#202      27 min 30 sec
China life: Managing cultural taboos in your marketing strategy

Sociologist Associate Professor Cheris Chan recounts the expensive lessons foreign insurance firms have had to learn in China and other ethnically Chinese countries when encountering cultural taboos and superstitions that directly impact on business success. With host Jennifer Cook.

"If these products or services are in conflict with some very deep rooted local cultural beliefs and habits, then these transnational firms have to decide the extent to which they are willing to accommodate these local cultures. If they are less willing to do so, then they have to be prepared for a smaller market share or slower growth in their business." -- Assoc Prof Cheris Chan




Associate Professor Cheris Chan
Associate Professor Cheris Chan

Cheris S.C. Chan is Associate Professor of Sociology at the University of Hong Kong and a fellow of the Hong Kong Institute for the Humanities and Social Sciences. After receiving her PhD from Northwestern University in 2004, Cheris became a faculty member at the University of Pittsburgh and a global fellow at the International Institute of UCLA before joining HKU. Her research interests include culture, market behaviors, professionalism, rationalization, globalization, and contemporary Chinese societies. Her writings have appeared in American Journal of Sociology, British Journal of Sociology, Theory and Society, International Sociology, and The China Quarterly among others. Some of her articles have won prizes from the American Sociological Association.

Cheris’s book, Marketing Death: Culture and the Making of a Life Insurance Market in China (OUP, 2012), has won the Best Book on Globalization Award from the Global Division of the Society for the Study of Social Problems. The book analyzes the role of culture in shaping the trajectory and features of a new market. Based on rich ethnographic data, it details how the Chinese cultural taboo on the discussion of premature death affects the organizational strategies of transnational and domestic insurance firms. The project was subsequently expanded to include Hong Kong and Taiwan’s markets for a comparative analysis.

A new book-length project of Cheris compares the professional authority of Chinese medicine and Western medicine in China, examining how Chinese medicine is struggling in a medical world dominated by Western medicine and how its efforts to meet the evidence-based model protocols affect its professional authority. 

Department of Sociology at the University of Hong Kong

陈纯菁是香港大学社会学系副教授,同时也是香港人文社会研究所成员。 2004年,她获得美国西北大学博士学位。在入职香港大学之前,她曾任教于匹兹堡大学和洛杉矶加州大学分校。她的研究兴趣包括社会文化、市场行为、全球化以及当代中国社会。她的论文发表在《美国社会学研究》、《英国社会学研究》、《理论和社会》、《国际社会学》以及《中国季刊》等知名刊物上,也获得美国社会学协会颁发多个奖项。
陈纯菁教授的著作《死亡行销:文化以及中国人寿保险市场的产生》(Marketing Death: Culture and the Making of a Life Insurance Market in China )(牛津大学出版社,2012)获得了社会问题研究全球部颁发的“全球化最佳书本奖”(The Best Book on Globalization Award)。这本书探究了文化在塑造一个新行业的产生轨迹和特点中扮演的角色,详细地讨论了中国人对死亡的禁忌文化是如何影响国内外人寿保险公司的策略。这个研究后来扩展至对香港和台湾人寿保险市场的比较。
陈纯菁教授现在探究中医和西医在中国的专业权威性,考察在一个被西医主导的医学领域中,中医如何地试图获取一席之地,以及中医的专业权威性如何受到实证模式主导所影响。

Credits

Host: Jennifer Martin
Producers: Kelvin Param, Eric van Bemmel
Audio Engineer: Gavin Nebauer
Voiceover: Nerissa Hannink
Series Creators: Eric van Bemmel and Kelvin Param

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VOICEOVER 
Welcome to Up Close, the research talk show from the University of Melbourne, Australia. 

JENNIFER COOK
I'm Jennifer Cook, thanks for joining us. How do you sell life insurance to a country that not only avoids talk about death, but has a complex belief system that says premature and untimely death, the very premise that the multi billion dollar business is based upon, as taboo? On this episode of Up Close we turn our gaze to China and we ask what happens when business comes up against deeply-held cultural beliefs. What does the simple life insurance policy reveal to us about the world's most populous country and what insights does it offer into how businesses can best engage with China's time-honoured cultural drivers?Joining us in the studio via Skype in Hong Kong is Associate Professor Cheris Chan, a sociologist at Hong Kong University. Her 2012 book, Marketing Death: Culture and the Making of Life Insurance Market in China is an extensive exploration into the issue. It's through her in depth research that we not only see how transnational life insurance firms were able to introduce life insurance to China, but importantly how local cultures shape the trajectory and features of a new market.Dr Chan, thank you for joining us.

CHERIS CHAN
It's my pleasure.

JENNIFER COOK
Now China is a richly complex culture. It has so many intersecting beliefs and with that comes many attitudes towards death. Your research explores how the different religions feed into a cultural belief in a death taboo. Can you talk us through this?

CHERIS CHAN
Okay, sure. The cultural taboo on thinking and talking about death among the Chinese is coming from the Chinese philosophies and folk religions and is a composition of Confucianism, folk Buddhism and folk Taoism. To begin this, death is rarely mentioned or discussed in Confucianism, it is something unknown. Now we know that in Christianity there is the possibility of eternity after death. But the Confucian notion of death does not imply the possibility of eternity. So death is the end and what follows the end is unknowable.Death for most people is already a mystery, but the avoidance of the topic further mystifies this mystery. So when that is something unmentionable, it turns to be a horror subject and intensifies the general sense of fear.

JENNIFER COOK
This is where the difference needs to be drawn, doesn't it, between Confucianism and folk Buddhism and Taoism?

CHERIS CHAN
Right, well Buddhism is mainly a life philosophy with spiritual teachings and it teaches people not to attach to the worldly matter, to let go, to live a simple life. But Buddhism also has a supernatural belief in reincarnation with the idea that each of us will be reborn after death. So our good deeds and bad deeds will carry consequences in our next lives. So the idea of karma comes from Buddhism.There are a lot of imaginations about the reincarnation and the consequences of having bad karma and these many imaginations then gave rise to folk Buddhism and they have very elaborated images of the dark world and hell. Now the dark world is a cold and damp place where most people's spirits will go after death, waiting there for reincarnation. Now folk Taoism actually is quite similar to folk Buddhism but is even more superstitious and there are a lot of deities, spirits for worshipping and for fulfilling human beings' secular wishes and desires. So in folk Taoism there is idea of the hungry ghost. The hungry ghosts are those people who died unprepared, those who don't have descendants to offer them food and money in the dark world. So if one dies when he or she has a lot of descendents, then this person won’t be a hungry ghost. But if one dies young, without any family members worshipping him or her, then this person is likely to turn into a hunger ghost. So we can see that this idea of early death or premature death that actually the life insurance business is based on, is something very miserable and terrible from this religious folklore. So that is where this cultural taboo on thinking about premature death is coming from.

JENNIFER COOK
And interestingly enough, in the Maoist era, especially during the Cultural Revolution, the state did attempt to eradicate these supernatural meanings of death, didn't they?

CHERIS CHAN
They did. The state attempted to eradicate supernatural meanings of death and presented death as nothing to be feared and educated the public that there was no life after death. And it was successful in the sense that the folk religious believes were to a certain extent replaced by communist ideology, especially in urban cities. So communism became a religion for the Chinese as a common belief and ultimate goal in life during the Maoist era from 1950s to 1960s or '70s.

JENNIFER COOK
So then how did these belief systems fare after the economic reforms in 1979 and the introduction of a market economy?

CHERIS CHAN
Now the traditional beliefs about death or other Chinese traditional beliefs or customs have never been really uprooted, even during the Mao regime. They were only temporarily buried by the communist ideology. And so in post-Mao China, especially after the economic reform, with the declining ideological force of communism, various religious beliefs and practices came back and the folklore about death then resurfaced.

JENNIFER COOK
So the first life insurance companies appeared in China then at the end of the 19th Century, but it wasn't until the '90s that we really saw transnationals like the American international Group, AIG, make their mark. So  Cheris, who are these main players in the market today, now that we've established the landscape that they're dealing with and how did they get there?

CHERIS CHAN
Although the life insurance or commercial life insurance was introduced to China as early as the 19th Century during the British imperialist reign. It was never popular among the Chinese. So it was not until the 1990s that life insurance became popular among the Chinese in urban cities and it was the foreign insurance firms, especially led by AIG's subsidiary called AIA, it was very active in Asia, that it brought in a whole new set of marketing techniques, agency management and product development. So when AIG arrived, it was actually the only foreign insurance company that was based on a commercial oriented operation model.And then later on there were other local companies being set up and following the AIG's model, as well as other foreign insurance companies came in to form as joint ventures. And they also operate according to the AIG model.

JENNIFER COOK
I'm Jennifer Cook and you're listening to Up Close and we're speaking with Associate Professor Cheris Chan about China, death taboos and the problems of selling life insurance in that market.Now Cheris, we've established what the market is like. We've established who is there. Can you explain to us now what exactly is being sold? Can we start by asking what is a life insurance policy in the conventional Western sense?

CHERIS CHAN
Well there are broadly two categories of life insurance products. One I call risk management life insurance and the other is money management life insurance. For a typical traditional life insurance policy, is for risk management, the risks we may face include death, early death, serious accidents or critical disease. And so if an insured person runs into any of these misfortunes, then the beneficiary will receive a lump sum as compensation from the insurance provider. So for this kind of policy, only when certain events happen then the insured person's family would receive compensation. And so the insurance provider pays out only when something bad happens to the insured person. So that's risk management life insurance.Now for money management life insurance, there is a savings or investment component in the policy and so the insured person could get some money even without any misfortunes. Now we can imagine that this kind of product, that means the money management insurance, is more costly to the insurance providers because then they have to pay out even if the insured person is alive or nothing bad happens. So the insured amount to the insured person or the beneficiary is usually lower than that of the risk management.

JENNIFER COOK
So you've explained to us there the difference between risk management and money management. And this in itself was something that the transnational companies had to learn to negotiate, didn't they?

CHERIS CHAN
Yes, they did, because the Chinese always want the kind of products that they could get money back when they are alive, which is the money management insurance. They call the risk management insurance “death insurance” and that is not the kind of products that they like because the local Chinese actually always love savings.However, it is problematic for insurance companies because the profit margins of money management products rely much on the investment returns of premiums, but China's regulatory policies and investment environments in the 1990s and the early 2000s were not as favourable to this kind of investment. And so money management products were not as profitable to insurance companies as [were] risk management products. So we see that there was an incompatibility between what people wanted and what was profitable to the insurance providers.

JENNIFER COOK
And western companies interpreted this Chinese reluctance to buy life insurance as a kind of selfishness.CHERIS CHANYes.

JENNIFER COOK
But you say that this wasn't the case?

CHERIS CHAN
Right, this is very interesting because when I was with the insurance sales agents, I heard a lot of complaints from them and they said that, well these Chinese are selfish because they were not willing to buy the kind of products that would leave money for the beneficiary, you know, they all want those products that they themselves could get some money back. But on the other hand, we also heard a lot of these agents saying that the Chinese are so family-centred, they would do everything for their families' benefit. So we see some contradictory comments from the insurance sales agent.Finally what I found was that while these Chinese were not willing to buy the kind of products like risk management products, simply not because they were selfish, but more because they don't believe that they will die before their child grows up. So if they don’t think that they would die tomorrow or next month, then why would they need risk management insurance, because by the time that they are dying, their children were already an adult, or financially independent. So that's why the Chinese were unwilling to buy risk management insurance and there's some misinterpretation from the insurance providers that these Chinese were selfish.

JENNIFER COOK
So it wasn't selfishness, you're saying it was more a faith and an unshakable optimism in that things - their lives would go the way they thought they would, or should?

CHERIS CHAN
Yes and I that's pretty much rooted in the cultural taboo and that cultural taboo is less about delivery or avoidance of saying the word die or death, but it's more subjective, subconscious avoidance of the possibilities of an early death. So that's why they were pretty optimistic about what's going on tomorrow, because they don’t always think about these misfortunes.

JENNIFER COOK
So Cheris, what is it like for the elderly in China? I'm just trying to get a picture. There's no pension, is there, so therefore retirement lifestyle becomes very important or providing for that lifestyle. 

CHERIS CHAN
Right, it depends on what generations we are talking about. Those people in their 60s and 70s, they were still getting pretty good social securities from the state. But for the younger generations, they are really becoming more independent; have to be financially very independent, especially due to the one child policy that now the family only has one child. So they can't really rely on the traditional mould of when you get old, then you rely on your children to take care of you. So now the elderly have all to be thinking of their own retirement plans. That's also the reason why the Chinese like savings products, because they are always worrying about their retirement.

JENNIFER COOK
So let's look at who's selling these policies. There's differences, isn't there, between the local insurance companies and the transnational companies and you've said that your research has shown that the Western companies thought that some of the domestic operators were quite crazy in the way they went about things.

CHERIS CHAN
Right, yes. Actually when these insurance companies faced with the local resistance to accepting life insurance as risk management, these companies have to either remove the resistance, that is to change the locals' ideas and habits, or to accommodate the resistance, that is, mainly just to cater for the locals' preference. The foreign nations companies, as represented by [the] AIG subsidiary AIA and later joined by Manulife from Canada, or Allianz from Germany, they all attempted to remove the resistance by educating the public that they might face risks at any time. So the products they offered were mainly for managing unexpected misfortunes. These companies sent their sales agents to go door to door to tell people misfortune stories that happened to families without life insurance. These agents, of course, faced rejections all the time.So it was more than two years after AIA arrived in Shanghai, life insurance was still unknown to the general public. But all of a sudden, in 1995 and 1996, the term life insurance became familiar to the public and the market began to bloom from the mid 1990s. Quite surprisingly, this change was brought by a new inexperienced domestic insurance company, Ping An Life Insurance Company of China. The Ping An was established in Shenzhen in South China in 1988 and it didn't begin to sell life insurance until July 1994. When Ping An joined the market, it had very little idea about what life insurance was. It even didn't have actuaries. So it just followed AIA to offer accident insurance.But it didn't take long for Ping An to realise that people didn't want to hear anything about death and accidents and they all want to see a return on their money while they are alive. So Ping An came up with this solution, now what do the Chinese like? Well they all like savings. Then when don't we just offer what they like? So Ping An took the lead to redefine life insurance as money management and offered three insurance products that were all savings in nature, including a child insurance.All these three savings products were designed in accordance with the Chinese habit of money management and their child-centred culture. But more importantly, there was no need to talk about unpleasant topic of death or misfortune in selling these products.

JENNIFER COOK
I'm not sure what's more fascinating, the innovative way they've come at that sideways, or just the notion of a life insurance company or a company selling life insurance with no actuaries.

CHERIS CHAN
Yes, isn't it interesting? Because at first really no-one was very clear about what life insurance was about.

JENNIFER COOK
This is Up Close, coming to you from the University of Melbourne, Australia. I'm Jennifer Cook and our guest today is sociologist Cheris Chan and we're talking about China, death taboos and selling life insurance.Let's have a look, Cheris, now at Shanghai, that's a very interesting case in terms of the resistance still shown towards life insurance. You've studied this in your research, so what are some of the issues that have played out in one of the most modern of China's cities?

CHERIS CHAN
Yes, it's interesting. The reason I picked Shanghai as the case was because Shanghai represents the most modernist city in China in the 1990s and early 2000s and Shanghainese kind of saw themselves as like New Yorkers in the United States. It's the city that was most receptive to foreign cultures and foreign commodities. And so if we see that well if Chinese culture is playing a role in shaping the market in Shanghai, then we can be very confident that this Chinese culture is also playing a very important role in other regions in China. So that's what makes Shanghai a very important representative case in this study.

JENNIFER COOK
So you've also looked at Taiwan, which has a lot more government oversight than places like Hong Kong, which we'll talk about in a moment, which leads to a lot more restrictions on how you sell the product. So what is the life insurance market there?

CHERIS CHAN
Yes, I compared Hong Kong and Taiwan because these two Chinese societies were supposed to share the same kind of Chinese culture with that in mainland China. What was interesting was I found that life insurance in Hong Kong has never been as popular as it has been in Taiwan, despite Hong Kong's stronger economy and lack of social insurance. The major reason is that where Hong Kong's life insurance industry was dominated by foreign insurance firms because of the colonial regime and the laissez faire policies, so at the beginning of 1990s when the life insurance market was blooming, three major foreign insurance firms - AIG from the United States, Manulife from Canada and National Mutual from Australia - captured over 70 per cent of the life insurance business in Hong Kong.Now these foreign players, like those in mainland China, promoted risk management products, despite the fact that the Chinese in Hong Kong like their fellows in mainland China, didn't like to talk about death and misfortunes either. So as a result, the market is relatively small, even though Hong Kong is such a well-developed, rich city.On the other hand, the life insurance industry in Taiwan was dominated by domestic players early on, due to state protectionist policies. So before 1987 there were no foreign insurance companies allowed in Taiwan. Starting in 1987 there was a limited number of American insurance companies and it was not until 1994 that other companies, other foreign nations companies from other countries were allowed to operate directly in Taiwan. So as a result, the Taiwanese insurance market, like those in mainland China, was dominated by domestic players and they all offer money management products to cater for the locals' preference and to avoid the cultural taboo. So this largely contributed to the growth of the business, because all these money management products were very well received by the local Taiwanese.

JENNIFER COOK
So Cheris, taking an overview of Taiwan, Hong Kong and China, what are some of the conclusions that you think you're able to draw about the life insurance market in this region?

CHERIS CHAN
Yes, first it was money management products that drove the rapid growth of the market. However the money management products were not that profitable to insurance companies, so that's why the foreign companies didn't just follow the local companies to offer whatever they wanted, so that's why there as kind of a very keen competition between the foreign and domestic camps in the definition of what life insurance was about.But the foreign insurance companies' unwillingness to accommodate local resistance compared to the domestic players resulted in a smaller market, or resulted in smaller market share. So what we have learnt is that first culture can't be changed overnight. Some transnational firms have the tendency to try to change local cultures or customs instead of adapting themselves to these cultures. So what we have learnt from this case is that some cultural forms can't be changed easily. As a case in point for example, the cultural taboo is still prominent in Hong Kong, even after over 150 years rule by Britain. And so it depends on the kind of products or services that they provide. If these products or services are in conflict with some very deep rooted local cultural beliefs and habits, then these transnational firms have to decide the extent to which they are willing to accommodate these local cultures. If they are less willing to do so, for example, because they are unwilling to take risk and prefer a more conservative business model, then they have to be prepared for a smaller market share or slower growth in their business.Now the second point is that the state policies and whether they are competitive domestic players in the industry are also critical factors that affect transnational firms' performance. For instance, in the case of Hong Kong, in the absence of competitive domestic players, foreign insurance firms consistently capture over 80 per cent of the market. So even though the market as a whole is relatively small, they are still quite highly profitable because the foreign insurance captures almost the entire market.In contrast, the foreign insurance companies in Taiwan have to fight harder to compete with the domestic companies. So foreign insurance companies in Taiwan and mainland China have to accommodate local cultures to a larger extent, no matter they like it or not.

JENNIFER COOK
Now Cheris I understand this is not your area of research, but I find this whole issue of death taboos so fascinating. Surely it would impact upon other businesses and industries. Can you tell us a little bit about that?

CHERIS CHAN
Yes. In China the funeral business actually is also blooming in the sense that because now it's all about cremation. Some people, very rich people, the wealthy people, they still want the traditional form of burial of the dead body and they still have disbelief about feng shui, where the ancestors [are] buried will bring fortune to their families. So it's become very, very expensive and only those very wealthy would be able to afford it. So it is kind of opposite to life insurance in the sense that it also has to do with the death as a Chinese culture, a lot of superstitious beliefs surrounding death, but that creates a business, because now people are fighting for the best piece of land for their ancestors, for burying their parents and grandparents.

JENNIFER COOK
Cheris, I'd just like to thank you for joining us today on this episode of Up Close all the way from Hong Kong via Skype.

CHERIS CHAN
Well thank you very much for having me here.

JENNIFER COOK
That was sociologist Associate Professor Cheris Chan from Hong Kong University speaking to us on Up Close today about China, death taboos and selling life insurance.Relevant links, a full transcript and more info on this episode can be found at our website at upclose.unimelb.edu.au. Up Close is a production of the University of Melbourne, Australia. This episode was recorded on 21 May 2012 and our producers were Kelvin Param and Eric van Bemmel. Audio engineering by Gavin Nebauer and background research by India Farrar. Up Close is created by Eric van Bemmel and Kelvin Param. I'm Jennifer Cook, until next time, good bye.

VOICEOVER
You've been listening to Up Close. We're also on Twitter and Facebook. For more info, visit upclose.unimelb.edu.au, copyright 2012, The University of Melbourne.


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