Case Study “Sun Life Financial”

CASE STUDY 3

It is a good time for “Sun Life Financial” to venture into theChinese market. The company has ample experience in the insuranceindustry. Having been set in Canada, 1865, “Sun Life Financial”has internationalized, venturing many overseas markets such as Japanand Nicaragua. The experience is relevant in making managementverdicts and validating effective strategies for joining the Chinesemarket. The company owns a representative office at Beijing from1992, which helps the company in establishing their presence inChinese market. The current joint venture with “Everbright Group”is beneficial in joining the Chinese market. Because “Everbright”is based in China, they have the capability of handling local as wellas national administrations. This makes it easier for Sun Life toventure the Chinese market.

China has a population of more than 1.3 billion persons, which makesthe nation the largest globally. This provides a great opportunityfor Sun Life, as the population acts as prospect clients. China has afast developing economy that draws numerous foreign organizations,especially the developing Chinese insurance industry. It implies manyopportunities for the company to acquire a considerable market sharewithin China’s insurance market. The opportunity is furtherenhanced by the fact that China can be termed as an untapped marketcomprising many possibilities. Another reason to venture the Chinesemarket derives from the declining social security. Since the statehas stopped the provision of civilians with social securityinsurance, it creates a chance for “Sun Life Financial” toreinstate social security through its products and services, whichmeet the criteria.

However, China is highly bureaucratic. Bureaucracy has the potentialof impeding the company from acquiring licenses. The administrativesystem is also probable to restrict products to provide for theChinese insurance market. Bureaucracy majorly has a negative impacton overseas enterprises, and is worsened by the fact that it isunavoidable. It enhances the costs to Sun Life, in terms of time andmoney. The company will require more time in convincing the Chineseadministration to provide licenses to sell their products. Money willbe spend in coming up with new strategies to draw as many customersas probable from the conservative Chinese industry. The problem issolved through a joint venture with a Chinese organization.

The reason for selecting “Everbright Group” in forming a jointventure is because it makes it easier for “Sun Life Financial” toventure the Chinese market. The reason for selecting the groupderives from the fact that Everbright has an established network ofdistribution. In addition, the group relates well with theadministration since it is a Chinese company. This means that it willbe easier to acquire licenses for Sun Life’s operation at ease,using the joint venture.

Guangzhou is the most suitable city. The city presents a largermarket niche for the company because other global insuranceorganizations are less probable to establish their operations inGuangzhou. The Chinese government is bureaucratic, which will make ithard for competitors to invest in other places except Shanghai. “SunLife Financial” benefits from the fact that the company has alreadyestablished an office in Beijing and created a joint venture with aChinese company. Thus, the government, through the joint venture,will have minimal restrictions on cities the company can permeate. Inaddition, Shanghai has minimal restrictions, which makes it a targetfor competitors. Thus, Guangzhou becomes a better place for investingbecause of the less competition expected.

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