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5 White Paper on the Business Environment in China
insurance licenses had been granted since October 2008, although Wal-Mart, “the world’s largest retailer by sales revenue,
a ‘relaxation’ in that situation was anticipated in late 2009.54 entered China in 1996”, “Nine years later […] had more than
70 stores” and as of mid-2012 “[had] more than 376 outlets
is ‘relaxation’ may have consisted of the February 2009 and more than 95,000 employees in China.”57
announcement by the Standing Committee of the NPC that
amendments to the Insurance Law would become e ective Carrefour and Tesco, the world’s second- and third-largest
on October 1, 2009. Among these amendments were retailers by revenue, had 206 and 111 stores in Mainland
reportedly the abolishment of a restriction on reinsurance China, respectively.57
and adjustments to the quali cation requirements for major
shareholders, among others.55 Foreign supermarkets, especially, have seen di culties
arising from pricing, misrepresentation and employee
In May 2010, the China Insurance Regulatory disputes.
Commission (CIRC) issued a new “Administration Provision
on Reinsurance Business” (CIRC Decree [2010] No. 8), In January 2011, the NDRC “ ned 11 Carrefour stores
which became e ective in July of the same year. According in six cities 500,000 yuan ($78,440) each for overcharging
to a KPMG brief on the new provision, “Decree 8 aims to customers” at the same time that “some Wal-Mart stores were
reinforce the supervision of the reinsurance business and also caught using illegal pricing methods.”57
promote the sustainable and healthy development of the
industry as a whole.”56 Issues persisted, however. In October 2012, “Wal-Mart
closed more than a dozen stores in Chongqing following
It would appear that “Decree 8” was a response to the allegations that it had labeled regular pork as organic pork in
then-undisclosed 3 billion yuan fraud (approximately $455 some stores. Two employees were arrested, another 35 were
million) committed by the two largest insurers in China detained, and the company was ned 2.69 million yuan.”62
(China Life Insurance (Group) Company and People’s
Insurance Company (Group) of China, both state-owned) in At roughly the same time, “more than 100 Tesco employees
2009, which was revealed to the public in early 2011.57 went on strike in eastern China. e employees blockaded
and prevented shoppers from entering a Tesco store due to a
American International Group—a company which was labor dispute.”62
actually founded in Shanghai in 1919, several decades before
the People’s Republic was proclaimed—made news in 2012 One question that remains unaddressed in many Mainland
as a signatory to a non-binding agreement to purchase $500 reports of foreign supermarkets’ troubles is that of culpability;
million-worth of shares in a Hong Kong IPO planned by the determining if wrongdoing has had the tacit support of more
People’s Insurance Company of China. e agreement also senior executives or has rather been the work of greedy ‘rogue
included a planned joint venture between the two companies actors’ at the individual store level seems to be left as an
to sell life insurance within the Mainland.58 exercise for the reader.
Historically, foreign insurance companies have been e situation has not lately improved for the embattled
permitted to sell optional auto insurance in China but have retailers.
been barred from o ering Mandatory ird-party Liability
(MTPL) coverage. White Paper contributors Dezan Shira & By 2013 Tesco had begun to “shut Chinese outlets and
Associates note that “Since most drivers tend to choose the open new ones more slowly two years after announcing plans
same insurer for both optional and compulsory coverage, to double stores and build more 400,000-square-foot malls,”
China’s restriction ‘has e ectively blocked foreign rms.’”59 writes BloombergBusinessweek. “Hindered by the country’s
slowest economic growth since the 2009 nancial crisis and
In 2011 then-Vice Premier Wang Qishan, at a session of competition from local markets and regional chains, the
the U.S.-China Strategic & Economic Dialogue, indicated Cheshunt, England-based retailer’s China same-store sales
that foreign insurers may in the future be allowed to o er declined 1 percent in the second quarter.”63
MTPL coverage, “[in the hope that] experienced Western
players will bring better pricing and underwriting practices to “Tesco’s China pullback re ects the hurdles global big
the country’s young, fast-growing market.”59 box retail chains face in Asia,” the article continues, “where
the realities of complex local markets and slowing economies
Foreign retailers’ Mainland experiences have been mixed are damping dreams of easy expansion. e world’s largest
in recent years. retailer, Wal-Mart, is also adding outlets more gradually than
it had planned in China’s 3.5 trillion yuan ($560 billion)
Home Depot, purveyors of home improvement supplies, grocery industry.”63
closed seven stores in China over the course of 2012, incurring
“an 11-cent charge” to its earnings per share.60 Whether more or less gradually, Wal-Mart recently
announced plans to open “up to 110 facilities in China
Meanwhile, “Wal-Mart said store tra c in China declined between 2014 and 2016, in addition to the 30 it has already
again [in Q3 2012].”61 opened [2013].” e company also plans to “pro t from
China’s changing retail landscape by embracing e-commerce.”
220
insurance licenses had been granted since October 2008, although Wal-Mart, “the world’s largest retailer by sales revenue,
a ‘relaxation’ in that situation was anticipated in late 2009.54 entered China in 1996”, “Nine years later […] had more than
70 stores” and as of mid-2012 “[had] more than 376 outlets
is ‘relaxation’ may have consisted of the February 2009 and more than 95,000 employees in China.”57
announcement by the Standing Committee of the NPC that
amendments to the Insurance Law would become e ective Carrefour and Tesco, the world’s second- and third-largest
on October 1, 2009. Among these amendments were retailers by revenue, had 206 and 111 stores in Mainland
reportedly the abolishment of a restriction on reinsurance China, respectively.57
and adjustments to the quali cation requirements for major
shareholders, among others.55 Foreign supermarkets, especially, have seen di culties
arising from pricing, misrepresentation and employee
In May 2010, the China Insurance Regulatory disputes.
Commission (CIRC) issued a new “Administration Provision
on Reinsurance Business” (CIRC Decree [2010] No. 8), In January 2011, the NDRC “ ned 11 Carrefour stores
which became e ective in July of the same year. According in six cities 500,000 yuan ($78,440) each for overcharging
to a KPMG brief on the new provision, “Decree 8 aims to customers” at the same time that “some Wal-Mart stores were
reinforce the supervision of the reinsurance business and also caught using illegal pricing methods.”57
promote the sustainable and healthy development of the
industry as a whole.”56 Issues persisted, however. In October 2012, “Wal-Mart
closed more than a dozen stores in Chongqing following
It would appear that “Decree 8” was a response to the allegations that it had labeled regular pork as organic pork in
then-undisclosed 3 billion yuan fraud (approximately $455 some stores. Two employees were arrested, another 35 were
million) committed by the two largest insurers in China detained, and the company was ned 2.69 million yuan.”62
(China Life Insurance (Group) Company and People’s
Insurance Company (Group) of China, both state-owned) in At roughly the same time, “more than 100 Tesco employees
2009, which was revealed to the public in early 2011.57 went on strike in eastern China. e employees blockaded
and prevented shoppers from entering a Tesco store due to a
American International Group—a company which was labor dispute.”62
actually founded in Shanghai in 1919, several decades before
the People’s Republic was proclaimed—made news in 2012 One question that remains unaddressed in many Mainland
as a signatory to a non-binding agreement to purchase $500 reports of foreign supermarkets’ troubles is that of culpability;
million-worth of shares in a Hong Kong IPO planned by the determining if wrongdoing has had the tacit support of more
People’s Insurance Company of China. e agreement also senior executives or has rather been the work of greedy ‘rogue
included a planned joint venture between the two companies actors’ at the individual store level seems to be left as an
to sell life insurance within the Mainland.58 exercise for the reader.
Historically, foreign insurance companies have been e situation has not lately improved for the embattled
permitted to sell optional auto insurance in China but have retailers.
been barred from o ering Mandatory ird-party Liability
(MTPL) coverage. White Paper contributors Dezan Shira & By 2013 Tesco had begun to “shut Chinese outlets and
Associates note that “Since most drivers tend to choose the open new ones more slowly two years after announcing plans
same insurer for both optional and compulsory coverage, to double stores and build more 400,000-square-foot malls,”
China’s restriction ‘has e ectively blocked foreign rms.’”59 writes BloombergBusinessweek. “Hindered by the country’s
slowest economic growth since the 2009 nancial crisis and
In 2011 then-Vice Premier Wang Qishan, at a session of competition from local markets and regional chains, the
the U.S.-China Strategic & Economic Dialogue, indicated Cheshunt, England-based retailer’s China same-store sales
that foreign insurers may in the future be allowed to o er declined 1 percent in the second quarter.”63
MTPL coverage, “[in the hope that] experienced Western
players will bring better pricing and underwriting practices to “Tesco’s China pullback re ects the hurdles global big
the country’s young, fast-growing market.”59 box retail chains face in Asia,” the article continues, “where
the realities of complex local markets and slowing economies
Foreign retailers’ Mainland experiences have been mixed are damping dreams of easy expansion. e world’s largest
in recent years. retailer, Wal-Mart, is also adding outlets more gradually than
it had planned in China’s 3.5 trillion yuan ($560 billion)
Home Depot, purveyors of home improvement supplies, grocery industry.”63
closed seven stores in China over the course of 2012, incurring
“an 11-cent charge” to its earnings per share.60 Whether more or less gradually, Wal-Mart recently
announced plans to open “up to 110 facilities in China
Meanwhile, “Wal-Mart said store tra c in China declined between 2014 and 2016, in addition to the 30 it has already
again [in Q3 2012].”61 opened [2013].” e company also plans to “pro t from
China’s changing retail landscape by embracing e-commerce.”
220
