death

Composing (A)

(A’) Resistance to life insurance as risk management

Money Management Market

Necessitating (B)

Culture as a tool kit or a repertoire

Etiquette of renqing Child-centered way of life Habit of saving Stock fever Risk management practice

(C’) Circumventing (C)

Figure 6.1 Interactive Multiple-Process Model of Culture in Market Formation

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fatal misfortune. This public resistance necessitates the invention of marketing strategies to remove or circumvent such resistance (figure 6.1, arrow B). Foreign and domestic insurers in China adopted rather different strategies in this respect. The foreign players attempted to remove the resistance by trying to raise local people’s sense of risk, and they accommodated to the local preferences only to the extent that profits were not jeopardized. The Chinese insurers, on the other hand, endeavored to circumvent the resistance by redefining the concept of life insurance according to local existing risk management practices and habits of money management, modifying product features to accommodate local preferences, deploying marketing strategies based on local etiquette, and designing sales talks appealing to the local audience. It was through these circumventing strategies that life insurance sales were fostered (figure 6.1, arrow C). Nevertheless, the Chinese market has emerged with a trajectory and features different from those of the Euro-American markets. It first emerged as a money management market and has been moving toward one of money-cum-risk management. The characteristics of this market, I propose, are shaped by the dual processes (figure 6.1, arrows A’ and C’) in which one form of culture composes the resistance and the other form of culture circumvents it. Throughout the text, I have demonstrated that the characteristics of the life insurance market in China were shaped by local cultural resistance and the local insurers’ yielding to this resistance. Hence, I expand the “culture matters” argument by incorporating the tool-kit dimension of culture into the analysis, without denying the role of cultural values in shaping the development of a life insurance market. I argue that the role of culture as shared ideas in shaping human action was not as inactive as Ann Swidler (1986) proposes. If the Chinese concepts of life and death did not matter, transnational life insurers would have succeeded in inculcating the risk management concept of life insurance into the local population and creating a predominantly risk management market. Moving beyond the case of China, the interactive multiple-process model of culture as illustrated in figure 6.1 can be used to reinterpret the making of the life insurance market in nineteenth-century America, according to the empirical data supplied by Viviana Zelizer’s (1979) Morals and Markets. I reinterpret the American case as follows: Christianity-dominated sociocultural values (sacralizing human life and condemning speculation on death) widely held prior to the midnineteenth-century America resulted in a widespread cultural resistance to life insurance (arrow A). The incompatibility between the Christian sociocultural values and the commensuration logic of human life necessitated the life insurance providers to adopt a religious discourse of life insurance from the 1840s to the 1860s in order to sanctify the nature of life insurance (arrow B). In dealing with the resistance to pricing human life, existing cultural symbols and practices were

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mobilized by American life insurers and their sales agents to undermine the commercial nature of life insurance and to bestow a quasi-religious function on the new commodity. Life insurance companies presented themselves as “human and benevolent institutions” and sales agents presented themselves as “the clergy” to convince the prospects that buying life insurance was a “religious duty” ( Zelizer 1979:96–99). Furthermore, life insurance providers also capitalized on the traditionally male-dominant culture by symbolizing the purchase of life insurance as a moral obligation of breadwinners to provide “a form of economic immortality” for their wives and children. Life insurance was presented as an instrument that could prevent their wives from remarrying so that they could control the sexual life of their wives upon their deaths (Zelizer 1979:58–61). All these strategies precisely illustrate the use of the tool-kit properties of culture to define and package the nature, the meaning, and the appearance of life insurance in order to circumvent cultural resistance (arrow C). Therefore, this project demonstrates that a life insurance market can emerge without public receptivity to the idea that life insurance is an effective and desirable device for managing unexpected misfortunes. While the existence of a set of cultural values compatible with the ideological contents of life insurance is certainly favorable to its development, their absence is not an insurmountable barrier. Instead, the market is made possible by the insurers and their sales agents’ strategic use of the local cultural repertoire to overcome the lack of public receptivity due to incompatible cultural values. Therefore, creating a life insurance market is simultaneously a cultural project. Its practice and meaning are constructed and reconstructed through interactions, negotiations, collaborations, and contestations among the actors concerned.

Structure and Agency: The General Mechanisms of the Interactive Multiple-Process Model Deriving from inductive, ethnographic research, the interactive multiple-process model praises the agency of both the globalizing agents and the local recipients, and yet it pays equal attention to the structural constraints imposed by local cultural logics and profit-oriented commercial logics, and how the actors interact with these structural forces. It may fall into the category of taking a middle theoretical position between determinist and voluntarist views of culture.1 Swidler’s tool-kit image of culture has been criticized for being overly voluntaristic, downplaying the factors that push individuals to select certain tools rather than others ( Vaisey 2009; Go 2008; Lamont and Thevenot 2000; Lamont 1992; Berger 1991, 1995). While emphasizing the possibility for individuals to actively choose among cultural resources, Michele Lamont challenges the fragmented paradigm

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of culture by arguing that remote and proximate structural factors shape choices from and access to the tool kit, and choices are largely channeled by the “cultural supply side of the equation” (1992:135). Building on that insight, this project, however, is a little more (or less) ambitious than proposing a middle-ground theory. It explores the mechanisms through which the two very different forms of culture interact. Extending the application of the interactive multiple-process model of culture to economic activities that go beyond the life insurance industry, I propose three mechanisms through which culture as a coherent meaning system and culture as a repertoire of multiple symbols interplay in shaping a new economic practice or the formation of a new market. First, shared meanings and values necessitate the mobilization of the tool-kit dimension of culture to steer the direction along which the new economic practice or market develops. This mechanism recaptures and extends the Weberian theory of culture and economic practice. Culture as shared worldviews and beliefs underlying theoretical and ontological assumptions (Campbell 1998) generates a constellation of folklore, values, moralities, and perceptions. This constellation, in turn, molds a pattern of preferences and dispositions that can be compatible or incompatible with the profit-making logic of a new economic practice. If this pattern is largely incompatible with the profitability of the new economic practice, it necessitates the mobilization of the tool-kit dimension of culture to circumvent the incompatibility. The circumventing mechanism is like bricoler, an old French verb introduced by Claude Levi-Strauss (1966) to elaborate the concept of “bricolage,” which describes diverging movements from a direct course to avoid an obstacle.2 Chinese insurers’ movements away from the risk management concept of insurance to avoid the cultural obstacle inevitably shaped the path and the features of the market. Second, the constellation of folklore, values, moralities, and perceptions, together with institutions, constitutes the symbolic contents of a cultural tool kit and circumscribes the selective use of the symbolic elements from the tool kit. This is why shared meanings and values in their own right rarely completely suppress a market embodying a contradictory set of values, precisely because they simultaneously constitute a repertoire containing numerous cultural elements for the practicalities of a cause. The tool-kit elements, manifesting as etiquettes, recipes, rituals, habits, styles, fads, skills, capacities, know-how, and practices, are constituted by various meaning systems and institutions. They are therefore heterogeneous and vast in number. However, because practices must be anchored in shared meanings (Sewell 1999; Swidler 2001), the shared meaning system prescribes a “matrix of possibilities” (Goffman 1967:13), by setting “the floors and ceilings” (Douglas 1985:75), “blocking out certain possibilities” (Emirbayer and

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Goodwin 1994:1440), or “determining the kinds of .  .  . . problems” (Dobbin 1994:20) for effective uses of cultural symbols and practical skills. Therefore, culture as shared ideas, values, and beliefs, combined with institutions, constitutes cultural symbols for practical and strategic uses but simultaneously functions as a structural force delimiting the range of possibilities and circumscribing the selective use of the cultural symbols.3 Lastly, in circumventing the tension between the local cultural logics and the ideological logics of the new economic practice, it is economic actors who materialize the tool kit into resources. As William Sewell puts it, a capacity for agency is inherent in all humans, and “part of what it means to conceive of human beings as agents is to conceive of them as empowered by access to resources of one kind or another” (1992:10, emphasis original). However, because an array of resources can be interpreted in varying ways, actors’ agency is the “capacity to reinterpret and mobilize an array of resources in terms of cultural schemas other than those that initially constituted the array” (1992:19). Since the tool-kit dimension of culture draws its properties from various logics and institutional resources, it is indeed like “a bag of tricks or an oddly assorted tool kit” as portrayed by Swidler (2001:24). The contents of these elements can be incoherent and even in conflict, but they coexist because actors have agency—the ability to pick and choose only those that are useful at one time for a particular situation. It is, after all, actors who engage themselves in “practical experimentation” (Zaloom 2006) to make the market possible. As Swidler (1986, 2001) emphasizes, the cultural elements in a tool kit have adaptable and flexible meanings for practical and urgency management. I should add, however, that these cultural elements are not a pool of resources in their own right. It is the actors who turn the normative rules and cultural symbols into resources. Because rules and symbols can be contradictory and carry multiple meanings in different contexts, the economic actors must have enough local knowledge to selectively and appropriately mobilize some of the cultural elements to orchestrate the new economic practice. Nevertheless, I emphasize that the economic actors’ agency is bounded. The bounded notion of agency was first portrayed by Sewell (1992). Accordingly, agency is profoundly social and collective in both its sources and its mode of exercise. For its sources, it is formed by a specific range of shared cultural meanings and schemas available in a person’s particular social milieu, and thus, it is “culturally and historically determined” (1992:20). This explains why the managers of German origin were less capable of picking the appropriate symbols from the Chinese cultural tool kit. For its mode of exercise, agency involves an ability to coordinate one’s actions with others and against others, and hence, the extent of the agency exercised by individual actors depends on their positions in the collectivity. Drawing insights from this study, I should add that economic actors’ agency is

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bounded by both macro- and microcultural and institutional conditions under which the agency is exercised. For instance, the strategic choices exercised by the Chinese life insurance sales agents were profoundly bounded by cultural taboos, ideas about good life, social insurance reforms, the performance of the stock market, and strategies of the competitors. These factors all have an impact on choices and the effectiveness of the chosen strategies toward the desired outcomes. The above mechanisms illustrate how coherent and incoherent cultural elements interact with each other. The role of the cultural tool kit in constituting action does not exclude an equally, if not more, important role of shared ideas in the process. I maintain elsewhere that the debates over whether culture is coherent or incoherent are not productive to the field of cultural sociology (Chan 2009a). What will be more productive, and here I agree with Ronald Jepperson and Ann Swidler (1994), is to study the hierarchic order of different cultural elements affecting human action. However, theorizing about various cultural dimensions in a quasi-hierarchic order demands more empirical research, beginning with nonhierarchic treatment of different forms of culture in order to explore the many possibilities of their linkage and ordering. Stephen Vaisey’s (2009) “dual-process model of culture,” which integrates the unconscious, motivational level of culture with the deliberate, discursive level of culture to understand how Americans make moral decisions, is an excellent example of this effort. These mechanisms also expand a cultural analysis of economic practice. The cultural embeddedness of economic practice has thus far drawn less attention from economic sociologists than its social, political, and institutional embeddedness. One of the reasons, as Zelizer (2002) points out, is that mainstream economic sociologists have not quite known what to do with culture. The elusive nature of the concept of culture makes measuring “cultural effects” extremely difficult. The relational approach to culture proposed by Zelizer (1994, 1996, 2002, 2005a, 2007) in her studies of monies, payments, consumption, and intimate transactions in various projects has offered a viable alternative approach to unraveling the dynamics of culture in economic practices. Her insights into the incorporation of social relations into various monetary transactions, and of monetary transactions into different types of social relations, unambiguously bring forth the constitutive nature of culture. Yet, unfortunately, the constitutive capacity of culture is quite often ignored by prominent economic sociologists. As a result, when culture is included as an independent variable in a causal model, it is often defined as a distant tradition. This is another reason that the cultural embeddedness of economic practice is undermined. For instance, by confining their concept of Chinese culture to the overarching Confucian ethic of obedience to authority, Gary Hamilton and Nicole Biggart (1988) reject a cultural explanation for national differences in market features and trajectories. However,

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as demonstrated through this case study of Chinese life insurance, culture in the form of overarching shared ideas can influence economic practices through a series of transmutations of cultural forms: from the concepts of life and death, to values, moralities, and perceptions, and to preferences and choices. At the macrolevel, culture may not shape action directly. Nonetheless, through transmuting its forms, it can travel from historically distant worldviews to more immediate perceptions and norms that more directly organize actors’ strategies. The role of culture in shaping a market, therefore, is not as remote as Hamilton and Biggart propose. Furthermore, when the constitutive capacity of culture is ignored, institutional analysts tend to take for granted certain institutional arrangements that call for explanation. For example, when establishing their institutional argument, Marco Orru, Biggart, and Hamilton (1991) take Taiwanese firms’ pooling of financial resources from extended families as one of the exogenous institutional factors, namely, firm financing, that affect Taiwanese business practices and their organizational behaviors. However, this analysis falls short of addressing these fundamental questions: Why do Taiwanese extended families have so much money in the first place? If the answer is that they have high savings, why do they save so much? In addition, why are extended family members willing to loan money to each other? Would extended family members in American society feel the same obligation to loan money to each other and feel as comfortable borrowing money from each other? In tracing questions this way, we will find that culture, which is certainly constituted by historical and institutional conditions, has itself a constitutive capacity.

Life Insurance in the Making of Culture The above analysis leads us to a question concerning the relation between life insurance development and rationalization. Timothy Alborn (2009) argues that life insurance is itself a “creator of culture” that contributes to various important substances of modernities, including new narrative genres, new statistical thinking, and new definitions of a healthy body. This study illustrates that a Chinese life insurance market is emerging without a rationalized economic calculation of human life from the clients’ subjectivities. However, once this new economic practice—buying life insurance—is adopted and popularized, new meanings and rationalities may arise. In other words, life insurance is first legitimized through existing cultural frames for meaning and legitimacy, but it can also transform local cultures by altering in part the way of life and by adding to the cultural repertoire a new set of vocabularies and schemas.4 Just as Donald MacKenzie and Yuval Millo (2003) find that options in financial market have enriched the investors’ “repertoire of strategies” by allowing them to realize a different set of payoffs than

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they would have realized in their absence, Chinese life insurance clients may come to associate life insurance more with the economic loss of human life after they repeatedly witness payments made to beneficiaries. If this is the case, life insurance is not only a product of rationalization but also an instrument of such a process. With this hypothesis, one of the objectives of my return to Shanghai in the winter of 2004 was to explore whether the new practice of buying life insurance had generated new, rationalized meanings and definitions. I interviewed a total of 37 clients (25 in person and 12 by telephone) who had received money from their insurers.5 Although I wished to interview those clients who had received payments for deaths or other serious misfortunes, such clients were usually unwilling to be interviewed. As a result, the majority of the clients interviewed had received small payments for minor injuries. Nonetheless, I managed to interview a few clients who received payments for deaths or critical diseases.6 Their cases are quite telling. In 1999, Xie Pingheng and her husband each bought an insurance policy from AIA that covered life, yanglao, accident, and critical diseases. Unfortunately, her husband died of cancer the following year. She received 60,000 yuan (~ US$7,249) from AIA. When asked if the money paid by the insurer had eased a little bit of the pain at the moment, Xie responded: “Of course not! Not at all! But now I feel that it’s a bit useful. How useful? Well, if there were no insurance, then there would be nothing now. The money I’ve got is mainly for my son’s future. I used part of it to buy a child policy for his future education. This policy costs 4,000 yuan (~ US$483) a year. So, it’s a bit useful.” Xie, age 34, was raising her nine-yearold son on her own after her husband’s death. With a college degree, she earned an above-average salary. Her feelings about the money from AIA were rather ambivalent. On the one hand, she refused to view human life as compensable by money, but on the other hand, she appreciated the practical value of the money. These mixed feelings make sense. As Zelizer (1979, 1994) points out, the relationship between human life and money bears not only a practical but also a moral dimension. Morally, human life in the Chinese worldview is sacred, as it is in the Christian tradition. The sacredness of human life is expressed in the aphorism renming guan tian (human life is a heavenly matter). In this sense, human life is noncommensurable. From a practical perspective, however, when a family breadwinner dies prematurely, the family members need money for survival. Hence, when the family members are grateful for receiving money from an institution as compensation for the loss of the breadwinner, it does not mean that they believe the money can replace their lost loved one. It only means that without the compensation, their lives would be impossible. Receiving money as a result of death, nonetheless, is not something that deserves celebration. Therefore, the relationship between money and death is better narrated in a very subtle, even hidden, way.

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Clients’ ambivalent feelings toward the money received from insurers were best demonstrated by Huang Jing, who initially bought an insurance policy from Allianz-Dazhong under the influence of her colleagues (described in chapter 5). Huang bought a policy in 2001 with coverage similar to Xie’s. Her sales agent informed me that she received a payment of 10,000 yuan (~ US$1,208) for a critical disease. After I briefly introduced myself and my study, Huang’s first reaction, even before I asked any specific question, was, “I hate that money! I spent it all as soon as I could. . . . I spent all the money on food and clothes. I really hate that money. I really do. . . . That money reminded me of the terrible misfortune.” When asked if her ideas about life insurance had changed since the time she bought her policy, she said: Not much. Probably because the amount [of money I received] was not big. If I had bought a bigger policy, it might have had an impact on me. I might have had some feeling after receiving the money. But I didn’t have much feeling when I received this amount, probably because it is not a big amount. Rationally, I understand that insurance can manage some risks, but I don’t have such a feeling. If I had bought a policy with an insured amount of, say 100,000 yuan (~ US$12,082), perhaps I would have a feeling. Intriguingly, while Huang expressed her hatred of the money, she also implied that her view of life insurance might have been more positive if she had received a larger sum from the insurer. When asked if the money she received from the insurer had any use at all, she said, “The money did help economically.” Her ambivalence about the money is obvious. During the entire 45-minute interview, Huang never mentioned what critical disease she was diagnosed with. I felt as if it was a somewhat taboo subject to her, so I did not ask. I later learned from her sales agent that it was breast cancer. For the majority of the clients who received small payments for minor injuries, I found that the tiny amounts of money they received strengthened their sense of trust in the particular insurance companies who insured them, and in the life insurance industry in general. For the small sample of clients who received relatively large amounts, I found a common pattern: the pain brought on by misfortune was not mitigated upon receiving money from insurers, yet after their period of grief, they realized that the money was useful, and their acceptance of life insurance was slightly elevated. For instance, Xie bought another policy for her son instead of simply putting the money in a bank. Huang thought about what her feelings would be if she had bought a policy with a higher insured level, which would be a risk management policy. Therefore, it is possible that with

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increasing significant payments made by life insurers due to various misfortunes, the general public’s perception and definition of life insurance will change from primarily money management to risk management. This inquiry awaits future research with a different methodology.

Culture and Globalization of Modern Capitalism In examining the question of how the global diffusion of a particular capitalist enterprise is possible despite variations in local cultures, this project proposes that localization is a necessary strategic move to create local markets in the course of globalization. It is through localized interpretations and definitions that a particular capitalist enterprise can be grounded in a local context (Chan 2011). The Chinese buyers’ understanding of life insurance as a primarily money management category unmistakably illustrates this point. Such localized interpretations have produced a market with a trajectory and features different from those of the transnational firms’ home countries. This proposal is in line with those from cross-national comparative studies (e.g., Dobbin 1994; Guillen 1994, 2001; Biernacki 1995; Dore 2000; Hall and Soskice 2001). However, we have seen in the Chinese case that foreign and domestic economic actors in a locality assume different degrees of localization. To answer the question about the extent to which local culture wields the power to selectively adopt and reject certain modern capitalist ideas and practices in the course of globalization, I suggest that (assuming the local institutions are supportive of the new ideas and practices) it depends on three critical factors: (1) the extent to which the local cultural elements are compatible or incompatible with the new ideas and practices, and how resilient the incompatible elements are; (2) who the creators of the new economic practices are; and (3) the presence or absence of competitive domestic players in the field. This section briefly recapitulates the first two factors that have been substantially discussed throughout the text and elaborate on the last one. From this case study, we would predict that the greater the degree of incompatibility between the commercial logic of a new economic practice and the locally shared ideas, traditions, values, and moralities, the more resistant a population will be to the new practice. It then becomes more necessary to mobilize the cultural tool kit to circumvent this incompatibility. Depending on what kinds of cultural elements are available in the tool kit, the new economic practice will be modified in some way. This modification is a combined effect of the prohibiting and enabling mechanisms performed by the two different forms of culture. The operations of the mechanisms, however, are not automatic. In the case of life insurance in China, the concepts of life and death as shared ideas and beliefs of

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the local population act as an exogenous factor in shaping the formation of the market. The extent to which this cultural force is influential in shaping the market, nevertheless, is not definite. It depends on how the insurance practitioners in the field respond to this cultural barrier. The ethnographic details from chapters 2–5 demonstrate that the types of strategies deployed by the insurance practitioners to handle the local resistance are neither predetermined nor random. Economic actors choose their operating and marketing strategies. Nonetheless, foreign and domestic companies display a systemic difference. Different foreign companies headed by leaders from different cultural backgrounds also display a pattern of difference. Thus, who is in the field affects the extent and the mode of localization. Although the shared concepts of life and death and the associated taboos, values, moralities, and perceptions set the boundary for the social construction of sales discourses, foreign insurers constantly attempt to test the boundary, to soften it, and to expand it for a discourse that is compatible with the profit-oriented institutional logic of life insurance. To do so, they draw certain elements from the local cultural repertoire but mix them with new cultural symbols that they intend to impose on the locals. The domestic insurers, on the other hand, observe the limitations imposed by the local cultural logics. They largely mobilize the local cultural repertoire to make sense of the new entity in a locally acceptable way, without attempting to challenge the local mentalities or habits. Thus, the economic actors’ bounded agency that entails their choice of strategy largely crafts the new economic practice in a particular locality. If, hypothetically, there were no domestic insurers or the domestic insurers were not competitive enough, we could reasonably infer that the foreign insurers would have localized their practices to an even lesser extent, but the growth of the life insurance business would have been much slower. In other words, whether the receiving end of a globalizing enterprise has competitive domestic player(s) will affect the extent to which the enterprise is localized. This factor is well illuminated when we include the cases of Taiwan and Hong Kong for comparison. The trajectory of the life insurance market in mainland China, thus far, closely resembles the one in Taiwan. The Taiwanese life insurance market expanded quickly during the 1980s–1990s. In 1991, life insurance premiums as a percentage of gross domestic product reached 3.3 percent (compared to only 0.98 percent in Hong Kong). By 2004, this percentage jumped to 10.55 (compared to 6.4 percent in Hong Kong).7 This impressive development of the life insurance business in Taiwan was likely due to the dominance of domestic players and its focus on money management. Thanks to the protectionist policies imposed by the Republic of China (ROC) government, the life insurance industry in Taiwan has long been dominated by domestic players. It was not until 1987 that a few American

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insurers managed their way in, and it was not until 1994 that the ROC administration allowed other foreign insurers to set up branches in Taiwan. Nevertheless, due to protectionist policies early on, the Taiwanese life insurance market continued to be dominated by domestic players. In 1989, domestic insurers occupied more than 90 percent of the market share (Lai 1991), and by 2001, they still held 88 percent of the policies in force in Taiwan. The distinction between the domestic and foreign insurers, like that in mainland China, was also remarkable in their product development. With the cultural taboo on premature death, the locally formed Taiwanese insurers presented life insurance as savings to the public and offered primarily endowment products from the 1960s to the mid-1980s. In 1989, endowment insurance accounted for 86 percent of long-term individual life insurance policies in force in Taiwan (Li, Duberstein-Lindberg, and Lin 1996). Yet upon their arrival, foreign insurers, like those in China, attempted to create a risk management market. More than 80 percent of the life policies sold by the foreign firms in the first half of the 1990s were risk management products, mainly whole life without endowment. However, domestic insurers still preferred to sell money management products. About 65–80 percent of their life policies sold during the same period were whole life with endowment or were pure endowment. Because the market had been dominated by the domestic insurers, it had a distinct money management flavor. By the end of 2001, endowment policies still accounted for 68 percent of the individual life premium income in Taiwan. On the other hand, the trajectory of life insurance development in Hong Kong was distinct from that in mainland China and Taiwan. As a British colony, Hong Kong was not protected from foreign insurers. During its economic boom in the 1980s, the life insurance industry was dominated by three major foreign firms: AIA from the United States, Manulife (International) Limited from Canada, and National Mutual Life Association, Ltd. from Australia. At the beginning of the 1990s, these three insurers had captured more than 70 percent of the life business in Hong Kong. Although the locals in Hong Kong, like those in mainland China and Taiwan, also favored money management products, the foreign insurers did not simply accommodate their preference. In the absence of competitive domestic players, the foreign firms in Hong Kong were under less pressure to localize their products. Instead, they aggressively promoted the risk management concept of life insurance and strove to convince the public of the necessity of purchasing traditional whole life. As a consequence, traditional whole life consistently constituted more than 70 percent of policies in force from 1991 through 1999. Thus, the market during this period was predominantly one with a risk management character. The dominance of traditional whole life policies in Hong Kong, nonetheless, by no means represents the general public’s acceptance of the risk management concept of life insurance. The development of

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the life insurance industry in Hong Kong was not nearly as explosive as it was in Taiwan. For instance, the number of policies in force in proportion to the population reached only 64 percent in 1999 (compared to 108.5 percent in Taiwan). In fact, the size of the Hong Kong life insurance market in light of its economy and population before the 2000s was significantly below the average compared to other developed economies (Chan 2012). One possible explanation is that the market was dominated by risk management products that were incompatible with the local preferences. I have argued elsewhere that the cultural taboo on premature death is the same in Hong Kong as it is in Taiwan and mainland China, and that residents of Hong Kong also tend to take out life insurance as a form of money management rather than risk management (Chan 2012). The distinction between the Taiwanese and Hongkong markets, I suggest, can be attributed to the extent to which indigenization took place, which in turn is a question of who dominated the markets. The market in Hong Kong has been dominated by foreign players who attempt to remove the cultural obstacle in the absence of competitive domestic players. These foreign players, like those in Shanghai, operate according to a rigorous profit-oriented institutional logic at the expense of a larger market. On the other hand, the market in Taiwan has been dominated by domestic players who are more accommodating to the local resistance, in order to boost their growth. Therefore, the power of the domestic players is an important element affecting how a globalizing enterprise operates in a locality. This power, in turn, is often a function of their policies and the bargaining powers of the local states. The weak political position of Hong Kong as a British colony entailed policies that favored transnational life insurance corporations. These policies resulted in an absence of competitive domestic players and a market with a lesser degree of localization (Chan 2012). While the divergence in product development between transnational and local life insurers is evident in all three Chinese societies, it is important to ask whether this divergence will persist. The changes I observed in 2004 in the insurers’ marketing and managerial strategies may provide us with some clues to this question.

Epilogue: Changes and Projections In the winter of 2004, I returned to the insurance agency offices in Shanghai where I did my study in 2001–2002. I was astounded to see the reversal of fortune between AIA and Ping An. AIA had achieved 12.3 percent growth in its premium income that year, while the entire market was shrinking. Its sales agents could not have had better morale, and it was the only insurer that recorded an

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increase in the number of sales agents, from about 4,200 in 2002 to around 5,000 in 2004. Ping An, in contrast, had suffered an impasse in the growth of premium income, with merely 2.3 percent growth that year. Its agency office, which was full of agents and filled with noise in 2001–2002, now had empty seats and was filled with silence. The agents were demoralized, and the size of Ping An’s sales force contracted to 9,300 from 16,400 two years earlier. Another surprising observation was the dispiriting atmosphere in Pacific-Aetna’s agency office. The agents who used to be upbeat, ambitious, cheerful, and enthusiastic in 2000– 2002 now, for the first time, were considering quitting. Pacific-Aetna’s sales force dropped from almost 8,000 in 2002 to only about 4,700 by the end of 2004. Its sales volume suffered a sharp fall to negative growth of -0.26 percent. What happened? Why did the business change so drastically in such a short period of time? How can we make sense of these abrupt changes? Does the “culture matters” argument still hold, given that the cultural elements working in 2000–2002 were not supposed to change overnight?

Dramatic Changes in AIA, Ping An, and Pacific-Aetna On December 6, 2004, I revisited the agency office of AIA where I spent most of the time during 2001–2002. Shen Hingfu, the unit manager of the agency office I used to visit, excitedly told me that this was the best year for AIA’s sales since its inception in 1992. The boom, unambiguously, was brought about by a new money management product, a variable universal life. What made AIA give up its insistence on promoting primarily risk management products and take the lead in offering an investment product? In July 2002, the Taiwanese general manager, Mr. Hsu, who headed AIA in Shanghai for 10 years, was replaced by Mr. Chan from Hong Kong. Nonetheless, Chan did not impress headquarters. In 2003, AIA’s growth hit a low point. That year, Chan was replaced by Mr. Bao, who came from Macau and had worked briefly in Hong Kong prior to this appointment. The sales agents believed that Chan was in his position for only 14 months because he failed to boost AIA’s business. As the newly appointed general manager, Bao was eager to increase sales volume to prove his leadership. He seemed to be much more willing to accommodate the local preferences. He launched the variable universal life soon after he succeeded Chan. Although this new policy had its origin in the United States, AIA modified it by guaranteeing an interest rate of 1.75 percent in addition to the investment return. According to the agents of AIA, the guaranteed interest rate made this product more appealing than unit linked, so it was well received by the public. Launching this variable universal life product marked AIA’s move to

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developing money management products. In fact, its move started in 2002 when its critical disease insurance, which was originally a nonreturning principal type, carried a 50 percent return of premium to clients who never filed claims. In April 2004, the return rate was raised to 100 percent. These recent changes in AIA’s product development were a noticeable attempt to improve sales performance by implementing a localizing strategy. Indeed, they boosted AIA’s share of the individual life business from 10.2 percent in 2003 to 11.2 and 11.7 percent in 2004 and 2005, respectively. Nevertheless, the boom at AIA was only temporary. According to two managers of the sales and marketing department of AIA, their profits did not go along with their increase in sales volume. A number of clients who bought the variable universal policy in 2004 made a “one-time premium payment.” Some of them bought the policy as if it were a fixed deposit savings plan, like certificate of deposit savings in the United States. Some employers bought it to reduce their profit tax for that particular year. Because the premium payment was made just once, the growth of the business in 2004–2005 was, on its face, inflated. As a result, its share in the individual life market dropped again in 2006 to 9.9 percent. It was not clear why AIA had to localize its products when Ping An was already moving toward a risk management definition of life insurance after the unit linked crisis. A possible reason was that the newly appointed general manager felt insecure due to the rapid change from the preceding manager, so he made this bold move to make AIA’s sales performance look good. Two days after I visited AIA, I went to the agency office of Ping An where I visited regularly in 2001–2002. I was surprised by the depressing feel of the office’s atmosphere. It was the office where Dai Hong and Chang Qing (the helpful friend and the filial daughter-in-law, respectively, in chapter 4) worked. I joined the morning assembly as I used to do in the past. The agency office had moved to another commercial building, and it was a bit more spacious than the one from two years prior. The image left in my mind from 2002 was of an office so packed of agents that they often had to squeeze space for one another. This image, however, had completely disappeared in 2004. Dai was still the team leader, but the number of her team members had dropped from 14 to 6 in two years. Chang had left the life insurance industry. The team sitting next to Dai’s shrank from 38 members to 15. In contrast to the memory I had of a room replete with agents and noise of their chitchat, now more than one-third of the seats were empty. Dai told me in a disheartening tone that sales were getting more difficult, so half of her agents had left. When asked what kinds of products they had been selling, Dai said a variable universal life, first launched by AIA, began being offered by Ping An in June 2004. To my surprise, Ping An, which had been bold in launching money management

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products from the beginning, seemed cautious in 2004. Its circumspect approach might be related to its going public in Hong Kong in the same year. In fact, as presented in chapter 2, Ping An’s move to a more conservative approach began in the second half of 2002 after the unit linked crisis. HSBC Group’s acquisition of 10 percent of its shares might have further checked the development of risk-taking products by Ping An. The critical disease insurance, which used to carry a dividend component that facilitated the sales talks of the agents, no longer had this component, so it became more difficult for the agents to sell. In 2004, none of the Ping An products stood out as uniquely appealing to the public. Although Ping An followed AIA in offering variable universal life, Dai’s agents complained that this product was too complicated for the agents and for the prospects to understand. This, together with the unit linked crisis, lost the agents of Ping An the competence and credentials to sell this investment product. This seemingly depressing note, ironically, was brought about by Ping An’s becoming more “mature,” by its being more profit oriented and offering more risk management products. The reversal of fortune between AIA and Ping An in 2004, in fact, further buttresses the statement that the growth of the Chinese life insurance market was brought about by money management products. However, the static growth of Ping An’s premium income and the decline of its market share cannot be taken at face value. After all, what matters to the shareholders is net profit, and what mattered to Ping An after its public listing was its stock price. By January 2007, Ping An’s price on the Hong Kong Stock Exchange had jumped 377 percent from its initial offering in June 2004. As mentioned in chapter 2, when it was listed on the Shanghai Stock Exchange in March 2007, its price recorded the world’s largest initial public offering by an insurance company. This domestic insurer first made its name by its breathtaking expansion within a short period of time from 1994 to 2001. Without this brave attempt to deviate from the conventional, conservative model in its early stages, it is difficult to imagine that it would have been expanded so rapidly. Compared to Ping An, the fastest growing joint venture, Pacific-Aetna, was faced with an even more severe setback in 2004. The setback was quite obviously triggered by a significant change in the top managerial body, which had changed the sales agents’ morale. The ING Group, which acquired a substantial share of Aetna Inc. in December 2000, began to reform Pacific-Aetna’s (now called Pacific-Antai) management in 2003. The Dutch-led headquarters complained that the expenditure of this joint venture in China was too high. To reduce its cost of operation, the headquarters replaced the Taiwanese expatriates with local Chinese that cost much less; only the general manager still came from Taiwan. Ms. Tao, a Taiwanese who also worked for Aetna in Taiwan, was appointed to replace Manager Chang as the general manager in April 2003. In December 2003,

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a local Chinese, Mr. Ku, was appointed to replace Manager Ge as the sales and marketing manager. Since the sales agents adored Ge, who had worked closely with their senior agents, his firing by headquarters came as a blow to the agents’ morale. Some senior agents followed Ge to join Citibank in Shanghai, helping this foreign bank to establish a joint venture life insurance firm.8 When I revisited the agency office of Pacific-Aetna where I spent most of my time during 2001–2002, I was shocked to see the abrupt change in agents’ morale and spirit. They expressed their sad feelings about the departure of the top managers and some senior agents whom they regarded as “parents.” Zhao Anpei, who used to be upbeat, ambitious, and eager to expand her sales group, now told me that she had been considering quitting Pacific-Aetna. It was the first time I saw the low morale of the sales agents of this joint venture since my first encounter with them in 2000. Wu Yunan, who was overwhelmingly committed and enthusiastic even with chronic headaches back in 2002, was now demoralized and upset about the recent change in the company. She complained that ING only cared about cutting costs. The new sales and marketing manager, Mr. Ku, was paid only about one-tenth of what Manager Ge as an expatriate was paid. The sales agents complained that Mr. Ku, though a local Chinese, had no skills to inspire them. On the day I attended the morning assembly, it happened that it was the last day for a contest in agency recruitment. Ku came with an attempt to boost the last day’s effort for this contest. Having no experience in the life insurance industry, Ku had little knowledge of how to motivate the sales agents. Unlike Ge, who was often humorous and making the agents laugh, Ku looked very uncomfortable standing in front of the crowd. In contrast to Ge, who always had a smiling face and maintained eye contact with the audience, Ku wore a solemn face and looked like a government official. He seemed ignorant of the norms and the routines of the agency offices. After the team manager introduced him, he embarrassingly asked, “What is this called? .  .  . morning assembly?” Without any humor, he urged the agents to work harder for the upcoming new round of sales contest. The agents, who looked bored and unconcerned, had no responses to his speech. In contrast to the cheerful and warm atmosphere that I experienced in the past, the morning assembly had become a dull routine. As elaborated in chapter 3, part of the managers’ cultural capital comes from the cultures of their former workplaces. The replacement of the Taiwanese sales manager with a local Chinese without experience in life insurance sales took away the practical cultural capital to motivate the sales agents. The change that the Dutch-based ING elicited in 2003 seemed detrimental to Pacific-Aetna’s growth and popularity. Like Ping An, this was a move toward a more profit-oriented operation. Previous chapters describe how Pacific-Aetna was profit oriented from the beginning and that its product development was no different

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from other foreign insurers. Nonetheless, it was the most localized foreign insurer in its organizational culture, agency management, and marketing strategies. Localization as such, which involved more ceremonial activities, might have induced a relatively higher cost. In John Meyer and Brian Rowan’s (1991) classical hypothesis, ceremonial activity is inherently in conflict with the logic of efficiency. Perceiving the ceremonial expenditures spent by the Taiwanese managers as “pure costs from the point of view of efficiency” (Meyer and Rowan 1991:55), the ING headquarters replaced the top managerial body in order to cut down costs. However, just as Orru, Biggart, and Hamilton (1991) challenge Meyer and Rowan’s hypothesis, ceremonial expenditure and efficiency can go along well in some circumstances. As a case in point, ING’s attempt to cut its cost of production limited its capability for effective localization. This move in turn brought another cost to Pacific-Aetna: the loss of company’s legitimacy for its internal participants—the sales agents. The Dutch executives at ING’s headquarters, like the German managers from Munichbased Allianz AG, lacked effective cultural capital in the Chinese context. They failed to realize that the ritual significance of ceremonial activities is not confined to categorical rules or formalities but has concrete effects. For Allianz-Dazhong, I did not see obvious changes in the atmosphere of the agency office where I used to visit. The majority of the sales agents whom I spent time with in 2002 had already left the company. The high turnover rate of sales agents was not new for this insurer. Nonetheless, the problem had intensified, as the number of agents dropped from more than 1,300 in 2002 to merely about 700 in 2004. Although its premium income increased 13 percent in 2004, the total sales volume was not impressive due to its small base. As presented in chapter 3, Allianz-Dazhong began to replace the Caucasian managers with local or overseas Chinese in 2002. However, the localization of managerial personnel had not been accelerated since then. In January 2003, the German deputy general manager was replaced by another German, Mr. Hans-Joerg. Then, in April 2005, the general manager, Dr. von Canstein, was replaced by Mr. Molt, who was given the title of CEO. Educated in Germany and the United States, Molt, like von Canstein, had worked for Allianz in Germany for years. It was a bit surprising to me that among the seven top managers that composed the new managerial team of Allianz-Dazhong (now named Allianz China Life) in 2007, three of them were still German, two were Hongkongese, one was Taiwanese, and only one was a local Chinese.9 Thus, a full localization of its managerial body was still a long way off. The market share of this Sino-German insurer remained insignificant (1.7 percent in 2007 and 1.08 percent in 2009). These findings parallel other studies of German multinational corporations, which maintain that German firms adapt their business system in a largely path-dependent manner, which results in a low degree of active globalization (Lane 1992, 2000; Whitley 1994).

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Projections The findings from 2004 suggest that Ping An was moving toward a profit-oriented model of product development, whereas AIA once attempted to significantly localize its product line. Pacific-Aetna was moving away from a costly but effective Taiwanese model of labor management, and Allianz-Dazhong seemed to continue its German model of management. With the exception of AllianzDazhong, the changes in the other three companies suggest a convergent dynamic at the organizational level, though the outcome of such a dynamic is not certain. Will Ping An move to define life insurance as primarily risk management and invest its energy in creating a risk management life insurance market? Will AIA continue to localize its product development with an attempt to capture a larger market share? Will Pacific-Aetna eventually display no difference in its organizational culture and agency management, compared to other joint ventures? Finally, will the life insurance market in China ultimately move from a moneycum-risk management market to a primarily risk management market? If so, a convergence of the life insurance markets may be seen at the transnational level. From the available official data, it appears that there has been a convergence in product development between foreign and domestic insurers in Shanghai over time.10 In 2001, the proportion of individual premium income from money management products (namely, unit linked and dividend insurance) for foreign insurers was less than 27 percent, compared to more than 41 percent for domestic insurers. Five years later, in 2006, the figures from both camps converged at around 35 percent. This convergent tendency has been taking place at the national level as well. In 2002, the proportion of individual premium income from dividend and unit linked products for foreign insurers was about 35 percent, compared to 50 percent for domestic insurers. In 2008, the figures from both camps converged at about 60 percent. The market as a whole seemed to maintain a money management character. Although Ping An and other domestic insurers began to follow more closely their foreign counterparts in offering critical disease insurance in 2002, the unpopularity of this risk management product, along with declining market growth, seemed to push them to concentrate on investment products again. By the end of 2009, premium income from unit linked and dividend insurance accounted for more than 68 percent of the individual life business of domestic insurers in Shanghai. At the same time, foreign insurers substantially increased their sales of these money management products, resulting in unit linked and dividend insurance accounting for more than 58 percent of their individual life premium income in 2009. The entire market therefore retained a money management character. Taking all the insurers together, the proportion of individual premium income

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received from selling unit linked and dividend insurance increased from 38.5 percent in 2001 to 66.8 percent in 2009. Furthermore, another money management product, variable universal life, also came to account for 17.3 percent of the individual life business by the end of 2009. If we add up the sales of all these products that carry an investment connotation (unit linked, dividend, and variable universal life), they accounted for more than 84 percent of the total individual life business in Shanghai in 2009. At this time, the market began to grow again from its low point in 2004. Annual real growth in premium income during the period 2006–2009 ranged from 16.6 percent to 25.5 percent. At the national level, the same trend was recorded. Annual real growth of the market during the period 2007–2009 ranged from 18 percent to 44 percent. Simultaneously, the proportion of individual premium income from dividend and unit linked products increased from 31 percent in 2001 to 69.2 percent in 2009. Likewise, variable universal life became popular, with 13.5 percent of the total individual premium income coming from this product in 2009. Investment products therefore accounted for 82.7 percent of the total individual life business in the country by the end of 2009. All these figures suggest that market growth after 2004 was likely brought about by money management products and that the Chinese market has not yet moved into a risk management direction. While it may be too early to draw a conclusion from the case in mainland China, perhaps we can project the trajectory from the experience of other Chinese markets and the Japanese market. In Taiwan, a convergence in product development across domestic and foreign firms was observed toward the end of the 1990s. While Taiwanese insurers still focused on selling money management products, they were increasingly offering more risk management policies. In 1987, products serving primarily a risk management function, namely, whole life without endowment, accounted for merely 9 percent of the total number of policies in force held by Taiwanese insurers. By 2003, it had jumped to 49 percent. On the other hand, foreign insurers were increasingly localizing their products, despite their continuous effort to promote risk management policies. In 1991, less than 15 percent of the policies in force held by foreign insurers served a money management function. Yet by 2003, this proportion increased to 42 percent. As the domestic insurers occupied a large market share, their movement to selling more risk management policies has resulted in a market moving from money management to money-cum-risk management. While whole life without endowment constituted only 6 percent of the policies in force in 1985, its share substantially rose to 49 percent in 2003.11 The Taiwanese life insurance market, though still marked with a money management character, has been moving closer to the one in Hong Kong.

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On the other hand, following a similar trajectory as the development of life insurance in Euro-American contexts, life insurers in Hong Kong began to diversify their product lines by launching money management products toward the end of the 1990s. Since 2000, foreign insurers in Hong Kong have begun to promote savings and investment products, namely, whole life with endowment or unit linked insurance. The market has been moving from risk management to risk-cum-money management. In 2006, 14.5 percent of the number of policies in force belonged to the investment category, compared to only 4.8 percent in 1999. At the same time, whole life with endowment also doubled its proportion, from 9 percent to 17.6 percent.12 This brings us to the question of culture, globalization, and varieties of capitalism. Evidence indicates that the Chinese life insurance markets—a product of the interplay of the local institutional conditions, the local cultural logics, the cultural repertoire mobilized by the strategic actors, and the institutional logic of capitalism (in general) and life insurance (in particular)—are unlikely to lose their distinctive features in the near future. Nonetheless, I am reluctant to project that their distinctive features will be preserved indefinitely. Just as Marion Fourcade and Kieran Healy (2007) reflectively note that local variations should not blind us to the fact that unequal power exists among actors and among justificatory logics, my case study demonstrates that localization is not always a straightforward path. Despite the Chinese insurers’ daring adoption of a market-share institutional logic at first, they later succumbed to a profit-oriented strategy and began to imitate more closely their foreign counterparts’ product development, both in mainland China and in Taiwan. As different institutional logics have different connections to the economic performance (or profitability) of a market, the extent of localization is not without limits. Take the Japanese life insurance market as an example. Under the influence of Confucianism and Buddhism, the Japanese share quite similar concepts of life and death with the Chinese. The idea of “death” was found to be as frightening to the Japanese as to the Chinese (Long 2004). Intriguingly, during the first half of its growth trajectory, the Japanese life insurance market corresponded closely with the Taiwanese and mainland Chinese markets. Although American and British life insurers entered Japan as early as the late nineteenth century, the life insurance industry did not take off until the 1960s. Beginning in the 1960s, the life insurance business in Japan expanded dramatically. In just three decades (by 1990), the Japanese life insurance market as measured in proportion to per capita gross national product was the second largest in the world ( Yoneyama 1995). It was during this period that foreign life insurers were not allowed, so the market was entirely constructed by domestic players. Exactly as in Taiwan, life insurance first emerged as money management, namely, endowment, in Japan in the 1960s.

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More than 80 percent of the policies sold in the mid-1960s were endowment. Starting in the early 1970s, the market gradually moved to a money-cum-risk management market, offering mainly endowment and secondarily endowment with term life. Nevertheless, the movement did not stop there. Endowment with term life increasingly gained popularity in the 1980s. Since the early 1990s, the market further transformed into a predominantly risk management market. Whole life with a term component and other insurance against death increasingly became the key products.13 It is plausible that the Japanese life insurance market first emerged as an endowment market owing to the overarching fear of death and the dominance of the domestic players. Questions remain, however: How did the market evolve to become a risk management market and finally exhibit features similar to those of Euro-American markets? Was it due to changes in local institutional conditions or cultural meanings? Was it the outcome of the triumph of the institutional logic of life insurance embedded in the globalizing capitalist logic? I placed the new findings about the development of the life insurance market in mainland China in the last section of this book to entice speculations. I have also left open the questions about the transformation of the Japanese market, to likewise solicit further studies and debates. Future studies and debates may not necessarily focus on life insurance per se but on the dynamic interplay between local and global forces, particularly the dynamics through which local institutional and cultural properties collide, negotiate, contend, and compromise with globalizing capitalist logics, and the possible outcomes that these dynamics entail. By focusing on multiple forms of culture and their interaction with institutional factors in making a Chinese market, this book is intended to facilitate dialogues among the fields of cultural sociology, economic sociology, globalization, and China studies.

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APPENDIX A

Methods

Ethnography and Data Collection My data collection was divided into three stages: the summer of 2000, the academic year of 2001–2002, and the winter of 2004. Most of the data presented in this book were collected in 2001 and 2002. During this period, I focused on collecting three sets of data for three levels of analyses: (1) The organizational level included insurance companies’ product development, marketing strategies, and agency management. To collect these data, I interviewed managerial personnel, including general managers, marketing and sales managers, agency development managers, actuaries, and underwriters. (2) The interactional level included insurers’ training for their sales agents and sales agents’ selling strategies and interactions with potential buyers. (3) The individual level included buyers’ consumption behaviors, preferences, and motives. For the latter two levels of data, I mainly interviewed insurance sales agents, their trainers, prospects, and clients. Observing the interactions between trainers and sales agents, and the interactions between sales agents and prospects or clients, was also an important tool for collecting these data. While the majority of these interviews were conducted at the four selected companies, they were not confined to them. The observations and interviews were supplemented with 179 nonrandom sampled questionnaires, 66 of which came from sales agents, 63 from clients, and 50 from prospects. Apart from the four insurers under study, questionnaires were also distributed to sales agents in Manulife-Sinochem Life Insurance Company, Ltd. (Manulife-Sinochem), AXA-Minmetals Assurance Company, Ltd. (AXA-Minmetals), and China Pacific Insurance Company, Ltd. To collect data from clients and prospects, I distributed questionnaires to 8 different companies for their employees to fill out. Among the participating companies, 3 were foreignowned, 3 private Chinese-owned, and 2 state-owned enterprises. (Samples of interview questions and questionnaires are attached.) From 2000 to 2004, I observed 46 morning assemblies, 48 small group meetings or gatherings, 28 training sessions, and 43 agent– client or agent–prospect meetings. A total of 99 sales agents, 44 managerial staff, 96

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clients, and 35 prospects in Shanghai were interviewed. (Summaries of fieldwork and profiles of interviewees are attached.) As the competition among insurers was very intense during my research period, I consciously did not tape record any interviews with sales agents or managerial staff, in order to facilitate the greatest degree of honesty. I simply asked for their consent to let me take notes on dates, figures, and names that they mentioned for the purposes of accuracy. As for clients and prospects, about half of the interviews were tape recorded with consent. Any sociological study, be it under the rubric of a quantitative or qualitative approach, inevitably involves a reconstruction of realities. While ethnography as a research tool aims to capture the most natural and dynamic world of the cases of interest, it unavoidably pays selective attention to some actors and incidents while ignoring others. As a method of social science, it also involves organizing a chaotic, messy, and contradictory set of data into a theoretical order. The ethnography itself therefore is as much a source of orientation, understanding, and insight as a source of data. Robert Wuthnow (1987) suggests that candid disclosure of researchers’ methods and assumptions is the most viable way to make sociological studies scientific. I do not hesitate to unveil my backstage stories: detailing the way I got into the field, the role I played, the assumptions and feelings I had, the difficulties I encountered, and the remedies I pursued. Writing these stories serves two purposes. First, it reveals the backstage of my data collection and any possible biased analyses I might have inadvertently advanced. Second, relating my ethnographic journey is an enjoyable process in and of itself. It serves as a memory of happy and exciting moments, a dose of therapy for the tough times, and an expression of respect for the informants who knew very little about what was on my mind when they interacted with me. As Michael Burawoy (2008:15) puts it, one’s “mode of entry always says much about the place being entered.” At the initial stage of my research, I attempted to use both formal (top down) and informal (bottom up) paths to get access to the life insurance industry. Formal letters were sent to various life insurance companies in China and the headquarters of foreign insurance companies in the summer of 2000. Follow-up phone calls were made to the public relations divisions of various companies. However, only two companies responded to my letters: American International Assurance Company, Ltd. (AIA) and Aetna Inc. I was not sure if Pacific-Aetna Life Insurance Company, Ltd. (Pacific-Aetna) would be one of my research field sites at that time, but I was certain that AIA, as the first and only wholly foreign-owned life insurer in China, would be. The public relations division of AIA’s regional headquarters in China scheduled an appointment for me to meet with their Taiwanese deputy general manager. I was thrilled at getting this appointment and took it as a sign of welcoming my study at their company. However, the meeting with the top executive turned out to be too good to be true. His purpose in seeing me was to tell me that they would not open their door to any academic studies. I immediately regretted meeting with him and worried that he would not allow me to interview any of his staff or sales agents. I had already gotten to know two AIA sales agents

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through personal networking. If the deputy general manager officially disapproved of my interviews with any of their sales agents, my research plan would fall apart. In an hour long meeting with this manager, however, I kept attempting to convince him of the importance and the confidentiality of my research. While he insisted that he could not change his company’s “closed door policy” to outsiders, he did soften his personal attitude to me. He seemed moved by my persistence and sympathetic to my position as a student. He gave me a very nicely printed company brochure and finally said, “I definitely won’t connect you to any of our staff or sales agents for your interviews. But if you personally know anyone working for AIA, I won’t stop you from talking to them either.” I was relieved to hear that, though I was disappointed that it would be very difficult for me to interview the in-house staff of AIA. After my encounter with the AIA deputy general manager, I was almost certain that the formal and “top-down” approach to get into the field would not work. I was fully aware that conducting research in China relies heavily on a personal guanxi network. I exploited all of my personal friendships in Chicago and Hong Kong to connect me to people in Shanghai. My friends’ friends in Shanghai connected me to a number of insurance practitioners. Through the snowball method, these insurance practitioners, mostly sales agents, further referred me to other sales agents, their clients, and prospects. One of the sales agents referred to me by a friend in Shanghai was the “professional saleswoman” from AIA, Chu Siujuan, presented in chapter 4. Chu connected me to the sales team manager of her agency office. This manager was surprisingly open to my research, hoping that I would be able to present the difficulties of their sales jobs and the problems of the insurance industry in China so that improvements might be made. I assured him that I would present what I saw as objectively as possible and conduct my analysis from an academic perspective. However, I hesitated to promise that improvements would come along. My presence at the AIA agency office invited many suspicions. Many sales agents were curious how I was able to get the permission to spend time in their office. A few of them suspected that I was a close relative of the Taiwanese general manager. They told me that no one ever was allowed to “study” their company. They were skeptical about my presence at the beginning but changed their attitude after they saw me frequently. Some of them later became very friendly and helpful to me. My access to Pacific-Aetna, likewise, was facilitated through guanxi. Aetna Inc.’s headquarters in the United States, in fact, referred me to a Taiwanese representative in Shanghai upon their receipt of my letter in the summer of 2000. I had a phone conversation with this representative while I was still in Chicago, and he agreed to arrange for me to meet with a few sales agents. However, my earlier negative experience with the deputy general manager of AIA made me reluctant to contact this representative of Pacific-Aetna when I was in Shanghai. At the same time, I was overwhelmed by the enthusiastic attitude of the Pacific-Aetna sales agents I met through guanxi. My sister first introduced me to a Singaporean expatriate in Shanghai whose driver was a client of Pacific-Aetna. This client, Wei Jinggang, whom I described in chapter 5, then connected

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me to his sales agent, Zhao Anpei. Zhao was very helpful to me, because I was referred by Wei, a very close friend of hers. She became my key informant at Pacific-Aetna, invited me to visit her agency office and introduced a number of other sales agents to me. I was surprised to see their enthusiasm and warm attitude toward my study. They even invited me to join their celebration party on my first visit. It was during the celebration party that I decided that this insurer should be included as one of the companies that I would study in depth. The party overflowed with tears and laughter that seemed exaggerated to me. The sales agents related to each other as if they were family members. The sales team looked exactly like what Nicole Biggart (1989) had described about direct selling sales groups. I knew that Pacific-Aetna would give me a lot of interesting sociological stories to tell. Nevertheless, I regretted later that I did not contact the Taiwanese representative referred to me by Aetna’s headquarters when I first arrived in Shanghai. I realized that I had become deterred by my negative experience with AIA’s top executive. Although I was able to get to know many sales agents of Pacific-Aetna through Zhao Anpei, no one could connect me to the managerial body of this company. Despite the top managers’ effort to create a “big family” atmosphere and to flatter the sales agents by calling them “partners” and “bosses,” the hierarchy and boundary between the managerial staff and the sales agents was still clear. The sales agents of Pacific-Aetna, like those of AIA and many other insurance companies, had no authority or power to connect me to someone in the in-house management. In the second stage of my research in 2001–2002, I tried to contact the Taiwanese representative, but he had already left the company and the position no longer existed. Afterward, I called up the public relations division of Pacific-Aetna in Shanghai in the spring of 2002 and, through a series of negotiations, was allowed to interview two members of their managerial staff, including an actuary. In addition, I interviewed two more managers from my personal solicitation when I joined their training sessions. At one point, I was tempted to study another two joint-ventures, AXA-Minmetals and Manulife-Sinochem, instead of Allianz-Dazhong Life Insurance Company, Ltd. (Allianz-Dazhong) and Ping An Insurance Company of China, Ltd. (Ping An). One of my former schoolmates was working as an underwriting manager at AXA-Minmetals. He helpfully scheduled a number of appointments for me to meet with different managerial staff members and sales agents. I could easily get access to an agency office for participant observation. As for Manulife-Sinochem, the general manager was especially supportive and open to academic research. The division head of the agency training was similarly supportive. I went to the training sessions of these two joint-ventures and attended their morning assemblies a few times. However, these two insurers did not display any significant differences from AIA. It would have been redundant to include them in the study. On the other hand, Allianz-Dazhong presented an organizational culture that was quite different from the others. Compared to Pacific-Aetna, AllianzDazhong represented another extreme. It seemed to be the most “rational” and “formal” firm. To widen the representativeness of my cases, Allianz-Dazhong would have to be included. It represented the least localized and most westernized end of the spectrum.

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Through a friend’s connection, I got to know the head of the public relations division of Allianz-Dazhong and her assistant in the summer of 2000. She arranged for me to interview the general manager and a few sales agents. As mentioned in chapter 3, the German general manager was very open to my research. This company seemed very different from the others. I saw a number of young Caucasians in the office during my first visit. I was told that some business majors from Germany came here for internships. The general manager and other staff, therefore, were used to having students ask them questions. When I approached Allianz-Dazhong again in 2001, the public relations division head, who helped me before, had already left. Fortunately, her assistant was willing to connect me to a young sales agent on the Venus Team where I conducted participant observations. The young agent, “the naive little sister” presented in chapter 4, later introduced me to some agents on the Aries Team. At the same time, the secretary of the general manager scheduled a number of appointments for me to interview their inhouse staff. My access to Allianz-Dazhong was relatively easy, and the in-house staff was most open talking to me. It was during the first stage of my research that I learned about the popularity of Ping An. However, none of my key informants at that time had any connections with Ping An. I did not have a chance to meet with any Ping An sales agents in the summer of 2000. In the second stage of my research, I made a pointed effort to get to know some Ping An sales agents. Through two of my friends’ indirect connections, I met two sales agents of Ping An. One of the agents was planning to study abroad and so was quite interested in getting to know me (someone studying in the United States). The other agent, the “helpful friend” Dai Hong in chapter 4, was hoping that I could be a resource for her sales team. She became one of my key informants and led me to her agency office where I took part in their daily routines. To my surprise, Dai did not ask for her subteam manager’s permission for my study. In contrast to my experience at AIA, no one at the agency office of Ping An ever cared about my presence. Many people probably thought that I was a new downline agent working for my key informant. The subteam manager soon realized that I did not speak Shanghainese and so was obviously not a sales agent. To my surprise again, she did not bother to ask what I was doing in her office. I did not know if my key informant ever told her about me. To minimize the possibility of being kicked out, I took the subteam manager’s silence as an implicit consent to my research. After I was in their office for more than a month, this subteam manager once came to me for help when she had difficulty reading an English memo. This eased my fear that she might disapprove of my presence. Again, there was no way I could hope to interview the in-house managerial staff of Ping An through the sales agents. I was, however, able to interview a trainer by regularly going to their training sessions. Through my friend Wu Yuxiao at Northwestern University, I was connected to an in-house manager at the headquarters of Ping An in Shanghai. This in-house manager helpfully introduced me to a sales and marketing manager, an agency development manager, and an actuary of Ping An for interviews.

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The four companies I chose to study represented a wide range in their organizational practices and cultures. However, the agency offices where I conducted participant observations were all above average. Despite my efforts to study the agency offices with average sales performance, only those team managers in the “better-than-average” offices were willing to let me stay with them. Their sales agents were more confident and open to my presence and enquiries. I managed to conduct my participant observation in two of the agency offices of Allianz-Dazhong and Pacific-Aetna on a regular basis. But for AIA and Ping An, I mainly stayed at one agency office of each. I pursued two remedies to address the possibility of a biased sample. First, I visited other agency offices whenever possible on a nonregular basis to cross-check the “typicality” of the offices where I visited regularly. Second, I sampled the gender, age, seniority, and sales performance of the agents I interviewed to seek variation in the interviewees. It was especially important to interview and observe the top sales agents to see the keys to their success, the senior agents to know their routines, and the new agents to learn about their difficulties and socialization. In each agency office, I stayed with a sales group on a daily and routine basis. I had no difficulty interviewing and chatting with the sales agents and observing their daily routines and interactions. The difficult part, however, was observing their interactions with prospects and clients. The sales agents normally preferred not to have me there during the selling process. Their reluctance was totally understandable. To have someone watch them being rejected all the time would be embarrassing. Moreover, they might have had to apply certain dramatic strategies to move the more reluctant prospects, and felt uneasy doing so in front of me. Upon my request, some agents were willing to let me go along to their meetings with prospects and clients once or twice. Although the male agents tended to be more open to my interviews, they were less willing to let me observe their interactions with prospects. A male agent from Ping An explicitly spoke of how embarrassing it would be to have me see him being rejected, and how my presence would cause him to lose his sense of how to “strategically deal with” (duifu) the prospects. Among the agents who were willing to let me observe their interactions with prospects, many of them invited me to go along only when they were meeting with the cooperative ones. When they had to deal with resistant prospects, which were the encounters I was most eager to observe, they were normally reluctant to bring me along. Fortunately, the sales agents shared about their stories of dealing with difficult prospects in the morning assemblies, group meetings, and training sessions. Although retrospective cognitive processes were involved when they recounted their interactions with the prospects, listening to a substantial number of stories told by different sales agents permitted me to discern some general patterns and became a valid and reliable method of obtaining data inaccessible to direct observation. Interviewing life insurance clients and prospects was not as easy as interviewing sales agents. The difficulty of recruiting clients and prospects to interview came from the fact that people in Shanghai were tired of hearing the term baoxian (insurance). As some insurance agents pretended to be researchers to identify potential clients, some

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interviewees were initially suspicious of my motives for interviewing them. Fortunately, soon after they learned that I was not local and therefore not selling them insurance, they felt more at ease talking to me about their views and concerns. The clients and prospects interviewed in 2000–2002 came from four different sources: some were referred by friends, some were referred by sales agents, some filled out the questionnaires I distributed to various workplaces, and some were my new acquaintances in Shanghai. But the majority of interviewees came from friends’ referrals and those who filled out the questionnaires, as I preferred these two sources over the others. The problem of having the sales agents’ referrals was that the agents tended to refer their “best” clients to me. Alternatively, some of them referred “difficult” prospects to me, expecting me to help them to “convert” these prospects. When I found that the clients and prospects referred by the sales agents were too atypical, I turned down their offers. Then, in 2004, I specifically wanted to interview clients who had received payments from life insurance companies or had family members who had received payments. The deputy general manager of Haier New York Life Insurance Company, Ltd. (who was an alumnus of my former school) and the trainer at AIA (who initially refused to have me attend their training sessions but later became a friend) both helpfully assisted me by each giving me a list of clients who had received benefits from their companies. In addition, the key informants at Ping An and Allianz-Dazhong also referred me to some of their clients. My role in the field was primarily peripheral according to Patricia Adler and Peter Adler’s (1987) classification of membership roles. I was “with” the insurance sales agents but not “part of ” them. I maintained some distance with the people I studied but exchanged information and services with them. Quite a large number of sales agents were eager to know more about the life insurance markets in the United States and Hong Kong. The very limited contribution I could make was to answer their questions and provide relevant information for their interests. As the sales agents were told by their companies that the life insurance sales agents in the United States and Hong Kong were making a fortune and enjoyed high social status, they often asked me about the social status of the agents outside China. I was struck by how many agents asked me this question. This revealed how much they were concerned with their low social status and their hope for its improvement in the future. While I did not observe that the life insurance sales agents in the United States and Hong Kong enjoyed a particularly high social status, I felt ambivalent about saying something frank that might disappoint them. Therefore, I typically provided an evasive response. Instead of focusing on the status of the sales agents, I described the lesser degree of public resistance to life insurance in places where the life insurance industry was more developed. One of the sales agents at AIA invited me to give a talk to her newly recruited agents. I focused on the evolution of the life insurance market and the development of different products in the United States, and I doubted if they found my talk of any use at all. I was clearly an observer in the agency offices, and my identity as a Ph.D. student was disclosed to my informants. Nevertheless, when I went out with the sales

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agents to sell, I sometimes acted as if I were a would-be agent. This was especially the case when the agents did cold calls, what they called “stranger visits.” I normally followed the agents’ preference concerning my identity. It would simply be too complicated for the agents to explain to the strangers about my research and my identity. So I agreed to act as a would-be agent. On the other hand, when the agents had already earned a certain degree of trust from their prospects, they preferred to disclose my identity. A few agents, especially those from Ping An, expected me to use my knowledge about the life insurance markets in the United States and Hong Kong to convince their prospects of the importance of life insurance. In those circumstances, I agreed to tell the prospects about the life insurance development in places outside China should they ask me questions. However, I refused to help to convince prospects to buy their products or to put down the products of another company. I did talk about the variety of insurance products and the buyers’ characteristics and concerns in the United States and Hong Kong to the prospects upon the request of the sales agents. As a whole, my participation in the selling process was minimal. I took two short breaks from the field, going to Hong Kong for library resources in February and May 2002. The breaks were particularly useful for getting some distance from the field for analytical purposes, helping me to modify my analytic frames, and adjusting my lens for the next stage of data collection. In order to see how culture works, I first had to desensitize myself to noncultural elements. As Eviatar Zerubavel (1991) maintains, one must perceive some noticeable discontinuity between that which we are to attend to and that which we are to ignore, in order to be able to focus on something. During the first half of my field research, I focused on how culture mattered and analytically separated culture from institution and other sociological factors. During the second half, I paid equal attention to culture, institution, and economic factors and, finally, to the intertwining dynamics of culture and institution in shaping the subject matter I was studying. My peripheral membership role allowed me to maintain a relatively neutral position in my analysis. Nonetheless, I must admit that I felt sympathetic toward the insurance sales agents throughout my research period. When I saw the insurance companies portraying the life insurance sales job in the United States as a prestigious career in order to create “dreams” for their sales agents, I struggled with whether I should tell the agents about the “realities”—the ones described by Guy Oakes (1990) and Robin Leidner (1993). This uneasy struggle lingered throughout my entire field research period, though finally I chose not to say something that would directly destroy their “dreams,” in order to maintain a maximum level of nonobtrusiveness in the field. However, my sympathetic feelings for the sales agents made me feel uncomfortable when I wrote about some of their malpractices. In a sense I felt that I was betraying them. I hope that in return this book reveals the structural issues inherent in the life insurance industry that drive market misconduct, if indeed there is any, and relieves individual agents from blame.

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Summaries of Fieldwork and Profiles of Interviewees Table A.1 Summary of Fieldwork, 2000–2004 AIA Ping An Pacific- Allianz- Others Total Aetna Dazhong Participant Duration observations (months)

Interviews

Surveys

3

3

2

2

4

14

Training (sessions or days)

10

9

4

3

2

28

Morning assemblies (per week)

1–2

5

2

2

OL

NA

Group meetings and gatherings

OL

Daily

Daily

OL

OL

NA

Agent– prospect/client interactions

18

16

4

3

2

43

Agents

20

21

18

17

23

99

Managerial staff

8

7

4

11

14

44

Clients*

35

40

8

7

23

96*

Prospects

35

Community observers

20

Sales agents

13

13

12

11

17

66

Clients*

21

27

3

2

19

63*

Prospects

50

OL, occasional. *The sum of the number under each company is greater than the total number of clients interviewed or surveyed because some clients held policies from more than one company.

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Table A.2 Summary of the Socioeconomic Profiles of the Insurance Practitioners Interviewed (N = 143) Sales agents Gender Age (years)

Seniority* Division

Male Female 20–29 30–39 40–49 50–59 Senior Junior General management Marketing and agency management Training Product development Public relations

Managerial staff Subtotal

52 47 19 46 24 10 52 47 NA NA

33 11 4 19 19 2 NA NA 8 18

85 58 23 65 43 12 — — — —

NA NA NA

7 8 3

— — —

*Senior, those who have been working as insurance sales agents for two years or more; junior, those who have been working for less than two years.

Table A.3 Summary of the Socioeconomic Profiles of the Clients and Prospects Interviewed (N = 131)

Gender Age (years)

Annual income (yuan)

Male Female 20–29 30–39 40–49 50–59 60 or above < 18,000 18,000–36,000 36,000–84,000 84,000–120,000 > 120,000

Clients

Prospects

Subtotal

46 50 20 37 28 10 1 18 28 26 14 10

16 19 8 16 6 5 — 9 12 10 3 1

62 69 28 53 34 15 1 27 40 36 17 11 (continued )

Appendix A

Occupation*

205

Clients

Prospects

Subtotal

Blue-collar

10

13

23

Lower level white-collar

40

10

50

Upper level white-collar

34

9

43

Self-employed/owner

12

3

15

*Lower level white-collar, lower level office employees such as clerks, secretaries, sales representatives, and junior officers; upper level white-collar, various managerial personnel, senior officers, and professionals.

Samples of Interview Questions and Questionnaires The interviews were semistructured, and questions were changed when the analytic frame was modified as the research progressed. Quite often the questions for insurance practitioners were modified according to the specificities of individual interviewees, such as their seniority in the field, their specialties, and their former work experiences. The samples provided below are collections of the questions that were asked most frequently at different stages of the research. Therefore, not all of the interviewees in a category were asked identical questions. These questions guided my interviews but were not presented verbatim to the interviewees.

Interview Questions for Sales Agents 1. Why this job, rewards, difficulties, experience, and benefits 1.1 When and why – When did you become a life insurance sales agent? – What made you join the life insurance industry? – Why did you choose this company? 1.2 Nature of the job, happiness, and difficulties – Is the job what you expected? – What is most rewarding in your job as an agent? – What are the difficulties? – How do you deal with them? – What keeps you in this job given these difficulties? 1.3 Former work experience – What did you do before you became an insurance agent? – How is working as an agent different from your former job?

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1.4 Benefits and support – What are the other benefits you get besides commissions? – Are you satisfied with your income and benefits? – How important are different kinds of rewards to you: money, promotion, ranking, free trips, colleagues, memberships, etc. 2. Training and morning assembly: reception and application 2.1 Training received – Please describe all the training you have received from your company from the very beginning to this moment. 2.2 Applying and useful? – To what extent do you follow instructions from training in your selling? To what extent do you find the training useful and helpful? – What instructions do you follow? What do you find useful and helpful? – What do you find not useful? Why not? 2.3 Morning assembly – (For senior agents only) When was the morning assembly introduced? By whom? – What do you feel about the morning assembly? – Do you enjoy it? If not, how do you deal with it? – Do you find it useful? If so, how? If not, why? 3. Concepts and purchase of life insurance 3.1 Functions – What is your understanding of life insurance? – What is its major function? (To see if it’s a risk management or money management concept or both) – If risk management – What are the risks the Chinese are facing? – Can the products you sell deal with these risks? How? – How is insurance different from charity and community mutual help in dealing with risks and misfortunes? – If money management – How is insurance different from savings, stock investment? – How can you compete with banks and the stock market? – Has your understanding of life insurance changed since you have become an agent? – If so, how? 3.2 Purchase? – Among the products offered by your company, which do you like the most? – Have you bought any? – If yes → What? When? Why? – If no → Why not?

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4. The selling process 4.1 Selling a policy – Can you describe to me how you sold your first policy, e.g., whom you approached, how you approached them, and what you said to them? – Now, can you describe to me how you sold your last policy? – (If substantially different from the first one, explore the changes.) – How typical is your last successful sale? (If not, probe the typical one.) 4.2 Selling to different categories of relations – Are there any differences, in terms of strategies and feelings, when you approach and sell to friends, referral prospects, and strangers? – What are the usual responses of the prospects you already know? – How about the usual responses of those you don’t know? – When you sell to friends and relatives, do you feel uneasy and embarrassed at first? – If yes → What makes you feel this way? How do you deal with these feelings? 4.3 Selling to different social groups – Are there any differences (in terms of strategies and feelings) when you approach and sell to males versus females? – If so → How different? Why? – Are there any differences (in terms of strategies and feelings) when you approach and sell to people of different age groups? – If so → How different? Why? 4.4 Sales talks, impression management, trust – Do you follow the sales talks that you learned from training and morning assemblies?

– Which sales talks work and which do not work? – How do you deal with the problem of trust? 4.5 Dealing with rejection and resistance – Who are those least interested in purchasing insurance of any kind? – What do they usually say? – What do you think are the “real” reasons for their being not interested in insurance? – What do you usually do when people show no interest in insurance of any kind? For successful cases → How did you achieve success? What did you do and what did you say to them? For the failing cases → What did you do and what did you say to them? – (For senior agents only) Have there been any changes in the prospects’ responses compared to the time when you joined this industry?

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– If so → What do you think are the factors that contributed to the changes? – (If always resistant) Ask the agents’ interpretations of the reasons. – What do you feel when being rejected so often in your job? – If negative → How do you deal with the feelings? 4.6 Buyers versus nonbuyers – Who are the buyers? Who are the nonbuyers? – How would you describe the differences among these three groups of people: those who have very positive response to life insurance, those who doubt and hesitate but finally buy, and those who strongly refuse to buy any no matter what? 5. Popular products and buyers’ concepts 5.1 Popular and unpopular products – What are the most popular products? – Why are they most popular? – Usually, who are the beneficiaries that the buyers put in? – What are the most unpopular products? – Why are they unpopular? – Any changes in the last few years? 5.2 Child products – Are they popular today? Why? – Do you agree to put the child as the insured? – If no → How did you convince the parents to do otherwise? 5.3 Buyers’ concept of insurance – What are the typical understandings/concepts of life insurance among your clients? – If not agreeing with their concepts → What do you do with their concepts? 6. Chinese culture and insurance 6.1 From your experience, do you think that life insurance has anything in conflict with the Chinese culture and habits? – If yes → What is it? How can you tell? How does it affect the prospects’ attitude to life insurance and the products you sell? How do you deal with such conflict? 6.2 Is anything in life insurance in harmony with the Chinese culture and the Chinese habits? – If yes → What is it? How can you tell? How does it affect the prospects’ attitude to life insurance and the products you sell? How does it benefit your selling?

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Interview Questions for Managerial Staff 1. (For foreign insurers only) Choosing the site and partner 1.1 What made your company choose Shanghai to start with the business, instead of Guangzhou or other cities that are open to foreign life insurance companies? 1.2 How did your company chose its local partner in forming the joint venture? 2. Favorable and unfavorable conditions 2.1 What are the favorable and unfavorable conditions in China in general and in Shanghai in particular for the development of a life insurance market? 2.2 Do you think if there are any elements in the Chinese culture that are obstacles to the development of the life insurance industry? – If yes → How does your company deal with that? 2.3 Are there any elements in the Chinese culture that are facilitating the development of the life insurance industry? – If yes → How does your company make use of them? 3. Public concept of insurance and life insurance 3.1 What do you think of people’s concept and knowledge of insurance in general and life insurance in particular in Shanghai? 3.2 Are their concepts and knowledge of life insurance different from what you or your company thinks it should be? 3.3 How about the insurance agents? Do they understand insurance and life insurance in the same way as you or your company defines it? 3.4 How does your company educate the people on the “right” concept and knowledge of insurance and life insurance? How successful is it? 4. Product development 4.1 In formulating and launching products, what considerations does your company take into account? – Any of these considerations are particularly related to the Chinese market? 4.2 Do you think what your company offers is what the people in Shanghai want? – If no → Why not offer those products that they want? 4.3 What are the most popular and unpopular products in Shanghai? – What do you think are the reasons for this? 4.4 Have there been any changes in the popularity and unpopularity of the products since your company started its operation in Shanghai? – If yes → What are the changes? What do you think are the factors that contributed to the changes? Are the changes good or bad for your company? 4.5 Do you think Shanghai represents a typical Chinese market for life insurance? – If no → What is unique about it?

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5. Agency management 5.1 Agents’ profiles – What are the socioeconomic profiles of the majority of your sales agents in terms of their sex, age, education, and experience, etc. 5.2 Recruitment – Are these agents’ profiles exactly what your company wanted to recruit? – What is/are your company’s agency recruitment method(s)? – What difficulties do you face in the recruitment? 5.3 “Ideal model” and performance – What is the “ideal model” of a sales agent from your/your company’s perspective? – How many (in percentage) of your agents are like this “ideal model”? – Who are these “ideal” agents? Why are they better than the others? 5.4 Labor management – How do you/your division motivate the agents and keep up their morale? – What are most effective? Monetary award, free trip, honors. . . . – What are the major difficulties of managing the agents? – (For expatriate only) What are the difficulties that you as an expatriate manager encounter in managing the sales agents or the internal staff in Shanghai, as compared to your past experience in . . . ? – (For expatriate only) What are the advantages that you as an expatriate manager have in managing the sales agents or the internal staff in Shanghai, as compared to your past experience in . . . ? 5.5 Turnover rate – What are the usual turnover rates of the sales agents and the internal staff respectively? – Have they been rather consistent since the beginning of the operation? – If no → What has affected the change? 6. Company images and marketing strategies 6.1 What is the image that your company is creating? Why? 6.2 Can you describe to me the marketing strategies that your company deploys? – In your opinion, how effective are these strategies? – If not → What do you think are the reasons? → Are you/your company going to change the strategies? – If yes → In what way? 6.3 (For foreign insurers only) How are these marketing strategies similar to and different from those of your parent company. . . . ? – Are there any particular strategies tailor-made for the Chinese market? 6.4 (For foreign insurers only) What do you think are the key features of your company that distinguish it from domestic firms?

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6.5 (For domestic insurers only) What do you think are the key features of your company that distinguish it from foreign firms? 7. Role of the state 7.1 In what way does the Chinese government or the CIRC affect your company’s product development, agency management, marketing strategies, and investment practices? 7.2 (For foreign insurers only) Compared to your company’s experience in other countries, what would you say about the role of the Chinese state in the life insurance industry in China?

Interview Questions for Clients (2000–2002) 1. Products bought 1.1 What made you first be interested in buying life insurance? – (If more than one reason) Among all these factors, what concerned you the most when you were considering buying life insurance? 1.2 What did you buy? – Why this particular type? – Why not other types of insurance (state those that s/he didn’t buy) – Who’s the beneficiary? 2. The buying process 2.1 What made you buy from this/these insurance company/companies? 2.2 What made you buy from this/these particular sales agent(s)? – Did you know the sales agent(s) before? – What made you trust the agent(s)? 2.3 Can you describe how the agent(s) approached you? – What was your first response? – If negative → How did the agent(s) convince you? What made you change from not accepting to accepting? 3. Perceived functions of life insurance 3.1 What’s the major function of life insurance? (If the perceived function is inconsistent with the function(s) performed by the product(s) purchased, explore why the inconsistency.) – Does/do the product(s) you bought fulfill this function? – If no → why didn’t you buy a different policy that can fulfill this function? – Can this function be fulfilled by other means? – What’s the difference between insurance, savings, and investment? 3.2 Do you think insurance can manage certain kinds of risks? Or can it reduce the consequences of adverse events?

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3.3 What would be the use of the money that may be given to you by the insurance company in the future? – Would this money have any particular meanings for you? 3.4 Some agents said buying insurance was related to one’s sense of responsibility and love for their families, do you agree? Why? 4. Risk profiles and perceptions 4.1 Employment and fringe benefits – Is your current employment on a contract base? – If yes → For how long? How likely/easy is it to get a renewal? – How certain do you feel about your employment? Do you ever worry about losing your job? – What other fringe benefits do you get other than income? 4.2 Pension scheme – Can you tell me about your pension scheme? – How sure do you feel that you will get your pension when you are retired? 4.3 Health care – What kind of health care scheme do you have? – How sure do you feel that health care will be available when you need it? 4.4 Child care – Who is now (financially and physically) taking care of the child? 4.5 Which part of life makes you feel most insecure? – What do you do to deal with this insecurity? 4.6 Hypothetical risk questions (wanyi) – (For single person) Let’s consider a hypothetical situation that something bad happened and you could no longer financially take care of yourself. What would you do? Could you get assistance from somewhere? – (For married person without child) Let’s consider a hypothetical situation that something bad happened and you could no longer financially take care of yourself and your spouse. What would happen to your spouse? Could your spouse get assistance from somewhere? – (For married person with child) Let’s consider a hypothetical situation that something bad happened and you could no longer financially take care of yourself and your family. What would you do? Could your family get assistance from somewhere? Who could take care of the child? – (For married women not working) What would happen if something happens to your husband that causes him to lose his earning ability? Could your family get assistance from somewhere? Who could take care of the child? 4.7 Do/Did you ever worry that this hypothetical situation might happen? – If yes → How did you deal with the worries? – If no → (explore why not?) Some people have these worries. What make you different from them?

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5. Perceptions of responsibility 5.1 What do you think is your major responsibility for your family? 5.2 When someone is facing a financial crisis due to unexpected events, do you think that it is mainly the individual’s responsibility to deal with the crisis? Do you think that the government or the workplace should also shoulder part of the responsibility? 5.3 How about friends, relatives, neighbors, and colleagues? Do you think that these people should offer help to someone who is in crisis? 6. Definition of good life 6.1 Do you feel if you are now living a good life? – If yes → What is the most important aspect of life that makes you feel that you are now living a good life? – If no → Which part of your life makes you most unsatisfied? What can make your life better? – If so-so or okay → What do you think can make your life even better and be perfect? 6.2 What do you think/feel (juede) is/are the most important thing(s) in life? 7. Needs and products 7.1 To what extent do the insurance products available today suit your needs? 7.2 Hypothetical question about purely risk management insurance (term life): – If a policy costs 1000 yuan per year for an insured amount of 500,000 yuan for death or severe handicap, would you want to buy this policy? Why? 8. Personal information – Age, marital status, living arrangement, child’s age, occupation, income, family income

Interview Questions for Clients (2004) [Notes: Questions with * are only for those who have received payment(s) from insurance companies.] 1. Background information 1.1 What kind(s) of life insurance products did you buy? 1.2 When and from whom did you buy? 2. Reasons for buying and perceived functions of life insurance 2.1 What made you first interested in buying life insurance of these kinds? What was the major concern when you bought these products? 2.2 When you bought these products, what did you think was/were the major function(s) of insurance? Can this/these function(s) be fulfilled by means other than insurance? If so, what are they? How are they different from insurance? 2.3 Did you ever worry that some unexpected events might happen to you or your family? To what extent and in what way did you think life insurance could help you in case unexpected bad things happen?

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2.4 What do you think are the differences between buying insurance, putting money in a savings bank, and buying stock? *3. Impacts of misfortune and payments *3.1 After having received payment(s) from the insurance company, what do you now think are the major functions of insurance? *3.2 I understand that when the tragedies/accidents/illnesses happen, it must be very hard to take. Did the money paid by the insurance company help to release part of your pain/sadness? How did you feel when you received the money from the insurance company? (Do you see the money that you received from the insurance company as different from money you obtained through work?) *3.3 After that misfortune happened (be it death, injury, illness), did you worry more that something unexpected might happen to you or your family? To what extent and in what way now do you think that life insurance can help? *3.4 As a whole, do you have different feelings/thoughts about life insurance after you have received the payment(s)? 4. Risk, insurance, responsibility 4.1 Do you agree that we are now living in a “risk society” such that unexpected contingencies can happen anytime to anyone? 4.2 During the SARS crisis last year, did you feel less secure about life? 4.3 To what extent do you think that life insurance can help to manage the risks that we are facing? Do you feel having more control over life/over your future after you have purchased those insurance policies? Do you feel more secure after holding these policies? 4.4 Do you think that buying life insurance is a way of expressing love and fulfilling responsibility to your family?

Interview Questions for Prospects 1. Contacts with insurance 1.1 Did any life insurance sales agents ever contact you? – When? – From which company does/do the agent(s) represent? – What did the agent(s) say to you? – What was your response? – What was your impression of the agent(s)? 2. Why not 2.1 What is the major reason that you have not bought any life insurance? 2.2 Would you consider buying some in the near future? – If yes → When? What? Why? From whom? Who would be the beneficiary?

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3. Perceived functions of life insurance 3.1 From what you know about life insurance, what do you think is its major function? – Can this function be fulfilled by other means? – What’s the difference between insurance, savings, and investment? 3.2 Do you think insurance can manage certain kinds of risks? Or can it reduce the consequences of adverse events? 3.3 Some agents said buying insurance was related to one’s sense of responsibility and love for their families, do you agree? Why? All the rest of the questions are the same as questions 4–8 in the “Interview Questions for Clients (2000–2002).”

Questionnaire for Sales Agents I am a doctoral student of sociology at Northwestern University in the United States. My name is Chan Shun Ching. I am now conducting research on the development of the life insurance market in China. Your assistance in this research is very important for my understanding of the insurance clients in Shanghai. All the information you fill out will be kept confidential and will be used for academic purposes only. If you would like to know more about this research or have any questions, please feel free to contact me at 6251-2816 or 138-1760-5277. Thank you very much for your participation. _______________________________________________________________ Date: ____/____/____ 1. Clients’ profile 1.1 About how many clients do you have? _____ 1.2 What percentage of your clients fall into the following categories? Gender: Male ____ Female ____ Marital status: Single ____ Married without child ____ Married with child ____ Separated or Divorced without child____ Separated or Divorced with child ____ Occupation: Blue-collar workers ____ Lower rank white-collar employees (e.g., clerks, secretaries, officers, sales representatives) ____ Higher rank white-collar employees or professionals (e.g., managers, executives, doctors, lawyers) ____ Owners or self-employed ____ Monthly income (yuan): Under 1,500 ____ 1,500–2,999 ____ 3,000–4,999 ____5,000–6,999 ____ 7,000–9,999 ____ 10,000 or above ____ 1.3 Approximate age of the majority of your clients: _______________________ The next major age group: _______________ The third major age group: _______________

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2. Beneficiaries 2.1 For the majority of your clients, who are the beneficiaries of their policies? Spouse ____ Child ____ Parent(s) ____ Legal person(s) ____ 3. Popular and unpopular products 2.1 The product you sold the most: ____________________________________________________________ 2.2 The second most sold product: ____________________________________________________________ 2.3 The third most sold product: ____________________________________________________________ 2.4 The product least wanted by your prospects and clients: ____________________________________________________________ 2.5 The second least wanted product by prospects and clients: ____________________________________________________________ 4. Correlation between products and clients’ profiles 4.1 The names of the products (can be more than one) that are most popular to the following buyers: Male: ____________________________________________________________ Female: ___________________________________________________________ Single ____________________________________________________________ Married without child ____________________________________________________________ Married with child ____________________________________________________________ Separated or divorced without child ________________________________ Separated or divorced with child ___________________________________ People in their 20s ______________________________________________ People in their 30s ______________________________________________ People in their 40s ______________________________________________ People in their 50s ______________________________________________ People in their 60s or above _______________________________________ Blue-collar worker ______________________________________________ White-collar employees (lower rank) _______________________________ White-collar employees (higher rank) _______________________________ Owner or self-employed _________________________________________ 5. Working experience 5.1 How long have you been a life insurance sales agent? _______ 5.2 Your current title is: ___________________

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5.3 Did you work for another life insurance company before? Yes _____ (Which one? ______________________) No _____ 6. Your information 6.1 Gender: Male ____ Female ____ 6.2 Age: Under 20 ____ 20–29 ____ 30–39 ____ 40–49 ____ 50–59 ____ Over 59 ____ 6.3 Education level: Primary school ____ Lower high school ____ Upper high school ____ Community college ____ University ____ 6.4 Approximate income per month (yuan): Under 500 ____ 500–999 ____ 1,000–1,999 ____ 2,000–2,999 ____ 3,000–3,999 ____ 4,000–5,999 ____ 6,000–7,999 ____ 8,000–9,999 ____ 10,000 or above ____ 7. If you don’t mind, I would like to have your contact number so that I can reach you in case I have further questions related to the above answers. Name: __________________________ Phone number: ____________________ I have been interviewing some insurance agents concerning their experience of selling insurance and the difficulties they face. Please indicate if you will be willing to be one of the interviewees. The interview will take about 30–45 minutes. Yes: ______ No: ______ Thank you very much for filling out this questionnaire. I wish you every success in your business!

Questionnaire for Clients I am a doctoral student of sociology at Northwestern University in the United States. My name is Chan Shun Ching. I am now conducting research on the development of the life insurance market in China. Your assistance in this research is very important for my understanding of clients’ needs and considerations when purchasing life insurance. All the information you fill out will be kept confidential and will be used for academic purposes only. If you would like to know more about this research or have any questions, please feel free to contact me at 6251-2816 or 138-1760-5277. Thank you very much for your participation. __________________________________________________________________ Date: ____/____/____

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1. From which company/companies did you buy your life insurance policy/ policies? China Life ____ Ping An ____ China Pacific ____ AIA ____ AXA ____ Manulife-Sinochem ____ Allianz-Dazhong ____ Pacific-Aetna ____ Other (please specify) _________________________ 2. The time of purchase and the title(s) and premium(s) of the product(s) you bought (if more than one product was bought, please fill out chronologically): Year when purchased:_______ Product title:________________ Premium:______ Year when purchased:_______ Product title:________________ Premium:______ Year when purchased:_______ Product title:________________ Premium:______ Year when purchased:_______ Product title:________________ Premium:______ 3. At the moment when you purchased the above insurance policies, the major reasons were (if more than one, please specify the order of importance: 1 as most important, 2 as secondary, 3 as tertiary, etc.) Agent(s)’ recommendations _____ The product(s) met my needs _____ My family said it/they was/were good _____ My friends or colleagues said it/they was/were good _____ I have more confidence in this insurer _____ Other (please specify) _________________________________________ 4. To you, the most important function of life insurance is (if more than one, please specify the order of importance: 1 as most important, 2 as secondary, 3 as tertiary, etc.) Saving for my own yanglao _____ Providing a protection for the family in case of the occurrence of accidents _____ Paying for medical treatment in case of serious illnesses _____ Investing for profit _____ Saving for child’s education _____ Other (please specify) _________________________________________ 5. What first made you ever consider buying life insurance? I already wanted to buy some before any agents approached me _____ I felt what the agent(s) said make sense to me _____ My family wanted me to buy some _____ The agent was a friend or a relative _____ The agent was very sincere and I was moved _____ Other (please specify) _________________________________________ 6. How important is the insurance company’s reputation to you? (1: very important; 2: important; 3: a bit important; 4: not too important; 5: not important) 7. When you were considering from which company to buy from, was the insurance company’s reputation or the agent’s quality more important to you? Company’s reputation _____ Agent’s quality _____

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8. Up to this moment, how satisfied are you with services of the insurer(s) and the agent(s)? (1: very satisfied; 2: satisfied; 3: a bit satisfied; 4: a bit dissatisfied; 5: dissatisfied; 6: very dissatisfied) ____ (Please specify the reason(s) if you choose 4, 5, or 6: _______________________) 9. What is the percentage of the premium(s) to your annual income? ______ 10. Your information Gender: Male ____ Female ____ Age: Under 20 ____ 20–29 ____ 30–39 ____ 40–49 ____

50 or above ____ Monthly income (yuan): Under 1,500 ____ 1,500–2,999 ____ 3,000–4,999 ____5,000–6,999 ____ 7,000–9,999 ____ 10,000 or above ____ Education level: Primary school ____ Lower high school ____ Upper high school ____ Community college ____ University ____ Marital status: Single ____ Married without child ____ Married with child ____ Other ____ Occupation and position title: ______________________________ Work unit category: State-owned enterprise _____ Domestic private firm ____ Joint venture ____ Foreign-owned ____ Other (please specify) ________________________________ 11. If you don’t mind, I would like to have your contact number so that I can reach you in case I have further questions related to the above answers. Name: ___________________________ Phone number: ____________________ I have been interviewing some insurance clients to know more about their experience of buying life insurance and their thoughts about this industry. Please indicate if you will be willing to be one of the interviewees. The interview will take about 30–45 minutes. Yes: ______ No: ______ Thank you very much for filling out this questionnaire!

Questionnaire for Prospects I am a doctoral student of sociology at Northwestern University in the United States. My name is Chan Shun Ching. I am now conducting research on the development of the life insurance market in China. Your assistance in this research is very important for my understanding of prospects’ needs and considerations in regard to life insurance. All

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the information you fill out will be kept confidential and will be used for academic purposes only. If you would like to know more about this research or have any questions, please feel free to contact me at 6251-2816 or 138-1760-5277. Thank you very much for your participation. __________________________________________________________________ Date: ____/____/____ 1. Did any life insurance sale(s) agents ever approach you? Yes _____ (please continue to answer question 1.1) No _____ (please continue to answer question 1.2) 1.1 Which company/companies did the agent(s) represent? What was your impression of each of these agents? China Life _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Ping An _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) China Pacific_____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) AIA _____(Impression: 1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Manulife-Sinochem _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Pacific-Aetna _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) AXA-Minmetals_____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Allianz-Dazhong _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Other (please specify) _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) 1.2 Have you ever heard of the following companies? What is your impression of each of them? China Life _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Ping An _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) China Pacific_____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) AIA _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Manulife-Sinochem _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad)

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Pacific-Aetna _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) AXA-Minmetals_____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Allianz-Dazhong _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) Other (please specify) _____(1 – very good; 2 – good; 3 – just okay; 4 – not good; 5 – very bad) What is the major reason that you have not yet bought a life insurance policy? (If more than one reason, please specify the order of importance: 1 as most important, 2 as secondary, 3 as tertiary, etc.) I don’t feel the need_____ The products do not meet my needs_____ The products are not good deals_____ My spouse/family members are not interested_____ I don’t trust life insurance companies_____ I don’t trust the sales agents_____ I don’t have money for insurance premiums_____ I had unpleasant experience in buying life insurance in the past_____ Other (please specify) _________________________________________ To you, the most important function of life insurance is (if more than one, please specify the order of importance: 1 as most important, 2 as secondary, 3 as tertiary, etc.) Saving for my own yanglao _____ Providing a protection for the family in case of the occurrence of accidents _____ Paying for medical treatment in case of serious illnesses _____ Investing for profit _____ Saving for child’s education _____ No specific function_____ Other (please specify) ______________________________________________ Do you think you will buy life insurance in the near future? Yes _____ (please continue to answer question 4.1) No_____ (please continue to answer question 5) 4.1 What would you buy? Traditional whole life_____ Term life_____ Personal accident_____ Endowment or annuity_____ Medical insurance_____ Investment insurance_____ Child insurance_____ How important is the insurance company’s reputation to you? (1: very important; 2: important; 3: a bit important; 4: not too important; 5: not important)

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6. Is the insurance company’s reputation or the agent’s quality more important to you when considering buying insurance policies? Company’s reputation _____ Agent’s quality _____ 7. Your information Gender: Male ____ Female ____ Age: Under 20 ____ 20–29 ____ 30–39 ____ 40–49 ____ 50 or above ____ Monthly income (yuan): Under 1,500 ____ 1,500–2,999 ____ 3,000–4,999 ____ 5,000–6,999 ____ 7,000–9,999 ____ 10,000 or above ____ Education level: Primary school ____ Lower high school ____ Upper high school ____ Community college ____ University ____ Marital status: Single ____ Married without child ____ Married with child ____ Other ____ Occupation and position title: ________________________________________ Work unit category: State-owned enterprise _____ Domestic private firm ____ Joint venture ____ Foreign-owned ____ Other (please specify) ________________________________ 8. If you don’t mind, I would like to have your contact number so that I can reach you in case I have further questions related to the above answers. Name: ___________________________ Phone number: ____________________ I have been interviewing some insurance prospects to understand more about their thoughts about life insurance. Please indicate if you will be willing to be one of the interviewees. The interview will take about 30–45 minutes. Yes: ______ No: ______ Thank you very much for filling out this questionnaire!

Coding and Sample Statements Perceived money management functions of buying life insurance • I was very concerned about money management. I bought these policies mainly for savings and investment. • The return rate offered by the insurance companies was higher than the interest rate offered by banks. . . . So, I took half of my money from the bank and invested it in insurance.

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• These policies carry some dividends. . . . [W]e could leave the dividends in the

company to let them accumulate. We thought this might be a good way to save a lump sum for our daughter. Perceived risk management functions of buying life insurance • I think insurance is for future protection. When I can’t work in the future, it will be useful. • Buying life insurance is “just in case.” It is there in case something happens, such as accidents or illnesses. • Now the medical fees charged by hospitals are very high. . . . Insurance could relieve part of my financial burden if I am ill and hospitalized. It is better than nothing. Perceived renqing functions of buying life insurance • I bought a policy from her as I wanted to help her . . . .[but] I actually didn’t know what I bought. I don’t really care about the product. I just wanted to help her. • It’s hard to say “no” to him. You know, he is my nephew. I need to give him and my sister a bit of face. • I always felt indebted to him. . . . This time he came to sell insurance. I didn’t care much about insurance. But it was okay to buy some from him. . . . It was a way of returning him a favor. Money management sales discourses • Now the interest rate offered by banks is less than 2 percent. . . . It is the best time to buy some life insurance. . . . This product guarantees at least 2.5 percent return. In addition, we give dividends based on the profits of our company. It’s a real good deal. • Education fees have been rising. Don’t think that you should provide the best education for your one and only child. If you don’t set up an educational fund for him right now, you may end up using your retirement fund to support his education in the future. • Insurance is for those, like you, who have extra money but don’t know how to invest because you don’t have time to study the stock market. Our insurance company can help you come up with a profitable investment plan. Risk management sales discourses • Insurance is simple. You pay a small amount of money to transfer your risks to the insurance company.

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• We want our children to have a good education. But what happens if something makes us incapable of raising our family anymore? Insurance can give our beloved family protection. It lets us and our loved ones live with dignity and respect. • Have you already made plans to protect your family members? Buying an insurance policy now is like bringing an umbrella when you go out. It always gives you a protection no matter what kind of weather it will be. Professional rhetoric • To be professional, you have to always be aware of the way you dress. Men should wear suits and ties, and ladies should wear skirts and jackets. . . . You should always be aware of your manner, such as how to present your business card . . . how to shake hands . . . how to say “good-bye”. . . . • Don’t feel bad when you get rejected. You are the expert on insurance. Your prospects reject it out of ignorance. Your job is to educate them on the importance of insurance. They may not understand at first. But you can gradually change their concept. Missionary rhetoric • Don’t think that you are begging for money from the prospects. Instead, always keep in mind that you are giving them money. Insurance is a business of giving people money. . . . Insurance is about love. It’s about helping people. • Do you love your family? Do you love your friends? If you find that something is really good, that could give your friends and their families a protective shield against all kinds of risks, would you introduce it to them? The mission of being an insurance agent is to distribute this protective shield not only to those you love, but also to people you don’t know. . . . Being an insurance agent is like being a philanthropist. Money rhetoric • When your family members oppose your being an insurance agent, what can you do? The only thing you can do is to prove to them that they were wrong. How? By making a lot of money! When you succeed in building your career, will they oppose you anymore? • Many insurance agents in foreign countries are driving Mercedes and BMWs when they visit their prospects. Will the prospects respect these agents? Of course! When they see that these agents are all successful people, they respect them. . . . Don’t complain that your prospects do not respect you. When you prove to them that you make more money than they do, they will naturally respect you.

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Business rhetoric • You are the boss. No one else is your boss. We are business partners. You depend on me and I depend on you. • Do you want to be the owner of a business? Do you want to be in charge of your own business? Here we give you a platform to build your teams. You will be your own boss. We provide you a platform to set up your own business. Familial rhetoric • Welcome to this big family! . . . Some new agents in other companies complained that they felt like orphans, having no one to go out with them to teach them how to approach strangers. Pacific-Aetna is different! Your parents are taking care of you. • We are engaging in a job about human beings. We need to take a humanistic approach to treating our employees. . . . We are all brothers and sisters, and we help each other.

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APPENDIX B

Life Insurance Companies in China: 2009

To represent the emergence of the life insurance market in China, I list the companies in a chronological order according to their years of founding or entry into China.

Company Name as of 2009 China Life Insurance (Group) Company* Ё೟Ҏ໑ֱ䱾˄䲚೬˅᳝䰤݀ৌ Ping An Insurance (Group) Company of China, Ltd.** Ё೟ᑇᅝֱ䱾˄䲚೬˅㙵ӑ᳝䰤݀ৌ China Pacific Insurance (Group) Company, Ltd. Ё೟໾ᑇ⋟˄䲚೬˅㙵ӑ᳝䰤݀ৌ American International Assurance Company, Ltd. 㕢೟ট䙺ֱ䱾᳝䰤݀ৌ Union Life Insurance Company, Ltd. ড়ⴒҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Manulife-Sinochem Life Insurance Company, Ltd. ЁᅣҎ໑ֱ䱾᳝䰤݀ৌ New China Life Insurance Company, Ltd. ᮄ 㧃ֱ䱾㙵ӑ᳝䰤݀ৌ Taikang Life Insurance Company, Ltd. ⋄ᒋҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Pacific-Antai Life Insurance Company, Ltd. (formerly Pacific-Aetna Life Insurance Company, Ltd.) ໾ᑇ⋟ᅝ⋄Ҏ໑ֱ䱾᳝䰤݀ৌ

Year of Founding Location of or Entry Headquarters into China Ownership in China 1949 (1996) 1988

Domestic

Beijing

Domestic

Shenzhen

1991

Domestic

Shanghai

1992

American

Shanghai

1993

Domestic

Wuhan

1996

Shanghai

1996

SinoCanadian Domestic

1996

Domestic

Beijing

1998

Sino-Dutch Shanghai (formerly SinoAmerican)

Beijing

(continued)

228

Appendix B

Company Name as of 2009 Allianz China Life Insurance Company, Ltd. (formerly Allianz-Dazhong Life Insurance Company, Ltd.) Ёᖋᅝ㙃Ҏ໑ֱ䱾᳝䰤݀ৌ (ࠡ䑿⚎ᅝ㙃໻ⴒҎ໑ֱ䱾᳝䰤݀ৌ˅ AXA-Minmetals Assurance Company, Ltd. 䞥ⲯҎ໑ֱ䱾᳝䰤݀ৌ BoCommLife Insurance Company, Ltd. (formerly China Life CMG Life Insurance Company, Ltd.) Ѹ䡔ᒋ㙃Ҏ໑ֱ䱾᳝䰤݀ৌ ˄ࠡ䑿⚎Ёֱᒋ㙃Ҏ໑ֱ䱾᳝䰤݀ৌ˅ CITIC Prudential Life Insurance Company, Ltd. ֵ䁴Ҏ໑ֱ  䱾᳝䰤݀ৌ Sino Life Insurance Company, Ltd. ⫳ੑҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Taiping Life Insurance Company, Ltd. ໾ᑇҎ໑ֱ䱾᳝䰤݀ৌ Tianan Life Insurance Company, Ltd. (formerly John Hancock Tianan Life Insurance Company, Ltd.) ໽ᅝҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ ˄ࠡ䑿⚎ᘚᒋ໽ᅝҎ໑ֱ䱾݀ৌ˅ Generali China Life Insurance Company, Ltd. ЁᛣҎ໑ֱ䱾᳝䰤݀ৌ Haier New York Life Insurance Company, Ltd. ⍋⠒㋤㋘Ҏ໑ֱ䱾᳝䰤  ݀ৌ ING Capital Life Insurance Company, Ltd. 佪ࡉᅝ⋄Ҏ໑ֱ䱾᳝䰤݀ৌ Minsheng Life Insurance Company, Ltd. ⇥⫳Ҏ໑ֱ䱾᳝䰤݀ৌ Sun Life Ever Bright Life Insurance Company, Ltd. ‫ܝ‬໻∌ᯢҎ໑ֱ䱾᳝䰤݀ৌ Aegon-CNOOC Life Insurance Company, Ltd. ⍋ᒋҎ໑ֱ䱾᳝䰤݀ৌ Aviva-COFCO Life Insurance Company, Ltd. Ё㣅Ҏ໑ֱ䱾᳝䰤݀ৌ CIGNA & CMC Life Insurance Company, Ltd. ᢯ଚֵ䃒Ҏ໑ֱ 䱾᳝䰤  ݀ৌ

Year of Founding Location of or Entry Headquarters into China Ownership in China 1999

SinoGerman

1999

Sino-French Shanghai

2000

SinoAustralian

2000

Sino-British Guangzhou

2001

Domestic

2001

Domestic

2001

Domestic Shanghai (formerly SinoAmerican) Sino-Italian Beijing

2002 2002

Shanghai

Shanghai

Shenzhen (formerly Shanghai) Shanghai

2002

SinoShanghai American Sino-Dutch Dalian

2002

Domestic

2002 2003

SinoTianjin Canadian Sino-Dutch Shanghai

2003

Sino-British Beijing

2003

SinoAmerican

Beijing

Shenzhen

(continued)

Appendix B

Company Name as of 2009 Heng An Standard Life Insurance Company, Ltd. ᘚᅝ῭⑪Ҏ໑ֱ䱾᳝䰤݀ৌ Nissay-Greatwall Life Insurance Company, Ltd. (formerly Nissay-SVA Life Insurance Company, Ltd.) 䭋⫳Ҏ໑ֱ䱾᳝䰤݀ৌ (ࠡ䑿⚎ᒷ䳏᮹⫳Ҏ໑ֱ䱾᳝䰤݀ৌ) Cathay Life Insurance Company, Ltd. ೟⋄Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Greatwall Life Insurance Company, Ltd. 䭋ජҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Jiahe Life Insurance Company, Ltd.  ৌ ௝⾒Ҏ໑ֱ䱾㙵ӑ᳝䰤  ݀ Sino-US MetLife Insurance Company, Ltd. Ё㕢໻䛑᳗Ҏ໑ֱ䱾݀ৌ Skandia-BSAM Life Insurance Company, Ltd. ⨲⋄Ҏ໑ֱ䱾᳝䰤݀ৌ Huatai Life Insurance Company, Ltd. 㧃⋄Ҏ໑ֱ䱾݀ৌ PICC Life Insurance Company, Ltd.* Ё೟Ҏֱ໑䱾᳝䰤݀ৌ Samsung Air China Life Insurance Company, Ltd. Ё㟾ϝ᯳Ҏ໑ֱ䱾᳝䰤݀ৌ Sino-French Life Insurance Company, Ltd. Ё⊩Ҏ໑ֱ䱾᳝䰤䊀ӏ݀ৌ  United MetLife Insurance Company, Ltd. (formerly Citiinsurance Life Insurance Company, Ltd.) 㙃 ⋄໻䛑᳗Ҏ໑ֱ䱾᳝䰤݀ৌࠡ䑿⚎㢅 ᮫ Ҏ໑ֱ䱾᳝䰤݀ৌ) Dragon Life Insurance Company, Ltd. ℷᖋҎ໑ֱ䱾᳝ 䰤݀ৌ Great Eastern Life Assurance (China) Company, Ltd. Ёᮄ໻ᵅᮍҎ໑ֱ䱾᳝䰤݀ৌ Huaxia Life Insurance Company, Ltd. 㧃໣Ҏ໑ֱ䱾᳝䰤݀ৌ Guo Hua Life Insurance Company, Ltd. ೟㧃Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ 

229

Year of Founding Location of or Entry Headquarters into China Ownership in China 2003

Sino-British Tianjin

2003

SinoJapanese

Shanghai

2004

Shanghai

2004

SinoTaiwanese Domestic

2004

Domestic

Beijing

2004 2004

SinoBeijing American Sino-British Beijing

2005

Domestic

Beijing

2005

Domestic

Beijing

2005

SinoBeijing Korean Sino-French Beijing

2005

Beijing

2005

SinoAmerican

Shanghai

2006

Domestic

Beijing

2006

SinoChongqing Singaporean

2006

Domestic

Beijing

2007

Domestic

Shanghai

(continued)

230

Appendix B

Company Name as of 2009 Happy Life Insurance Company, Ltd. ᑌ⽣Ҏ໑ֱ䱾݀ৌ Sinatay Life Insurance Company, Ltd. ֵ⋄Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Sunshine Life Insurance Corporation Ltd. 䱑‫ܝ‬Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ Yingda Taihe Life Insurance Company, Ltd. 㣅໻⋄੠Ҏ໑ֱ䱾᳝䰤݀ৌ King Dragon Life Insurance Company, Ltd. ৯啡Ҏ໑ֱ䱾᳝䰤݀ৌ Aeon Life Insurance Company, Ltd. ⱒᑈҎ໑ֱ䱾㙵ӑ᳝䰤݀ৌ China Post Life Insurance Company, Ltd. Ё䛉Ҏ໑ֱ䱾㙵ӑ᳝䰤݀ৌ HSBC Life Insurance Company, Ltd. ⒭䈤Ҏ໑ֱ䱾᳝䰤݀ৌ Shin Kong-HNA Life Insurance Company, Ltd. ᮄ‫ܝ‬⍋㟾Ҏ໑ֱ䱾䊀ӏ᳝䰤݀ৌ

Year of Founding Location of or Entry Headquarters into China Ownership in China 2007

Domestic

Beijing

2007

Domestic

Hanzhou

2007

Domestic

Beijing

2007

Domestic

Beijing

2008

Xiamen

2009

SinoTaiwanese Domestic

Dalian

2009

Domestic

Beijing

2009

Sino-British Shanghai

2009

SinoTaiwanese

Beijing

Source: Almanac of China’s Insurance 1999–2010. *In 1996, the state-owned People’s Insurance Company of China (PICC), first established in 1949, was renamed PICC Insurance (Group) Company. That year it also spun off business to three independent share-holding companies: China Life Insurance Company, Ltd., PICC Property Insurance Company, Ltd., and China Reinsurance Company, Ltd. PICC Property later expanded the scope of its business and established subsidiaries, including PICC Life Insurance Company, Ltd. in 2005. PICC Property was renamed several times, most recently returning to PICC Insurance (Group) Company in 2007. ** Ping An has changed its names several times. It was named Ping An Insurance Company in its founding year 1988. In 1992, it became Ping An Insurance Company of China when it began to expand its business nationwide. The company restructured its ownership into stock shares and adopted the name Ping An Insurance Company of China, Ltd. in 1997. Then, in 2003, it was restructured into a holding company and began to prepare for public listing. Its name was changed to Ping An Insurance (Group) Company of China, Ltd. The life business sector was now taken over by one of the Group’s subsidiaries, Ping An Life Insurance Company of China, Ltd., which was set up in December 2002.

Notes

I n t roduc t ion 1. “East Meets West: The Insurance Industry in China,” Life Association News, Washington, April 1996. 2. “Cracking the Iron Rice Bowl,” Best’s Review, November 1998. 3. Newsweek, October 9, 2006, and Time, September 25, 2006. See also Newsweek September 15, 2003, September 4, 2006, and September 18, 2006. 4. In China, insurance is divided into two broad categories: life and property. Life insurance includes term life, whole life, variable life, participating, personal accident, hospital care, annuity, and endowment insurance. Property insurance refers to general insurance that includes all non-life insurance, such as automobile insurance, home insurance, and production-related insurance. 5. These figures are calculated by the author based on available data. Unless otherwise specified, data on the insurance business in China and Shanghai are referenced from the following sources throughout this book: Wang, Fei, and Li (2003) for the pre-1997 data for China; Haier New York Life Insurance Company, Ltd. in Shanghai for the pre-1997 data for Shanghai (though because of missing data for 1993–1994, Haier New York Life estimated the figures for those two years through interpolation); and the Almanac of China’s Insurance 1998–2010 and the Almanac of Shanghai Insurance 2001–2010 for the data from 1997 on. Any scholars who are familiar with China’s statistics understand the inconsistencies that are often found in their categorization system in different years. The statistics reported in the almanacs suffer the same problem. The figures reported through this text, therefore, are based on my best knowledge after exhausting the possible sources, and they are mainly for illustrative purposes. 6. The Weberian legacy has been carried through a number of important works, which all assert the pivotal role of systemic cultural orientation in patterns of human action. The most notable is Talcott Parsons’s theory of action (see Parsons and Shils 1951). Other representative examples of the Weberian legacy include Robert Merton’s Puritanism and science, Robert Bellah’s sociology of religion, and Clifford Geertz’s interpretation of culture (see Wuthnow 1987). See also Stephen Kalberg (2009) on Protestantism and American democracy.

232

Notes to Pages 12–29

7. A minority of economists have begun to acknowledge the role of culture in shaping economic action. In Accounting for Tastes (1996), Gary Becker, Nobel Prize laureate in economics, asserts the critical role of preferences and values in shaping the choices of economic actors, bringing economists to a subject, or a variable, that was previously considered off limits. Institutional economists, such as Arthur Denzau and Douglass North (1994), strongly criticize the rational choice model by arguing that shared mental models, ideologies, and belief structures not only guide choices but are critical constraints on those making choices. However, as DiMaggio (1994) has observed, economists, if they recognize the importance of culture at all, pay attention primarily to its regulatory functions, focusing on how culture constrains the individual pursuit of economic interests. Culture in this sense is posited as being in conflict with economic interests and, therefore, restraining purely economically driven behaviors. 8. Group life insurance, which is usually sold to employers as a fringe benefit for employees and was restricted to domestic insurers prior to 2005, is not the concern of this project. 9. A few exemplary sociological pieces that examine how culture regulates or constitutes exchange and market formation can be found in Zelizer (1979, 1985, 2005a), Dobbin (1994), and Mukerji (1983). 10. I follow the Chinese norm that puts surnames before given names. But for those informants who identified themselves with English names, I follow the English norm by putting their given names first. Chapter 1 1. Bicentenary Chinese Insurance 1805–2005, edited by Insurance Institute of China and China Insurance News. Beijing: Contemporary World Publishing House, 2005, 23. 2. Ibid., 169. 3. Ibid., 205. 4. Calculations based on available data from China Statistical Yearbook 1995. 5. China Statistical Yearbook 1995. Throughout this text, the U.S. dollar estimate is based on the exchange rate for the period 1998–2004, which was US$1 = 8.277 yuan. 6. For example, Andrew Walder (1992) in 1986 found that 55 percent of state and private enterprises provided medical clinic services to employees in Shanghai and Tianjin. A similar survey in 1993 showed that only 28 percent of the enterprises in these two cities still offered those services (Kwok 1999). 7. Anthropologists find that by the 1990s, even residents in rural areas began to rely more on friendship than kinship for mutual help. See Yunxiang Yan (2003). 8. I was stunned to see the popularity of iron doors in Shanghai and Beijing. Although Hong Kong is a city with a higher crime rate than Shanghai and Beijing,

Notes to Pages 29–40

9. 10. 11. 12. 13.

14.

15.

16.

233

I had never seen such defensive and prisonlike doors in a city’s residential buildings. With a population of 6.5 million, Hong Kong had 75,877 reported crimes in 2002, compared to 35,785 reported crimes in a population of over 13 million in Shanghai and fewer than 40,000 reported crimes in a population of over 14 million in Beijing (Hong Kong Police Home page, Crime Statistics [www.police.gov. hk]; Shanghai Daily, September 9, 2004; People’s Daily, December 18, 2002). It seems to me that the iron doors were put up not only for security purposes but also for drawing a fortified boundary between private and public spaces and for expressing the need to protect one’s private property and privacy. It can be interpreted as a postcultural revolution syndrome. Interview, Shanghai, January 2001. The pamphlet probably paraphrased what the prime minister said. Therefore, the quotation should not be read as a direct quote of the prime minister. A number of furloughed workers in their 50s attended classes, usually two to three evenings a week, learning how to invest in the stock market. Xinmin Wanbao [New People’s Evening Press], July 15, 2001. A number of popular television drama series in Hong Kong and Taiwan depicted stories of the “18 levels of hell,” where punishments were applied to the dead with bad karma, and of living in a dark world surrounded by ghosts. The punishments in hell were the cruelest tortures one could imagine: climbing naked up a mountain full of knives, having tongues being cut, being fried naked in a pan with boiling oil, lying naked in a bed full of needles, and so forth. I watched a few of these drama series in Hong Kong during the 1970s and 1980s. For Taiwan, see McCreery 1990. Geoffrey Fowler, “SARS: Dying Alone,” Far East Economic Review, June 5, 2003, which cites the Chinese concept of death from an interview with Joseph Bosco, a professor of anthropology at the Chinese University of Hong Kong. The cultural taboo on the topic of death has been so pervasive even in Hong Kong that the Centre on Behavioral Health at the University of Hong Kong launched a three-year program from 2007 to 2010 to educate the public of the “fearless” of death. The program was initiated by Cecilia Chan, who as a professor of social work, witnessed that too many family members were left with no wills or any expressed wishes from the deceased regarding their funeral preferences and the management of their properties. According to Chan, many terminally ill patients and their family members avoided discussing the topic of death, and so drafting a will was uncommon. The program aimed to break the taboo to openly narrate death and to teach the public the skills of communicating with their family members about their preferred arrangements related to their death. See Chan and Chow (2006) on the cultural taboo surrounding death in Hong Kong. See also the advertisements in Newsweek cited in note 3 of the introduction to this volume. To this day, to die with dignity in American society includes dying without debt. The idea that a “good death” means leaving the family debt free came

234

17.

18. 19. 20.

Notes to Pages 40–44 from the marketization and consumerism of American society. See Quinn (2008) for an institutional account of the meaning of a good death toward the end of the twentieth century. In an April 2009 field trip to Chaozhou, a prefecture-level city in eastern Guangdong province (south China), with a population of 2.5 million, I observed a case of handling the dying of an old woman that dramatized the unshakable obligations of the living and dead members to each other. The woman, more than 80 years of age, was a widow with six children (three sons and three daughters) and more than a dozen grandchildren and great grandchildren. She was bedridden and suffered dementia for almost two years before being hospitalized for a severe respiratory problem that impaired her ability to breathe. She had been in the hospital for almost three weeks, treated with nasotracheal intubation that provided her with oxygen to sustain her life. After learning from the doctor that her respiratory problem was incurable, her children thought that it would be too painful for their mother live with the intubation. They decided that they better let her go. As a usual practice, people prefer to die at home, not in the hospital. To prepare for her death, her three sons argued over which home they should let her to go for her last breath. All of them wanted their mother to die in their homes. I later realized that the place in which an aged person died was believed to be blessed. To be fair to each other, the sons decided to take her back to the old, unkempt house in which they were brought up. They renovated a room in this house and delivered the bedridden old woman back to it on the same day. All of her children, some of her sons- and daughters-in-law, and some of her grandchildren then gathered around her bed. The daughters and granddaughters were weeping. By this time, the old woman had begun to be treated as an ancestor and a saint. The youngest son, owner of a small factory, said to her, “Mom, I have a small request. You don’t have to make too much effort to do this, but in case you pass by my debtors . . . well, just in case you pass by their places, would you please kindly remind them to return money to me?” This request indicated that the dying mother would soon take on some supernatural power, with which she would have the obligation to help her descendants resolve some difficult but mundane problems. The woman stared at him when he was speaking but was unable to give him any signal on whether his request was taken. Seven days after the woman died, one of this son’s debtors called him after almost 10 years with no contact. Although this debtor was not calling to return money, he had a business proposal. The son was happy and thought that his recently deceased mother must be helping him. “A Survey of the World Economy,” The Economist, September 24–30, 2005. China Statistical Yearbook 2005. The consumer price index growth rate was 17.1 percent in 1995 and 8.3 percent in 1996 due to currency devaluation. These figures are calculated based on available data of the numbers of policies in force and the population in Shanghai. Sources are referenced from Almanac of

Notes to Pages 44–53

21. 22.

23.

24.

25.

235

Shanghai Insurance 2003 and Shanghai Almanac of Population and Family Planning 2003. Unfortunately, the numbers of policies in force in China presented in Almanac of China’s Insurance are incomplete, so information about the entire country is not available. See, for example, Headey, Law, and Zhang (2002); Hwang (2003); and Wang, Fei, and Li (2003). “Ping An Gongsi Ma Mingzhe Dangxuan LIMRA Dongshi” [Ping An Company’s Ma Mingzhe Elected as a Member of LIMRA Board of Directors], Fuwu Kuaixun [Service Express News], issue no. 24 of 2001, Sales Agent Service Division, Ping An Insurance Company of China, Ltd. Shanghai Branch (Life), p. 2. “Ping An Zhaogu, Zhongjian Dingjia” [Ping An Issues Shares and Prices are set in the Middle], Singtao Daily, Hong Kong, June 18, 2004 ; “Ping An Retail Portion Sees 50 Times Booking,” China Daily, June 18, 2004 ; “Pingbao A Gu Shoutian Sheng 38%; H Gu Beichi” [Ping An A Share Rose 38 Percent First Day, H Share Went the Other Way], Hong Kong Economic Journal , March 2, 2007. It would be more valid to compare the sales volume of all money management products (including endowment insurance, annuity insurance, child savings insurance, unit linked, and dividend insurance) with the sales volume of all risk management products (including term life, personal accident, whole life, hospitalization insurance, and critical disease insurance). However, these figures are not available because, with the exception of unit linked, dividend, and personal accident policies, premium income from other kinds are lumped together in official yearbooks. The mean annual premium for personal accident insurance among clients that I surveyed and interviewed was 495 yuan; dividend policies, 2,950 yuan; and unit linked, 3,267 yuan. Although the means come from a nonrandom sample, the figures are likely representative considering the variety of the clientele in the sample.

Chapter 2 1. According to Zelizer (1979), burial insurance was the first widely accepted life policy in the United States in the mid-nineteenth century, prior to the popularity of policies that carried savings and investment functions. Murphy (2010) documents that dividend policies issued by mutual companies were also popular in mid-nineteenth century America but that those policies were appealing because of the increased face value or lower future premiums. The main function of these policies was to provide financial protection to dependents upon breadwinners’ early deaths. For the British life insurance market, four waves of popularity were

236

2.

3. 4. 5. 6.

7. 8. 9. 10. 11. 12.

13. 14. 15.

Notes to Pages 53–65 recorded: (1) mortuary tontines in the first three-quarters of the eighteenth century with the primary motive of gambling (Clark 1999), (2) bonus scheme insurance in the last quarter of the eighteenth century for a share of interest earned in addition to financial protection against premature death (Alborn 2002), (3) term life policies and “other interest” life policies in the first half of the nineteenth century for family protection and for protecting creditors and lending parties’ interests, respectively, in case of premature death (Pearson 1990; Alborn 2009), and (4) term life with endowment in the second half of the nineteenth century for a primary function of protecting family dependents in case of premature death and a secondary function of savings (Alborn 2002, 2009). For example, traditional whole life policies and term insurance accounted for 74.7 percent of the number of life policies sold in the United States in 1998. See 1999 Life Insurance Fact Book, Congressional Information Service Inc., American Council of Life Insurance, 2000, 6. Prospectus of Ping An’s Public Listing in Hong Kong, June 2004, 131. Interview, Shanghai, January 2002. Interview, Shanghai, August 2002. It might not apply to the Euro-American markets in recent decades when traditional risk management products were yielding declining profits due to market saturation and money management products were more profitable with the availability of diverse investment channels and relatively stable investment returns (prior to the global financial crisis stemming from the United States in 2008– 2009). Interview, Shanghai, August 2002. Interview with a former PICC salesperson, Shanghai, October 2001. Interview, Shanghai, August 2000. Interview, Shanghai, March 2002. “Ping An de Guojihua ‘Shenhua’” [The Myth of Ping An’s Being International], Nanfeng Chuang [The Window of Southern Wind], February 2002 . According to von Senger (2000), Chen (2000), and Stockman (2000), the meaning of the Chinese concept of fa or falu (both are literally translated as law) is fundamentally distinct from the meaning of “law” in occidental contexts. Fa has been traditionally associated with punishments for the sake of social order and control. It stands in contrast to li (translated variously as “ritual,” “rite,” “propriety,” or “etiquette”), which refers to the appropriate demeanor and the bearing of the body that instruct correct behavior within a social relationship. The enactment of li qualified one to be a gentleman, whereas fa was the enforcement of correct behavior by the threat of punishments and was appropriate only for “mean people.” Thus, law per se has no virtue. Interview, Shanghai, April 2002. Interview, Shanghai, February 2002. Interview, Shanghai, March 2002.

Notes to Pages 66–72

237

16. “Insurers Lose on Rate Cuts,” South China Morning Post, September 13, 2000. 17. Interview, Shanghai, March 2002. 18. “Ping An Baofei Shouru Zengchang” [The Premium Income of Ping An Increased], Jingrong Shibao [Financial News], January 17, 2002 . 19. From my interviews with the general managers of Allianz-Dazhong and ManulifeSinochem respectively. Both of them defended the traditional risk management concept of life insurance during the interviews. 20. Participant observation at an agency office of Pacific-Aetna, Shanghai, October 2001. 21. Information obtained from an agency office manager of China Pacific, who showed me a table with figures released by Shanghai Insurance Association, 2001. 22. Figures were drawn from Shanghai Stock Exchange Statistical Tables (1993– 2003) at www.chinainfobank.com. 23. There was a rumor circulating among some managerial staff and agents of Ping An that Nanfang Zhoumo was bought out by AIA and that the article was written by someone at AIA to hurt the reputation of Ping An. I did observe that many sales agents of AIA used this article to show their prospects that they were being cheated by Ping An. However, Nanfang Zhoumo, with its headquarters in Guangzhou, belongs to Nanfang Ribao Baoye Jituan [Southern Daily News Group], later renamed to Nanfang Baoye Chuanmei Jituan [Southern News and Media Group]. It is a state-owned enterprise in the Guangdong province, though it is well known for its rather bold investigative reporting. 24. “Ping An Touzilianjiexian Fuzhou Yuxian” [Ping An’s Unit Linked Insurance Is in Danger in Fuzhou], Gongshang Shibao [Industrial and Commercial Press], February 25, 2002 . According to Murphy (2010) and Ericson et al. (2003), insurance sales agents misleading potential buyers by exaggerating the returns of their investment products was also common in the United States and Britain in the early phase of their market development. 25. An observation of conversations among a few customers in a tailor shop in Shanghai in March 2002. 26. Interviews conducted in the United States, October 2002 and July 2003. 27. This internal conflict was reported by a deputy general manager of Ping An during an interview, Shanghai, August 2002. 28. Telephone interview with a senior sales agent of Ping An in Shanghai, January 2004. 29. “Ping An Retail Portion Sees 50 Times Booking,” China Daily, June 18, 2004; “Ping An Zhaogu, Zhongjian Dingjia” [Ping An Issues Shares and Prices in the Middle], Singtao Daily, Hong Kong, June 18, 2004. 30. The conversion from Hong Kong dollar to the U.S. dollar is estimated based on a rate of HK$7.75 to US$1.

238

Notes to Pages 72–82

31. “Pingbao A Gu Shoutian Sheng 38%; H Gu Beichi” [Ping An A Share First Day Rose 38 Percent, H Share Went the Other Way], Hong Kong Economic Journal, March 2, 2007. 32. “China Life Shares Soar at Start of Hong Kong Debut,” China Daily, December 18, 2003. China Life listed simultaneously in Hong Kong and New York. The listing in New York was dated December 17, 2003. But a few months later China Life was accused of hiding information, which led to the U.S. security authority’s investigation. See “Huaqijituan Zhi Tigong Xujia Ziliao; Zhao Ziyang Xifu Ren Keying Bei Tingzhi” [Citigroup Pointed Out Fake Information; Zhao Ziyang’s Daughter-in-Law Ren Keying Was Suspended from Her Job], Hong Kong Economic Journal, June 25, 2004. 33. “Goushou A Gu Jin Guapai; Gujia Liao Zhang Bacheng” [China Life A Share Lists Today; Price Estimated to Increase 80 Percent], Hong Kong Economic Journal, January 9, 2007. Chapter 3 1. In her studies of direct selling companies in China, Jeffery (2001) reports a similar discourse about xintai in their training of distributors. 2. Interview, Shanghai, January 2002. 3. Interview, Shanghai, January 2002. 4. Interview, Shanghai, October 2001. 5. For the isomorphic dynamics of the organizational practices of the life insurance firms in Shanghai, see Chan (2011). 6. Today’s AIA Building was formerly the North China Daily News Building, which was opened in 1924 to mark the 60th anniversary of a British newspaper, North China Herald. The building was taken over by the Japanese during their occupation in 1941–1945. Soon after the Japanese’s withdrawal, North China Daily News and AIA moved back in and stayed there until 1950. The structure was named the Guilin Building after the Shanghai Municipal Government took over. In 1996, AIA reached an exchange agreement with the Shanghai Municipal Government to relocate its office to the building, and in 1998 it was renamed as the AIA Building. 7. Apart from its historical origin that gave it a special bond with China, there was a publicly circulated rumor that a former AIG Chairman, Maurice Greenberg, had made many efforts to lobby U.S. congressmen to grant a permanent status of Most Favored Nation to China, especially when U.S.–China relations were in tension after the crackdown on the pro-democratic movement in 1989. The granting of an operational license for AIA was said to be the Chinese top officials’ repayment of favors to Greenberg. This rumor was circulated among the sales agents in Shanghai, including those in AIA, Ping An, and Pacific-Aetna. Richard Madsen, a scholar of China’s politics, in an informal conversation with me in 2007 suggested that this rumor was likely to be true.

Notes to Pages 85–97

239

8. There is no single system of romanizing Taiwanese names, as variations exist between the local Taiwanese and the immigrants from mainland China and between different generations. In romanizing Taiwanese names for this text, I adopted the Mandarin system with reference to the standards provided by the Taiwan’s Ministry of Foreign Affairs (http://www.boca.gov.tw). Therefore, these names may not appear exactly the same as the informants’ official romanized names. 9. Interview, Shanghai, February 2002. 10. Interview, Shanghai, January 2002. 11. Interview, Shanghai, February 2002. 12. “Zhan Shanghai ” [Battling Shanghai], Ershiyi Shiji Jingji Baodan [Twenty-first Century Economic News], January 7, 2002 . 13. I observed that a small number of sales agents were allowed to enter the building freely because they had won a particular sales contest and were rewarded with a one-year “pass” (tongxingzheng). The “pass” was presented as a gift for the very top sales agents. 14. For an interesting discussion of using the concept suzhi (quality) as value coding in China’s neoliberal reform and as a discourse for class differentiation, see Hairong Yan (2003) and Amy Hanser (2005), respectively. 15. Nanfeng Chuang [The Window of Southern Wind], February 2002, 43. The term “Eight-Power Allied Armies” (Baguo Lianjun) refers to the aggressive troops sent by Britain, the United States, Germany, France, Russia, Japan, Italy, and Austria to suppress the anti-imperialist movement (Yihetuan) in China in 1900. The leaders of the movement were prosecuted, and the Chinese government was forced to sign an unequal treaty in 1901. The eight powers were considered imperialists, and the attack was considered a humiliation to the nation of China. 16. Interview, Shanghai, August 2002. 17. Interview, Shanghai, February 2002. 18. Participant observations of some of the training sessions at Ping An, March– April 2002. 19. This structure is very similar to the Falun Gong organization. See Chan (2004). 20. The morning assembly was more centralized during my second visit in 2004. Instead of having the subteam managers host their own meetings, the assembly was broadcast through a television installed in each room. In this way, all the sales agents in all agency offices in Shanghai watched the same programs. 21. However, I also observed in another agency office of Ping An that the in-house training manager treated the agents in a very friendly manner. A few agents in this office told me that they were especially lucky and grateful to have this manager, which implied that such friendly management was not common. 22. Participant observation at an agency office of Ping An, Shanghai, March 2002. 23. See Li (2001).

240

Notes to Pages 99–121

24. Zhou Huajian was indeed a very popular singer in Taiwan, Hong Kong, and parts of China, so his price must have been high. 25. I did not have a chance to join the ceremony. Instead, I watched the videotape of the entire ceremony and interviewed the agents who had attended it. 26. Participant observation at an agency office of Pacific-Aetna, Shanghai, July 2002. 27. Participant observation at an agency office of Pacific-Aetna, Shanghai, August 2000. 28. Another is a Sino-American joint venture, John Hancock Tianan Life Insurance Company, Ltd. Founded in Shanghai in January 2001, it was headed by an American from the United States. In 2009, John Hancock International sold its 50 percent stake in this joint venture to four other Chinese companies, which transformed the ownership of this insurer to be wholly Chinese. It was then renamed the Tianan Life Insurance Company, Ltd. 29. Dr. von Canstein stated his theory in Allianz-Dazhong Focus (Spring 2000), a quarterly newsletter of Allianz-Dazhong. 30. Interview, Shanghai, September 2000. 31. The names of the sales teams presented in this chapter are fictitious. 32. This is according to the team manager of the Venus Team, though no official figure was available. The productivity rate is measured by the total first-year premium divided by the number of agents. 33. Participant observation at an agency office of Allianz-Dazhong, Shanghai, April 2002. 34. Interview, Shanghai, April 2002. 35. Interview, Shanghai, April 2002. 36. Interview, Shanghai, September 2000. 37. Interview, Shanghai, April 2002. Chapter 4 1. Interview, Shanghai, February 2002. 2. The Path to Success: Life Insurance Professional Book, an AIA training kit, 22. 3. Ericson, Doyle, and Barry (2003) found that some life insurance firms in the United States nowadays also urge their agents to exploit their social networks to sell. 4. For interesting studies of how cultural schemas shape women’s choices between career and family and how cultural schemas influence policy outcomes, see BlairLoy (2003) and Steensland (2006), respectively. 5. Interview, Shanghai, May 2002. 6. Interview, Shanghai, September 2000. 7. There were sales jobs in state-owned enterprises before the marketization of the economy, but salespersons received fi xed salaries. If there were commissions, they were given as extra “bonuses” on top of salaries.

Notes to Pages 122–145 8. 9. 10. 11.

12. 13.

14. 15.

16. 17. 18. 19.

20. 21. 22. 23. 24. 25. 26. 27.

241

Interview, Shanghai, September 2000. Interview, Shanghai, August 2002. Participant observation at an agency office of Ping An, Shanghai, March 2002. On the other hand, in his studies of technology sales in the United States, Darr (2006) finds that the salespersons used gifts to induce a sense of obligation to reciprocate and offered personal favors to blur the line between friendship and business relationships. Participant observation at the prospect’s workplace, Shanghai, March 2002. Participant observation at an agency office of Ping An, Shanghai, April 2002, in which the agent, Chang, shared with other agents in a morning assembly her experience in establishing guanxi with clients and prospects. Participant observation at an agency office of Ping An, Shanghai, April 2002. The agent, Zhang, shared her successful story with other agents in a small group meeting in an agency office of Allianz-Dazhong in May 2002. The annual premium US$3,625 was ten times more than most policies sold in Shanghai. Interview, Shanghai, July 2002. Participant observation at an agency office of Ping An, Shanghai, November 2001. Participant observation at the shop, Shanghai, January 2002. Zhang is a unit of length used by the Chinese for centuries until Communist China. Yizhang refers to one zhang, which equals 3.33 meters. As one meter is approximately three feet, I use ten feet to represent one zhang. Participant observation at the prospect’s residence, Shanghai, January 2002. Participant observation at the prospects’ workplace, Shanghai, November 2001. Participant observation at the prospect’s residence, Shanghai, March 2002. Interview, Shanghai, August 2002. Interview, Shanghai, March 2002. Participant observation at the prospect’s workplace, Shanghai, October 2001. Participant observation at the client’s residence, Shanghai, January 2002. For discussions of what kinds of cultural elements have higher potency to be drawn upon, see Fine (1979) and Schudson (1989).

Chapter 5 1. For a classic discussion of the concepts of motive, reason, and meaning and the relations between them, see Schutz ([1932] 1967). 2. When someone adds the word xiao or lao to a person’s last name, it means someone feels the person is quite a close friend. Xiao, meaning “junior,” is used when the person is younger than or about the same age, and lao, meaning “senior,” is used when the person is older. 3. Interview, Shanghai, August 2000. 4. Interview, Shanghai, April 2002.

242 5. 6. 7. 8.

9. 10. 11. 12. 13. 14.

15. 16. 17. 18. 19. 20. 21. 22. 23.

24. 25.

Notes to Pages 146–157 Interview, Shanghai, December 2004. Interview, Shanghai, December 2004. Interview, Shanghai, April 2002. It is a Chinese tradition that parents and married uncles and aunts give “New Year money” to children (and unmarried adults). The “New Year money” is put in a red packet to signify “fortune and good luck” when it is delivered. In Hong Kong, the “New Year money” is called “fortune money” (lishi). This tradition is still a common practice in all Chinese societies, including Hong Kong and Taiwan. The number 9 is a fortune number for the Chinese, because its pronunciations, “jiu” in Mandarin and “gau” in Cantonese, both mean “lasting” or “forever.” Interview, Shanghai, December 2004. Interview, Shanghai, October 2001. The average annual income in Shanghai in 2001–2002 was around 24,000 yuan (~ US$2,900), according to Shanghai Statistical Yearbook 2002, 2003 . Interview, Shanghai, October 2001. Many sources of information report that Manulife-Sinochem was the first life insurer in Shanghai that offered dividend products. The policy offered by China Life in 1996 might not actually have been a dividend product. It is likely that this domestic insurer simply called the interests “dividends” to make their product seem appealing. Interview, Shanghai, October 2001. Interview, Shanghai, October 2001. Interview, Shanghai, March 2002. Interview, Shanghai, March 2002. Interview, Shanghai, August 2002. Interview, Shanghai, January 2002. Figures drawn from Shanghai Stock Exchange Statistical Tables (1993–2003) from www.chinainfobank.com. See Guseva (2008) and Bandelj (2008) for the postsocialist sociocultural changes in Russia and Eastern Europe, respectively. On July 23, 2011, a deadly crash between two high-speed trains took at least 40 lives and injured nearly 200 passengers in Wenzhou, South China. This incident aroused a series debates about the state’s priority: human lives or speedy technological and economic development. On August 1, 2008, China was proud to present to the world the fastest high-speed rail on earth, able to reach a speed of 350 kilometers (~ 218 miles) per hour. The country took pride for spending less than 10 years to catch up with and even surpass the high-speed rails in Europe and Japan that took 40 years of development. The “-est” (zuei) became the utopian goal of China at the turn of the twenty-first century, and phrases like “the biggest or the largest” (zuei da), “the highest” (zuei gao), “the fastest” (zuei kuai), and “the longest” (zuei chang) are heard everywhere from the central state to municipal governments and to private corporations. It was not until 2004 during my follow-up research that I saw Ping An and China Life begin to offer the kind of health insurance that the local people wanted. Interview, Shanghai, July 2002.

Notes to Pages 161–179

243

26. Data are for 128 clients: 63 from the surveys and 65 from the interviews in 2000– 2002. Clients interviewed in 2004 are not included because I did not ask them to list all the products they bought. 27. Guojian Han, “Insurance Boom,” Beijing Review, June 1996. 28. The survey was conducted by TC Marketing Research & Consultancy Lt. in Shanghai in March 2003. The distribution of the respondents regarding the reasons for savings is: 51 percent for “meeting unexpected contingencies,” 49 percent for “child’s education,” 36 percent for “buying house(s),” 13 percent for “temporarily put in the bank,” 9 percent for “running business,” 9 percent for “taking care of the elderly,” and 9 percent for “earning the interests.” 29. In fact, Shanghai had the highest ratio of lung cancer patients to the total population in the early 2000s. See “Benshi Feiai Fabinglu ju Quanguo Bangshou” [The Rate of Lung Cancer in This City Ranks Number One in the Country], Dazhong Weisheng Bao [Public Health Press], March 21, 2003. 30. Interview, Shanghai, September 2000. 31. Conversations in an informal gathering, Shanghai, November 2001. 32. Interview, Shanghai, January 2002. 33. In his insightful analysis of the political cultures in the Philippines and Puerto Rico during U.S. colonialism, Julian Go (2008) asserts a similar position: that cultural systems delimit the possibilities of instrumental usage of cultural schemas. Chapter 6 1. Lamont (1992, 2000) takes a similar position. 2. Accordingly, the verb bricoler applies to ball games and billiards, to hunting, to shooting, and to riding but is always used with reference to some extraneous movement, such as a ball rebounding, a dog straying, or a horse swerving from its direct course to avoid an obstacle. See Levi-Strauss (1966, esp. 16). 3. There is an increasing volume of insightful works that treat institutions as a variable in theorizing their relation to culture. See, for example, FourcadeGourinchas and Babb (2002), Eliasoph and Lichterman (2003), Zhou (2005), Healy (2000, 2006), Dobbin (1994), Steensland (2006), Fligstein and MaraDrita (1996), Binder (2007), Hallett and Ventresca (2006), Guseva and Rona-Tas (2001), and Quinn (2008). 4. For some exemplary works on the use of cultural frames to legitimate new actions, see Snow et al. (1986) on social movement mobilization; Dobbin (1994) on forging industrial policies; Binder (2002) on education curricular; and Hirsch (1986) and Fiss and Zajac (2006) on business and management strategies. For a theoretical elaboration of how a shared cultural frame constitutes individual interests to a cultural object, see Schudson (1989). 5. They were clients of Haier New York Life, AIA, Allianz-Dazhong, Ping An, or Manulife-Sinochem.

244

Notes to Pages 179–193

6. I was careful not to stir up painful memories and therefore was rather restrained when probing into their feelings. 7. Unless otherwise specified, the figures presented in this paragraph are calculated based on the available data from the Insurance Yearbook, the Republic of China, for the years 1997, 2002, and 2007, for the case of Taiwan, and the Annual Report for 1992–2007, Office of Commissioner of Insurance, Hong Kong, for the case of Hong Kong. 8. In June 2004, Citigroup Inc.’s subsidiary, Travelers Insurance Company, was granted permission to launch a joint venture life insurer named Citiinsurance Life Insurance Company, Ltd. (Citiinsurance) with domestic partner, Shanghai Alliance Investment Ltd. However, in January 2005, Citiinsurance sold its insurance business to the New York-based Metropolitan Life Insurance Company. When the joint venture was inaugurated in October 2005, it still adopted the name Citiinsurance until January 2006, when it became United MetLife Insurance Company, Ltd. See “Banking Giants extend China Rivalry to Insurance,” South China Morning Post, June 5, 2004; “Huaqi Renshou Hushang Kaizhang Yinhanbaoxian Weiqizhuyao Yingxiao Moshi [Citiinsurance Inaugurated in Shanghai with Bankinsurance Its Main Sales Model], Guoji Jinrong Bao [International Finance News], October 19, 2005. 9. This information was obtained from Allianz China Life’s official website (www. allianz.com.cn) as of February 2008, and from my e-mail communication with a sales agent of this insurer in Shanghai. 10. The figures about the life insurance business in Shanghai and mainland China in this section are calculated based on the available data from Almanac of Shanghai Insurance 2002–2003, 2007–2010, Almanac of China’s Insurance 2002, 2008–2010, Shanghai Statistical Yearbook 2007–2010, and China Statistical Yearbook 2008– 2010. 11. Calculation based on available data from the Insurance Yearbook, the Republic of China for the years 1991 and 2004. 12. Calculation based on available data from the Annual Report for the years 2000 and 2007, Office of Commissioner of Insurance, Hong Kong. 13. Changes in Life Insurance Products in Japan, Life Insurance Association of Japan, 2006.

Glossary

Annuity Yearly or monthly payments to policyholders starting on the maturity date, with a fixed face value as determined by a fixed return rate. Cash value or cash surrender value The amount available in cash upon termination of a policy by the policyholder before it becomes payable by maturity or before occurrence of the circumstance insured against. Normally a penalty is imposed in terms of administration fees. Endowment A lump-sum payable to policyholders upon maturity, with a fixed face value as determined by a fixed return rate. Insured amount, face value, or face amount The amount stated by the policy that will be paid in case of occurrence of the circumstance insured against or at maturity. Main policy A policy that can be sold independently. Participating policy or dividend insurance Insurance that entitles the policyholder to share in the surplus earnings of the company through dividends. Rider A policy that can be sold only as an attachment to a main policy and not independently. Term life A policy that is payable at death during a certain number of years but expires without policy cash value if the insured survives the stated period. Unit linked A variant of variable life insurance, common in Britain, in which each unit of the premium paid is linked to an investment return. Variable life Insurance in which the amount payable may fluctuate during the term of the policy, subject to the investment returns of the premiums. Whole life Payable at death of the insured, with cash surrender value upon termination of the policy by the policyholder before it becomes payable by maturity.

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Index

AAU. See American Asiatic Underwriters accident insurance policies, 22, 49f, 54, 136–37, 161t, 235n25. See also integrated personal accident coverage AIA’s, 59, 65, 157 clients on, 55, 163 commission rates for, 88 estimated number of, 48–49, 49f Manulife-Sinochem’s, 150–51 Pacific-Aetna’s, 138–39 Ping An’s, 62 premiums for, 48 Accounting for Tastes (Becker), 232n7 action buying life insurance with culture, institution and, 167–68 economic, 232n7, 232n9 theories of, 231n6 Adler, Patricia, 201 Adler, Peter, 201 advertisements, 4, 32, 35, 116, 121–22, 233n16 Aetna Inc., 76, 187, 196–97 agency management, 108–14 AIA. See American International Assurance Company, Ltd. AIA Building , 82, 89, 238n7

AIG. See American International Group, Inc. AIU. See American International Underwriters Insurance Company Alborn, Timothy, 3, 9, 116, 178 Alford, Robert R., 56 Allianz AG, 76, 102, 107, 112, 189 Allianz China Life Insurance Company, Ltd., 228, 244n9 Allianz-Dazhong Life Insurance Company, Ltd., 4, 13, 65, 198–201, 237n19 agency management and managers’ cultural capital at, 109–14 as foreign masculine man, 102–8 different from other insurers studied, 83t–84t frustrations of in-house managers and sales agents at, 106–8 German-headed management at, 102–3 market share, 76 premium income of, 76 products, 68–69 sales agents as elites and commoners at, 103–6 sales agents’ morale at, 77, 81

268

Index

American Asiatic Underwriters (AAU), 82 American International Assurance Company, Ltd. (AIA), 3, 13, 21–22, 23, 196–97, 201, 227, 238n6 accident insurance with, 59, 65, 157 as proud big brother, 82–90 changes, 184–86 critical disease policy, 135–36 different from other insurers studied, 83t–84t dividend insurance, 60 Hong Kong and Taiwanese management teams at, 85–86 market setback, 65–66 market share, 61–62 Ping An’s conflicts with, 51–52 professionals and standardized scripts at, 116–18 risk management as new concept and pioneering role of, 59–61 sales agents as independent professionals and missionaries at, 86–89 sales agents’ morale at, 89 tensions between in-house management and sales agents, 89–90 term life with, 60, 88 whole life policy with, 60, 68, 88, 140 American International Group, Inc. (AIG), 3, 23, 82, 238n6 American International Underwriters Insurance Company (AIU), 23 ancestors, 39, 40, 234 annuity insurance, 54, 63, 101, 221, 231, 235, 245. See also endowment insurance Aries, Philippe, 37

assemblies, morning , 33, 87, 95–96, 99, 105, 195, 198, 200, 203t, 207, 239n20 AXA Group, 23 AXA-Minmetals Assurance Company, Ltd., 65, 86, 195, 198, 228 Baker, Tom, 163–64 baoxian (insurance), 59–60, 200 Baoxianxue (insurance handbook), 20 battle between foreign and domestic camps, 59–65 explanation of, 58–59 life insurance concept and market setback, 65–66 product lines converging and concept of life insurance, 71–73 unit-link crisis and Ping An’s lessons, 69–71 unit-link fad, Ping An’s miracle and new definition, 66–69 Becker, Gary, 232n7 Bellah, Robert, 231n6 Betting on Lives (Clark), 8 Biggart, Nicole, 80, 131, 177–78, 189, 198 bonuses, 89, 97, 106, 137, 240n7. See also salaries bonus scheme insurance, 235n1 Bosco, Joseph, 233n14 bosses, sales agents as, 97–101 Bourdieu, Pierre, 10, 78, 111 Brantley, Peter, 109 bricoler (extraneous movement), 175, 243n2 Britain, 20, 34, 53, 91, 116, 136, 235n1 Buddhism, 37, 39, 192 Burawoy, Michael, 196 burial insurance, 235n1

Index capitalism, 10, 53, 155, 181–84 varieties of, 192 cash value, 59, 60, 71, 136, 245 Castanias, Richard, 131 catching up, social psychology of, 154–56 CCP. See Chinese Communist Party Chan, Cecilia, 233n15 chance, life insurance purchased by, 149–50 changes in AIA, Ping An and Pacific-Aetna, 185–89 in interest rates and cultural values, 153–54 in names, 22–23, 230 in pensions and population structure, 153–54 with culture, 184–89 Chaozhou, 234n17 child-centered ethos, 31, 34–35, 58, 153, 171 children insurance, 64–65, 146, 153, 161–66 one-child policy, 28–29, 35, 40, 42, 49, 141 China cultural obstacles in, 36–42 economic and institutional conditions in urban, 24–31 historical background of commercial insurance in, 19–21 insurance industry’s reappearance in, 22–24 life insurance companies in, 227–30 life insurance penetration in U.S compared to Shanghai and, 6f population, 24 projections of life insurance in, 190–93 savings of city households in, 41

269

societal conditions, market and other puzzles with, 19–50 China Insurance Regulatory Commission (CIRC), 31, 54, 66, 70–71, 211 China Life Insurance (Group) Company, 227, 238n32 China Life Insurance Company, Ltd. (China Life), 23, 47, 65, 121–22, 148, 243n24 as publicly traded company, 72 term life with, 137 China Pacific Insurance Company, Ltd., 65, 68, 76, 195, 237n21 China Reinsurance Company, Ltd., 23 Chinese Communist Party (CCP), 21, 30, 34, 42 choices, and meanings, 15, 17, 77, 143 between market share and profits, 56, 16, 63–65, 73–75 cultural logics of preferences and, 16, 163–67 firms’ microlevel strategic, 16, 77–78, 83–84, 108–14 from cultural tool kit, 174–75, 167, 176 ideologies and shared mentalities guiding , 16–17, 77, 153–57, 163–67, 232n7 institutional logic guiding , 56 intentions of, 17, 143 interpretations of, 17, 143, 152–57 managers’ strategic, 85–108, 113 of economic actors, 232n7 of foreign and domestic insurers in strategies, 16, 52, 56, 57–60, 62–65, 73–75, 77–78, 93–97 of life insurance products, 9, 17, 144, 157–63, 168

270

Index

choices (continued) of role in market structure, 52 sales agents’ strategic, 17, 123–30, 132–40, 177 Christianity, 37, 39, 116, 173 CIRC. See China Insurance Regulatory Commission Citigroup Inc., 244n8 Citiinsurance, 244n8. See also Metropolitan Life Insurance Company Clark, Geoffrey, 8 Clients. See also life insurance buyers interview questions (2000–2002) for, 211–13 interview questions (2004) for, 213–14 perceived functions of life insurance by, 157–63, 158t questionnaire for, 217–19 rural migrants excluded as potential, 27–28 types of life insurance purchased by, 160–63, 161t coding statements, 222–25 cognition. See also cultural schemas automatic, 140–41, 164–65 deliberative, 140–41, 166 cold calls. See stranger visits commercial insurance, 6, 22, 27, 30, 61 historical background of China’s, 19–21 post-1949 period, 21 pre-1949 period, 19–21 commissions, 71, 87–88, 92, 98, 119, 121–23 commodities, 32–34, 43, 143 commoners, 37, 99, 103–6, 155 comparative, 17, 37, 77, 108, 181 Confucianism, 37, 39, 42, 130, 177, 192 consumers, negotiation with insurers, 13, 14, 15, 123–40

consumer goods. See commodities consumer price index, growth rate, 45f, 234n19 consumer society, 31–32, 41 Croll, Elisabeth, 42 cultural capital, 10 management strategies impacted by, 76–114, 111f of managers and agency management, 108–14 cultural constitution of consumption, 144, 143 of economic behaviors, 144–45 cultural elements as congenial to life insurance, 31–36 cultural logics, Chinese, 55–56, 163, 164, 170, 171, 174 cultural objects, 143, 243, cultural obstacles, 4–5, 8, 9, 11, 12, 16, 36, 45, 52, 74, 169 existing risk management practices as, 7, 24, 41–42, 49 explanation of, 16, 35–41 “good life and death,” moral obligation and risk perception, 7–8, 39–41, 138–41 in China, 36–42 life, death, and taboo on premature death, 7, 37–39, 41, 44, 52–53, 63, 116–17, 135–36, 140–41, 163–64, 168, 171–72, 183–84, 236n1 cultural schemas, 39, 118–20, 122, 141, 153, 164, 176, 240n4 cultural resistance, 4, 7, 11, 15, 73, 116, 170, 173 to risk management concept of life insurance, 59–60, 133–36, 171 to risk management products, 59, 163–67

Index cultural resources, 10, 115, 174 cultural symbols, 17, 110, 116, 138, 141, 167–68, 173, 176, 182 cultural taboo. See taboo cultural values, 5, 8, 10–12, 16, 153–54, 171, 173–74 culture as constitutive agent, 12, 143–44, 167, 177–78 as regulatory force, 12 as repertoire, 10–11, 44, 50, 114–15, 118, 141, 167–69, 172, 174–75, 178, 182, 192 as switchmen, 10–11 changes with, 184–89 Chinese, 4, 12, 31, 32, 56, 177 circumventing resistance, 11–12, 172f, 173–76, 181 classical view of, 10–11, 44–45, 50, 144, 168, 175, 231n6 coherent view of, 10–12, 17, 44, 175–77 composing resistance, 4, 7, 11–12, 15, 17, 37–42, 132–36, 171–74, 172f contemporary view of, 10–12. “dead” form of, 14 fragmented view of, 10–12, 17, 151, 174, 176, globalization of modern capitalism with, 32–34, 181–84 in buying life insurance, with institution and action, 167–68 in sales discourse, with institutions, 140–42 interactive multiple-process model of, 12, 169–78, 172f life insurance in making of, 178–81 “living” form of, 14 logic of preferences and choices with, 163–67

271

organizational or corporate, 15, 17, 75, 82–108, 112–13, 189–90, 198 practical dimension of, 175, 176 predispositions, 12, 154, 167, 168 shared ideas or shared beliefs or shared values, as, 10–12, 17, 168, 172–73, 176–78, 181 structure and agency with, 12, 174–78 theory of, 10, 167–68 tool kit approach to, 10–12, 16–17, 44–45, 50, 174–77, 181 with motives for buying life insurance, 152–57 “Culture in Action” (Swidler), 10 danwei (work unit) system, 26, 28 Darr, Asaf, 241n11 data collection, 195–202 Davis, Deborah, 26, 33, 35 death as cultural taboo, 3–4, 5–9, 16, 37–41, 43–44, 79, 116, 136, 140, 168, 177, 183–84, 233n15 Chinese concept of, 4, 7, 9, 11, 16–17, 36–41, 43–44, 52, 59, 63, 73, 79, 117, 135–36, 141, 163–64, 167–68, 170–73, 179, 181, 183–84, 233nn14–15 early, 38, 138, 140, 166, 235 evasive answers to questions about, 9 folklore about, 37–39, 171 good, 7–8, 39–41, 43–44, 52, 167–68, 171, 172f, 233n16 life and death concepts with taboo on premature, 7, 37–39 premature, 7, 36–39, 41, 44, 52, 53, 63, 116, 117, 135–36, 140–41, 163–64, 168, 171–72, 183–84, 236n1

272

Index

death (continued) supernatural powers in, 40, 234n17 taboo and puzzle of marketing , 5–8 debt, 33, 38, 233n16 Deng Xiaoping , 5, 19, 31 Denzau, Arthur, 77, 232n7 DiMaggio, Paul, 10–11, 119, 143, 232n7 dirty money, 8, 180 dirty work, 78–80 discourses. See sales discourses divergence explaining pattern of, 73–75 in institutional logics, 56–58 of life insurance and product development, 51–75 in sales agents’ images, 80–82 dividend insurance (fenhong xian), 68, 136–37, 154. See also participating policy local preference for, 48, 49, 61–69, 76 market growth with, 69, 190–91 with money management market, 48–49, 65–67 Dobbin, Frank, 168, 232n9 domestic insurers battle between foreign and, 58–73 contribution to market growth, 22–23, 47, 61–65, 66–69 creating money management market, 61–71, 171–73 dealing with cultural resistance, 57–58, 62–64, 66–68 financial losses, 66 in post-1949 period, 21 in pre-1949 period, 20 in response to local preferences, 62–64, 66–68 local interpretation of life insurance, 61–65 market share, 61, 66, 72

market-share operation of, 57–58, 61, 63–65 product development of, 61–68, 71 public listing , 72 revival of, 22–23 sales discourses, 133, 136–38, 140 doors, iron, 29, 232n8 dramaturgical interaction, 123–30 performance, 17, 110, 125, 123–30 strategies, 123–30 dual-process model of culture, 177 economic action, culture shaping , 232n7, 232n9 economic calculation, 143, economic conditions, 5, 8, 24, 160, 25–26, 31–34 birth of new middle class, 24–25, 32 growth and rising purchasing power, 24 job insecurity, 25–26 economic immortality, 40. See also good death 18 levels of hell, 37, 233n13 Eight-Power Allied Armies, 239n15 employment, 25–26 endowment insurance, 21, 54, 57, 63, 68, 183, 192–93, 235n1, 245. See also annuity insurance enterprises. See companies; state-owned enterprises Ericson, Richard, 237n24 the “-est” (zuei), 242n23 ethnography or ethnographic, 12–13, 15–16, 33, 43, 52, 73, 95, 169, 174, 182, 195–203 ethos. See child-centered ethos

Index etiquette li (ritual, rite, propriety), 236n12 of renqing. See renqing evil, necessary, 78–80 fa or falu (law), 236n12. See also li face amount or face value, 245 face definition, 120 giving , 22, 93, 120–21, 144–45, 152, 223 losing , 120 fads stock market, 154–56 unit linked, 58, 66–69 Falun Gong , 239n19 family, 29 centered ethos, 34–35 obligations of living and dead members in, 40, 234n17 Pacific-Aetna as warm, 96–101 size, 6, 27–28, 43, 141 urbanization influencing , 28 Farrer, James, 34 fatal accident(s), 41, 164 misfortune(s), 4, 41, 117, 173 fate, 150. See also predestination favors, 144–45. See also renqing Fei Xiaotong , 35 fictive kin, 130–32 fieldwork, summary of (2000–2004), 203t profiles of interviewees, 203–5 Fine, Gary, 167 flattery, 101 Fligstein, Neil, 74, 77–78, 109 foreign insurers battle between domestic and, 58–73 bringing new sales and marketing methods, 58–60

273

creating risk management market, 59–60, 65–66, 191–92 dealing with cultural resistance, 16, 52 in post-1949 period, 21 in pre-1949 period, 19–21 institutional logics and profit-oriented operation of, 56–57 market share, 60–61, 65 product development of, 16, 59–60, 68–69, 71, 185–86, 191–92 reentry of, 23–24 risk management as new concept, introducing 59–61 sales discourses, 133–35 with AIA’s pioneer role, 59–61 fortune money (lishi), 242n8 Fourcade, Marion, 192 Fowler, Geoffrey, 233n14 Friedland, Roger, 56 friendships business relationships blurring line between, 241n11 cultural schemas of, 118–20, 122, 164 help from, 42, 119–20, 124–25, 232n7 GDP. See gross domestic product Geertz, Clifford, 231n6 Gemeinschaft (community), 28 gender roles, 130–32, 174 Germany, 102–3, 176. See also Allianz-Dazhong Life Insurance Company, Ltd. Gesellschaft (society), 28 gifts, 147, 153 globalization culture and market with, 169–93 global-local dynamics, 13–15, 156, 181–84 of modern capitalism with culture, 181–84

274

Index

Go, Julian, 243 Goffman, Erving , 120 Goldman Sachs, 72, 90 good death, 7–8, 43–44, 52, 167–68, 171, 172f as cultural obstacle, 39–41 without debt in U.S., 233n16 good life, 39–44, 52, 55, 154, 167–68, 171, 172f, 177, 213 Gorer, Geoffrey, 37 Gouldner, Alvin, 36 government, supportive attitude of, 30–31 Greenberg, Maurice, 238n6 gross domestic product (GDP), 4, 24, 42, 44, 182 growth consumer price index and rate of, 234n19 dividend insurance, 69, 190–91 in Hong Kong with life insurance, 183 in Japan with life insurance, 192–93 in Taiwan with life insurance, 182–84 life insurance premium income and real rate of, 4–6, 45–46, 69, 73, 191 of life insurance in relation to GDP and per capita disposable income, 46f of property insurance, 4 of unit linked insurance, 66–69 of whole life policies, 184, 191–93, 236n2 patterns of life insurance, 190–93 guanxi (interpersonal relationships), 31, 63, 92, 115, 132, 197, 241n13 and interpersonal trust, 35–36, 119–21 and renqing, 17, 22, 35–36, 64, 92–93, 118–21, 123, 130–32, 144–45, 152–54, 167, 171–72

in economic transactions, 36, 118–19, 121 in life insurance sales, 118–19, 121–27 reciprocity, fictive kin and gender roles in making , 130–32 renqing’s decline and limits of, 121–23 selling self and making , 123–30 Guillen, Mauro, 77 Haier New York Life Insurance Company, Ltd., 201, 228 Hamilton, Gary, 177–78, 189 Hanser, Amy, 239n14 Healy, Kieran, 192 hell, 37–40, 233n13 help difficulties of informal mutual, 27–29 from friendships, 42, 119–20, 124–25, 232n7 Hertz, Ellen, 33, 67 Hong Kong AIA management teams from, 85–86 crime rate in, 232n8 exchange rate, 237n30 life insurance market’s growth in, 184 managers compared to Taiwanese managers, 113–14 population, 232n8 stock market, 187 housing , 26, 28, 33 HSBC Group, 71–72, 187 Huber, Richard, 4 Huebner, Soloman, 42 huibao (returns), 51, 55, 136–37 huikou (rebates), 122 human life, sacredness or priceless of, 8, 173, 179 hypothesis or hypotheses, 9, 19 41, 43–50, 52, 74, 82, 179, 189

Index ideas new and foreign, 32–34 shared, 171, 172f, 176, 181, with values and beliefs, 171, 172f, 174, 175, 176, 182, 232n7 ideology, 77, 80, 232n7 images of insurers, 82–85, 90–91, 96, 102 of professionals, 87 sales agents’ divergent, 80–82 indebtedness, 36, 125. See also renqing indigenization. See localization inflation rates, 42 ING Group, 187–89 in-house management. See management institutional conditions, 24, 26–27, 30–31, 50, 116, 141, 154, 167–68, 170, 176, 178, 192–93. See also economic conditions China’s economic and, 24–31 government’s attitude and legalization, 30–31 urbanization and difficulties of informal mutual help, 27–29 welfare and eroding state provisions, 26–27 institutional logics divergent, 16, 52, 56–58 of life insurance, 52–54 of profitability, 52–54, 56–57, 74 institutionalization, 14 institutions, 17, 54, 140–42, 153–54, 167–68, 175–76, 181, 243n3 instrumental rational, 13, 31, 77, 108, 113, 170 insurance. See life insurance insurance handbook, first in China, 20 insurance industry domestic insurance’s revival in, 22–23 foreign insurance’s reentry in, 23–24 reappearance in China, 22–24 U.S., 7–8

275

Insurance Yearbook, the Republic of China, 244n7 insured amount, 22, 48, 55, 59–60, 63, 135–37, 163, 180, 245 insurers. See domestic insurers, foreign insurers, and life insurance companies interest rates, 55, 64, 66, 120, 133, 146, 153–55, 167 interpersonal obligation. See renqing interpersonal relationships. See guanxi interviewees socioeconomic profiles of clients and prospects, 204t–205t socioeconomic profiles of insurance practitioners, 204t interview questions clients (2000–2002), 211–13 clients (2004), 213–14 managerial staff, 209–11 prospects, 214–15 sales agents, 205–8 investment for profit, 154–56 insurance. See life insurance products meaning of, 154–56 premiums yielding profits from, 54, 57 IPA coverage. See integrated personal accident coverage iron rice bowl system, 25, 168 Japan, 20, 192–93, 242n23 Jeffery, Lyn, 33, 238n1 Jepperson, Ronald, 177 John Hancock Tianan Life Insurance Company, Ltd, 240n28. See also Tianan Life Insurance Company, Ltd. Kahneman, Daniel, 74 Kalberg, Stephen, 231

276

Index

karma, punishments for bad, 37–38, 233n13 kinship, 28–29, 34, 42, 119–20, 124–25, 232n7 Lamont, Michele, 141, 174–75 law, 113. See also fa; falu as without virtue, 236n12 first formal insurance, 30–31 natural, 38, 39, 40 leaflets, insurance product, 118, 124, 129, 140 Lee, Ching Kwan, 27 legalization of life insurance business, 30–31 Leidner, Robin, 79, 80, 116–17, 123, 202 LES policy, 60, 68 Levi-Strauss, Claude, 175 Li, Hongmei, 111–12 life Chinese concept(s) of, 7, 37–40, 42, 43, 44, 52, 55, 154, 167, 168, 171, 172f, 177, good, 39–44, 52, 55, 154, 167–68, 171, 172f, 177 retirement and quality of, 41 taboo on premature death with concepts of, 7, 37–39 life insurance battle over concept of, 58–66 benevolent meanings imbued in, 135 cultural resistance to, 4, 7, 11, 15, 59–60, 73, 116, 133–36, 163–67, 170–71, 173 foreign concept of, 11, 16, 20, 59–61, 65–66, 88, 119, 140, 173, 175, 183, 237 group, 22, 59–61, 232n8 in Britain, 8, 34, 53, 116, 143, 235–36n1

in Britain, 34, 53, 116, 235n1, 237n24 in China and historical background of, 19–21 in Hong Kong , 17, 52, 56, 60, 74, 112, 183–84, 192 in Japan, 192–93 in making of culture, 178–81 in Taiwan, 8, 17, 52, 74, 96, 97, 182–84, 191 in U.S., 7–8, 24, 35, 53, 67–68, 79, 116, 143, 173, 235n1 individual, 13, 48f, 60, 67, 75, 183 institutional logic of, 53–55 local interpretation of, 61–65, 163, 167 main policy 163, 245 penetration, 4, 6f, 44 premium income of, 4–6, 44, 45–46, 48–49, 54–55, 61, 67, 76, 103, 183–85, 187, 189–91, 235n24 product development of, 57, 59–73 profitability of, 53–55 life insurance buyers. See also clients meaning construction, 143, 144, 167 perceived functions of life insurance, 158t, 158–60 preferences and choices of products, 55–56, 144–63 subjectivities, 144, 154, 178 life insurance, buying by chance or misunderstanding , 149–50 cultural logics of preferences, 163–67 culture, institution and action with, 167–68 explanation of, 143–44 for multiple reasons, 150–52 for savings, 150–51, 153–54 for yanglao (retirement), 148–49, 151–52 gifts, 147, 162 as investment, 148

Index motives for, 17, 144–57, 167–68, 171 peers influence and showing off, 145–47 preferences, perceived functions and choices of products, 157–63 rationale(s), 152–57 renqing and favors, 118–21, 144–45, 150 life insurance companies. battle between foreign and domestic camps, 58–73 domestic. See domestic insurers foreign or transnational. See foreign insurers. in China up to 2009, 227–30 Sino-foreign joint ventures, 4, 11, 13, 16, 21–23, 58–59, 65–66, 73, 76–77, 85–86, 96–97, 102–3, 107, 126, 149, 170, 187–88, 190, 198, 209, 219, 222, 240n28, 244n8 life insurance products, 21, 68–69, 71–73 annuity, 54, 63, 101, 221, 231, 235, 245 critical disease policy, 71, 135–36, 151, 156–57, 179 divergent pattern between foreign and domestic camps in developing , 73–75 endowment, 21, 54, 57, 63, 68, 183, 192–93 hospital care insurance, 133, 137, 150, 157, 161t, 162–63, 168, 231n4, 235n24 integrated personal accident (IPA) coverage, 157, 162 local preferences and choices of, 16, 52–57, 61–65, 74, 76, 101, 157–63, 170, 171, 173, 184–85 money management, 17, 49, 53–57, 74, 93, 101, 120, 133, 150, 156,

277

158, 161t, 161, 168, 170–71, 183, 185–87, 190–92, 235n24, 236n6 participating policy (dividend insurance), 54, 68, 145 profitability and conflict with local preferences, 53–56 rider, 137, 150, 163, 245 risk management, 49, 50, 55–57, 71, 137, 157, 162, 168, 171, 183–84, 235n24, 236n6 term life, 22, 53, 54, 60, 88, 137, 163, 193, 231n4, 235, n24, 236n1, 245 unit linked, 48, 49t, 49, 58, 66, 67–72, 145–46, 148, 151–52, 154, 156, 161t, 161, 185–87, 190–92, 235n24, 235n25 whole life, 22, 53, 54, 60, 63, 68, 71, 72, 88, 135, 140, 147, 150, 161, 183, 191, 192, 193, 231n4, 235n24, 236n2, 245 life insurance, selling. See selling strategies local preferences, 10, 16, 52–53, 55–57, 74, 76, 101, 170–71, 173, 184–85 cultural logics of choices and, 163–67 with perceived functions and choices of products, 157–63 local resistance. See cultural resistance localization, 70, 73, 77, 81, 85, 97, 102, 102–3, 111, 181–82, 184, 186, 189–90, 192, 198 Mackenzie, Donald, 178 Madsen, Richard, 238n6 Ma Mingzhe, 47, 61, 91 management Allianz-Dazhong’s German-headed, 102–3

278

Index

frustrations of Allianz-Dazhong’s in-house, 106–8 influence of managers’ cultural capital on, 108–14 mutual flattering between Pacific-Aetna sales agents and in-house, 101 Pacific-Aetna’s Taiwanese-headed, 96–97 Ping An with local Chinese and Taiwanese in, 91–92 Ping An’s submissive sales agents with authoritative in-house, 94–96 strategies in relation to cultural capital, 76–114 teams at AIA, 85–86 tensions between AIA’s sales agents and in-house, 89–90 Manulife-Sinochem Insurance Company, Ltd., 65, 86, 183, 195, 198, 227, 237n19, 242n14 accident insurance with, 150–51 participating policy with, 68 whole life policy with, 147, 150 Mao Zedong , 21, 27, 31 market culture and globalization with, 169–93 emergent life insurance, 44–45, 50 formation, 14, 19, 43, 53, 171, 172f, 232n9 growth of life insurance, 45–50, 69, 190–91 money management, 47–50, 172f, 173 money-cum-risk management, 11, 173, 191, 193 reforms, 22, 26 risk management, 11, 50, 53, 173, 183, 190, 193 risk-cum-money management, 11, 53, 192

setback, 65–66, 184–85 social construction of, 14, 172–76 marketization, intensified, 31–32 market share domestic insurers’, 47, 48f, 61, 62f, 65–68, 72, 76, 187, 191 foreign insurers’, 48f, 61, 62f, 65, 189–90 of individual life insurance business in Shanghai, 48f of life insurance business in Shanghai, 61, 62f market share model, 73, 170 medical care, 26, 30, 71, 138, 139, 141, 157, 160, 162, 167, 168, 232n6 medical reform, 30, 71, 141, 157, 162, 167 Meldrum, Stephen, 91, 136 Merton, Robert, 231n6 methods coding and sample statements, 222–25 ethnography and data collection, 195–202 fieldwork and profiles of interviewees, 203–5 interview questions and questionnaires, 205–22 Metropolitan Life Insurance Company, 244n8 Meyer, John, 189 Microprocesses of economic practice, 12 of transaction(s), 115 with macroforces, 12 middle class, birth of new, 24–25, 32 migrants, rural, 27–28 Millo, Yuval, 178 misunderstanding, life insurance purchased through, 149–50 money, 55, 93, 163, 242n8

Index commissions as begging for, 121–23 dirty, 8 exchange rates, 237n30 meaning of, in relation to misfortunes, 179–80 premiums as waste of, 136–37, 151, 162–64, 171 money management as perceived functions of buying life insurance, 55–56, 63–65, 222–23 insurance products, 54, 63–64, 66–69, 235n24 local definition of life insurance as, 55–56, 63–64, 157–67 market, 47–50, 172f, 173 sales discourse, 93, 133, 136–38, 223 morale of sales agents AIA’s, 89, 184, 77, 89 Allianz-Dazhong’s, 77, 81, 170, 77, 81, 104, 106–7 Pacific-Aetna’s, 16, 77, 81, 98, 100, 113, 185, 87, 188 Ping An’s, 77, 93, 170, 186 moral obligation, 34, 39–41, 116, 117, 143, 174 Morals and Markets (Zelizer), 7–8, 115, 173 Morgan Stanley, 72, 90 mortuary tontines, 235n1 motives and meanings, 144, 153 change of, 153–57 for buying life insurance, 152–57 Murphy, Sharon, 237n24 mutual help, 27–29 Nan Shan Life Insurance Company, Ltd, 97 National Mutual Life Association, Ltd., 183

279

need a feeling of, 9, 139, 140, 152 a sense of, 115, 117, 118 neoliberal reforms, 239n14 New Year money, 242n8 North, Douglass, 74, 77, 232n7 numbers, symbology of 9, 242n8 Oakes, Guy, 80, 116–17, 123, 202 obligations, 40, 234n17. See also renqing interpersonal, 17, 22, 36, 64, 92, 120, 121, 145, 171 moral, 34, 39, 116, 117, 143, 174 obstacles. See cultural obstacles one-child policy, 28–29, 35, 40, 42, 49, 141 organizational culture, 15, 17, 75, 82, 96, 102, 189, 190, 198 of AIA, 82–90 of Allianz-Dazhong , 102–8 of Pacific-Aetna, 96–101 of Ping An, 90–96 organizational strategies, 15–16, 72, 111 of domestic insurers, 15, 57–58, 61–73, 90–96 of foreign insurers, 15, 56–57, 59–61, 65–66, 82–90, 96–108 Orru, Marco, 178, 189 Pacific-Aetna Life Insurance Company, Ltd., 13, 57, 65, 170, 196–200, 238n6 accident insurance with, 138–39 agency management and managers’ cultural capital at, 109–14 caring angels at, 101 changes in 2004, 187–89 commission rates, 98 different from other insurers studied, 83t–84t market share, 76

280

Index

Pacific-Aetna (continued) mutual flattering between in-house managers and sales agents at, 101 premium income of, 76 products, 69 sales agents as family members and bosses at, 96–101 sales agents’ morale at, 77, 81, 98, 185 sales agents’ psychological attitude at, 100 Taiwanese-headed management at, 96–97 Parsons, Talcott, 231n6 participating policy, 68, 245. See also dividend insurance Pellow, Deborah, 28 penetration, life insurance, 4, 6f, 44 pension scheme, 26–27, 30, 34, 63, 90, 97, 141, 146, 153–54, 162, 167–68 pensions, 26–27, 153–54 People’s Bank of China, 22, 31 People’s Insurance Company of China (PICC), 21–23, 59, 60–61, 62f, 82 People’s Republic of China (PRC), 21–23, 82 PICC Life Insurance Company, Ltd., 229 PICC Property Insurance Company, Ltd., 23, 230 Ping An Insurance Company of China, Ltd. (Ping An), 144, 170, 198–202, 237n23, 238n6, 239n21, 243n24 accident insurance with, 62 AIA’s conflicts with, 51–52 as authoritative parent, 90–96 as publicly traded company, 72 changes in 2004, 186–87 critical disease policy, 71, 151

different from other insurers studied, 83t–84t guanxi and renqing at, 118–21 local Chinese and Taiwanese in management at, 91–92 market share, 47, 61, 67 market-share operation of, 58–59 name change, 22–23, 230 property insurance at, 22, 61 punishment-oriented system at, 95–96 retirement insurance with, 63, 120 sales agents and in-house management at, 94–96 sales agents as money-making crowds at, 92–94 sales agents’ morale at, 77 unit linked crisis and lessons of, 69–71 unit linked fad and miracle of, 66–69 whole life policy with, 63, 72 with local interpretation of life insurance, 61–65 with shrinking market, 184–85 Ping An Insurance (Group) Company of China, Ltd., 23, 47, 227, 230. See also Ping An Insurance Company of China, Ltd. Ping An Life Insurance Company of China, Ltd. (Ping An), 13, 23, 230. See also Ping An Insurance Company of China, Ltd. policies. See also life insurance products estimated numbers of, 49f in force in China, 234–35n20 in force in Hong Kong , 183, 192 in force in Shanghai, 44, 234n20 in force in Taiwan, 183–84, 191 population changes in structure of, 153–54 Chaozhou, 234n17

Index China, 24 Hong Kong , 232n8 positive mental attitude, 79–80 predisposition(s), 12, 154, 167, 168 privatization of medical care, 71, 141, 157, 162 of pension scheme, 154, 167 PRC. See People’s Republic of China predestination, 10, 150 preferences. See local preferences premature death. See death premium income, 4–6, 44, 45–46, 48–49, 54–55, 61, 67, 76, 103, 183–85, 187, 189–91, 235n24 premiums, 122, 150 as percentage of GDP, 182 as waste of money, clients perceiving , 136–37, 151, 162–64, 171 for accident insurance, 48 increase in, 146 personal accident insurance and mean annual, 235n25 profits from investment returns of, 54, 57 rural migrants and inability to pay for, 27–28 priests, 110, 116 principal nonreturning , 55, 168, 186 returning , 55, 69, 145, 168 product development battle between foreign and domestic camps in, 58–73 conflict between profits and local preferences with, 53–56 divergent institutional logics with, 56–58 pattern of divergence explained with, 73–75 production market, 52

281

professionals AIA model of standardized scripts and, 116–18 AIA’s sales agents as independent, 86–89 image of, 87 profit-oriented model, 53, 170 foreign insurers’, 56–57 profits conflict between local preferences and, 53–56 from investment returns of premiums, 54, 57 investing for, 154–56 of life insurance, 53–55 projections of market, 184–85, 190–93 property insurance, 23, 231n4 at Ping An, 22, 61 growth of, 4 prospects, life insurance interview questions for, 214–15 questionnaire for, 219–22 The Protestant Ethic and the Spirit of Capitalism (Weber), 10 psychological attitudes (xintai), 238n1 as key to success, 79 at Pacific-Aetna, 100 of sales agents, 77, 80, 97, 109 punishments at Ping An, 95–96 for bad karma, 37–38, 233n13 with social order and control with fa, 236n12 puzzles of market growth and characteristics, 19, 43–50 of market growth with taboo on death, 5–8 quality. See suzhi questionnaires, 195 for clients, 217–19

282

Index

for prospects, 219–22 for sales agents, 215–17 interview questions and, 205–22 questions about death and evasive answers, 9 interview questionnaires and, 205–22 rebates. See huikou reciprocity, 17, 31, 36, 40, 44, 64, 92, 115, 119, 123, 130–32, 153 reforms economic, 19–21 era, 26 management, 91, 103, 187, 189 market, 22, 26 medical, 30 neoliberal, 239n14 pension, 26–27 social insurance, 156–57 relationships, interpersonal. See guanxi renhai zhanshu (human-sea strategy), 63 renqing (interpersonal obligation), 22, 64, 92, 118 baodan, 120–21, 123, 132, 145 favors and, 144–45 motives for buying life insurance, 118–21, 144–45, 150 perceived functions of buying life insurance, 223 with trust and gifts, 153 retirement, 223. See also yanglao benefits, 26 concerns about, 58, 101, 141, 152, 160 fund, 136–37 good life with, 154 male and female respondents on, 160 pension fund, 27 quality of life after, 41, 156 retirement insurance, 63, 120

returns. See huibao rhetoric business, 110, 225 familial, 96–101, 225 missionary, 86–89, 116, 224 money, 224 professional, 224 risk avoidance, 57, 74, 157 managing , 131, 153, 156 selective attention to, 41, 44, 168, 172f taking , 58, 70, 74–75, 143, 155, 187 risk management a new concept of, 59–61 existing practices through savings, 41–42 perceived functions of buying life insurance, 156–57, 223 products, 137, 236n6, 237n19 products with sales volume, 235n24 sales discourse, 223–24 through interpersonal care, 42 risk perception, 39–41, 52, 156 as cultural obstacle, 39–41 with fate, 150 with social insurance reforms, 156–57 with unit linked insurance, 60–70 Rowan, Brian, 189 Sahlins, Marshall, 144 salaries, 59, 87, 148, 179, 240n7 sales agents assemblies for, 13, 87, 95–96, 99, 105, 195, 198, 200, 203t, at AIA, 86–90 at Allianz-Dazhong , 103–8 at Pacific-Aetna, 97–101 at Ping An, 92–96

Index divergent images of, 80–82 dropout rate of, 78–79 interview questions for, 205–8 management of, 108–14 productivity rate for, 240n32 psychological attitudes of, 77, 79–80, 80, 97, 109 questionnaire for, 215–17 training , 13, 22, 54, 88, 89, 90, 93, 95, 98, 103, 104, 107, 117, 133, 134, 195, 198, 199, 200, 203t, 204, 238n1, 239n21 with dirty work and necessary evil, 78–80 sales discourses AIA model with standardized scripts and, 116–18 explanation of, 132–33 on need for life insurance, 132–40 selling strategies and, 115–42 successful, 136–38 switching from unsuccessful to successful, 138–40 unsuccessful, 133–36 salesman, knowledgeable, 127–28 sales talks. See sales discourses sales teams, productivity rate for, 240n32 sales volume, 63, 65, 76, 86, 88, 89, 100, 129, 170, 185, 186, 189, 235n24 saleswoman, professional, 128–30 sample statements, coding and, 222–25 savings, 150–51 as a cultural practice, 41–42 for yanglao and managing risks, 153–54, 156–57 of city households, 24, 41–42 rates in China as compared to other countries, 41, 154 scripts, standardized, 116–18. See also sales discourses

283

security deposits, 94 Self-Strengthening Movement, 20 selling strategies cultures, institutions and sales discourse with, 140–42 discourses on need for life insurance, 132–40 getting started, 116–21 guanxi’s limits and decline of renqing with, 121–23 linguistic framing , 60 money as motivator, 93 reciprocity, fictive kin, and gender roles in making guanxi, 130–32 sales discourses, 17, 115, 132–40, 182 with self and making guanxi, 123–30 Sensenbrenner, Julia, 33, 35 Sewell, William, 175 Shanghai annual premium cost in, 241n15 as a case study, 12–13, 43 as insurance hub of China, 12–13 as international settlement, 12 crime rate in, 232n8 household size, 28 market growth in, 45–47, 49, 58, 66, 69, 71, 73, 190–91 market share of individual life insurance business in, 48f market share of insurance business in, 62f modern identity, 12, 32–34 mortgage, 33 policies in force in, 234n20 ratio of lung cancer patients in, 243n29 savings of city households in, 24 spending on children, 35 stock market, 6, 33, 47, 72, 154–55, 187 Shanghai Insurance Association, 237n21 showing off, for peers, 145–47

284

Index

Siegelman, Peter, 163–64 Simmel, Georg , 6 Simple Life Insurance, 22, 59 sister, naive little, 126–27 social insurance reforms, 156–57 social order, 236n12 socio-economic status, functions of life insurance by, 159t–160t SOEs. See state-owned enterprises statements, coding and sample renqing functions of buying life insurance, 223 with money management, 222–23 with rhetoric, 224, 225 with risk management, 223–24 state-owned enterprises (SOEs), 79, 91 bankruptcy for, 25 companies and, 195, 237n23 PICC, 21–22 statistics, inconsistencies with, 231n5 stock fever (gupiao re), 33, 43, 67, 154–55 Stockman, Norman, 236n12 stock market classes, 233n9 fad, 154–56 Hong Kong , 187 Index, 69, 155, 167 losses, 69–70 Shanghai, 6, 33, 47, 72, 154–55, 187 stranger visits (cold calls), 117, 118, 202 strategic interaction(s), 115, 126–27, 130, 142, 200 strategies of insurers, 16, 52, 57–58, 59–60, 61–69, 71 of managers, 87–88, 92–95, 97–99, 101–3 of sales agents, 123–30, 132–40 subjective immunity, 39, 141 success psychological attitude as key to, 79

with sales discourses, 136–40 supernatural powers, 40, 234n17 suzhi (quality), 239n14 Swidler, Ann, 10, 144, 167–68, 173, 174, 176, 177 taboo death as cultural, 3–4, 7, 9, 16, 37, 43, 44, 79, 116, 136, 140, 168, 177, 183, 184, 233n15 impact on selling strategies, 128, 133–41 of death as marketing puzzle, 5–8 on premature death, 7, 37–39 Taiwan, 239n8 AIA management teams from, 85–86 growth of life insurance market in, 182–84 Hong Kong managers compared to managers from, 113–14 Pacific-Aetna’s management from, 96–97 Ping An’s management from, 91–92 Tang, Wenfang , 36 Taoism, 38, 39, 110 TC Marketing Research & Consultancy Lt., 243n28 term life insurance, 22, 137, 231n4, 236n2, 245 AIA’s, 60, 88 as waste of money, 137, 163 China Life’s, 137 in U.S., 53 with endowment, 193, 235n1 theories of action, 231n6 of culture, 10, 167–68, 171–78 Thevenot, Laurent, 141 Tianan Life Insurance Company, Ltd., 228, 240n28

Index tool kit approach, to culture, 10–12, 16–17, 44–45, 50, 174–77, 181 top executives. See top managers top managers cultural capital of, 17, 78, 91, 107, 108, 109, 111t, 111, 112, 113, 114, 170, 171, 188, 189 institutional entrepreneurs, 77, 108, 110 labor management, 78, 87–106, 113, 170 transactions, making , 115–42 Travelers Insurance Company, 244n8 trust, 103, 115, 130–31 guanxi, renqing and interpersonal, 35–36 with renqing and gifts, 153 tu (old-fashioned), 33 Tversky, Amos, 74 United States (U.S.) annual premium cost in, 241n15 burial insurance as first widely accepted policy in, 235n1 cultural resistance to life insurance in, 7–8 dying without debt as good death in, 233n16 exchange rate, 237n30 household savings rate in, 41–42 insurance industry in, 7–8 life insurance in, 4, 7–8, 24, 29, 35, 53, 116, 143, 173 market trajectory, 11, 53 penetration in China and Shanghai compared to, 6f sales agents exploiting social networks in, 240n4 societal cultural values, 7–8 term life in, 53 unit linked. See also life insurance products

285

crisis and Ping An’s lessons, 69–71 definition, 245 fad, 58, 66–69 urbanization, 6, 7, 27–29, 40, 42, 43, 49 Vaisey, Stephen, 177 Vander Starr, Cornelius, 82 variable life, 66, 70, 245 variable universal life, 68, 185–87, 191 virtue frugality as, 42 law as without, 236n12 von Senger, Herro, 236n12 Walder, Andrew, 232n6 Wank, David, 35 Weber, Max, 10 Weberian concept of culture, 10, 44, 45, 50, 144, 168, 175, 231n6 legacy, 44, 45, 50, 144, 168, 231n6 welfare, 35, 40–43, 99, 166, 168 eroding , 6, 26–27, 29 White, Harrison, 52 whole life policy, 22, 53, 161 AIA’s, 60, 68, 88, 140 definition, 245 growth of, 183, 191–93, 236n2 Manulife-Sinochem’s, 147, 150 Ping An’s, 63, 72 Whyte, Martin, 38 wills, 233n15 Wolf, Arthur, 38 women as sales agents, 63, 79, 83t, 97, 104, 132 career or family as choice for, 240n4 in professional sales, 128–30 work, dirty, 78–80 World Trade Organization (WTO), 23 Wuthnow, Robert, 196 Wu Yuxiao, 199

286

Index

xincun (new villages), 28–29 xintai. See psychological attitude Yan, Hairong , 239n14 yang (modern), 33, 34, 40 Yang, Der-Ruey, 110 yanglao (support for elderly), 40, 58, 92, 120, 136, 137, 141. See also retirement; retirement insurance insurance, 65–66, 152 investment and, 148–49 saving for managing risks and, 156–57 savings and, 153–54

Zelizer, Viviana, 3, 9, 24, 87, 115, 143, 173, 177, 179 on burial insurance in U.S., 235n1 on child insurance, 162 on imbuing life insurance with benevolent meanings, 135 on sales agents as priests and missionaries, 116 with “cultural values matter” argument, 7–8, 10 Zerubavel, Eviatar, 202 Zhou Huajian, 99, 240n24