For Life or Death : Local Culture and State in Shaping Life Insurance Markets in Mainland China, Taiwan, and Hong Kong

Abstract

Based on a comparative analysis of the life insurance markets in mainland China, Taiwan, and Hong Kong, this article explores the interplay between local culture, the state, and economic actors’ agency in shaping the characteristics of local markets. I ask why life insurance market in Hong Kong takes a trajectory different from that in China and Taiwan though the life insurance industry faced cultural resistance in all three Chinese societies. Available data suggests that with a strong state, both mainland Chinese and Taiwanese governments heavily protected domestic life insurance firms. These firms accommodated to local cultural resistance by re-defining the concept of life insurance to cater for local preferences. Life insurance was presented as savings to the mainland Chinese and Taiwanese populations, resulting in money management markets. The colonial Hong Kong government, on the other hand, adopted a laissez faire policy that essentially favored foreign insurers who attempted to lift the local cultural taboo in order to create a risk management market. My argument is that state policies mediate who the dominant players are in the field which, in turn, affects the extent of localization of a particular market. The Hong Kong market was localized to a lesser extent due to the absence of competitive domestic players. However, this characteristic resulted in a smaller market in Hong Kong, due to insurers’ reluctance to compromise to culturally constituted local preferences.