Insurance Sector in China Surges through Mergers and Acquisitions

Published By : 25 Jun 2015 | Published By : QYRESEARCH

When it comes to corporate control Chinese companies continues to a force to reckon with in the global market. China has registered successful completion of cross-border deals amounting to US$53 billion in 2014. According to reports, the outbound acquisition and mergers in China will continue to remain strong during the forthcoming years. However, the key factors propelling the outbound M&As (mergers and acquisitions) in China is likely to be supplemented by the expansion of the Chinese insurance industry. 

After the recent launch of the ‘Going Out’ policy, the outbound M&As activities in China is primarily driven by 5 key factors. Firstly, due to the relatively limited base of natural resource, the companies located in China has been long purchasing oil and gas from the leading natural resource companies around the world. Secondly, leading companies in China has imported know-how techniques from the most prominent service providers across United States and Europe in order to gain access to advanced technologies. Thirdly, a considerable number of Chinese companies have acquired foreign brands to enhance their corporate image, particularly across their domestic market. Fourthly, the acquisition of foreign brands were also directed to reduce the time-to-market time in terms of establishing a brand image in the global market. Lastly, China is proactive about taking stakes in the foreign companies as a part of its strategy to diversify holdings in foreign currency beyond institutional and government bonds. 

Since the past decade, the insurance sector in China has registered rapid development and has successfully emerged as the fourth largest insurance market worldwide in terms of premium volume generated globally. The country is trailed by contemporaries like the United States, Japan, and the United Kingdom. Despite registering robust growth in the last couple of years the insurance sector in China is still considered to exhibit low rate of penetration compared to the developed countries. 
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