Sun Life Case

Table of contents

1: Summary 2

2: Main Contents of the report 3-20

2.1: Introduction 3

2.2: Problem and the followed procedure 4

2.3: Sun Life Financial from strategic managerial viewpoints 4

2.3.1: Sun Life Financial's strategic logic 6

2.3.2: SWOT analysis 10

2.3.3: PEST analysis 13

2.3.4: The attractiveness of the Chinese insurance market 17

2.3.5: Strategies and city choice 18

3: Results, conclusions and recommendations 22

4: Bibliography 23

1. Summary

This report looks into the Chinese insurance market for Sun Life Financial in order to evaluate whether it is wise for the company to enter the Chinese market and if so, where to enter. To research whether Sun Life Financial is internally ready to enter the Chinese market or not, there was chosen to use the strategic logic theory.

The Chinese government imposes foreign companies to form joint ventures if they want to be active in the Chinese market. In this way, domestic companies will benefit from business development as well. Sun Life Financial strategically chose to form an alliance with Everbright, because of Everbright's established distribution network and good relations with the government.

Sun life Financial's business concept consists out of already developed products in other markets, adapted to Chinese customers. The biggest potential customer base can be found in urban areas where people tend to be more westernised and richer. The products in these areas will be offered by means of personal selling carried out by a specially trained sales force. The organisation concept shows that Sun Life Financial can use their management expertise, financial strength and extensive customer service experience to support their business concept. Furthermore, it could use Everbright's established distribution channels and local market expertise. Both parties have an equally share in the joint venture. Stakeholder development with the government is the most important core process to be undertaken by Sun Life Financial, since in the future they would like to make a strategic move into the wealth management business and pensions. The SWOT analysis shows that potential strength and weaknesses balance each other out, but according to our opinion, the strengths are stronger than the weaknesses. Opportunities are based on a big market potential, whereas threats are mainly due to the communistic history of the country. From the PEST analysis one can conclude that political factors are still a bit unstable (bureaucracy and market restrictions), the other factors have seriously improved.

The Chinese insurance market is highly attractive because of the fact it is a nearly untapped market with high growth potential. In addition, market shares and profits can be obtained relatively easy. Entering the Chinese market now, would mainly mean that Sun Life Financial is coinciding with the general strategies of the overall companies. The Chinese government decided to open up six different cities, from which three are not attractive to Sun Life Financial at all. From the three cities that seemed attractive, Guangzhou looks most attractive to enter the Chinese market to us. It has the highest GDP growth and a relatively high percentage of households, which means the biggest market potential. Moreover, average salary is higher in this city.

2. Main contents of report

2.1: Introduction

Sun Life Financial is an insurance company established in 1865, in Montreal, Canada. Since 1890 they have been internationalizing their company by expanding to numerous countries all over the world. Since the establishment, Sun Life Financial has managed to diversify their activities into different industries successfully. Nowadays, Sun Life Financial is one of the strongest players on the insurance market.

Sun Life Financial is still interested in setting up their business activities in new untapped markets. China is one of these untapped markets with great opportunities since it opened up two geographical market areas in 1992. Due to the Communist regime China was not open to foreign companies. Soon after this decision Sun Life Financial decided to open a representative office in Beijing. The Chinese government required all foreign companies to have a joint venture agreement with domestic companies in order to maintain domestic involvement in Chinese business developments. As a result Sun Life Financial set up a joint venture agreement with the China Everbright Group. The China Everbright Group has been founded in 1983 and has been reported to make vast profits through the years.

Sun Life Financial now faces several dilemmas. Among others, it has to decide on an entry strategy, choose a geographical market and watch their financial situation closely.

This report will closely examine Sun Life Financial's strategy to enter the Chinese insurance market. In order to come to accurate conclusions several key questions will be answered. First of all Sun Life Financial will be studied from an internal perspective by examination of their business concept, organization concept and how these are linked together.

Secondly, China will be examined and assessed as a business environment. The same goes for the more specific Chinese insurance market. The report will assess whether Sun Life Financial's choice to enter the Chinese insurance market is a correct one.

To conclude the report several entry strategies will be examined and assessed. Several Chinese cities will be discussed and a decision will be made regarding the best location to enter the Chinese insurance market. The joint venture between Sun Life Financial and the China Everbright Group is discussed and several advantages and disadvantages will be explained.

2.2: Problem definition and the followed procedure

Two interesting problems, arising from the Sunlife Financial