Earlier this year, clients from around the world traveled to China for Aon's inaugural trip to the country. Though the group represented clients in different industries and had various levels of exposure to China, what they had in common was a desire to learn more about this economic superpower.

Presentations during the week-long trip covered China's political and economic background, attitudes to corporate governance, legal issues, the challenges in managing talent in China, and the different forms of investment open to foreign organizations. Sessions also covered the nature of the insurance markets in China, and how risk management and claims handling are tackled there.

Learning from experience

The participants were privileged to hear directly from a number of large firms that already have extensive operations in China. Paul Zhang of McDonald's shared the corporation's experiences in setting up a network of more than 900 stores in China, the strict attention to quality that they insist on, and the way the organization trains store managers to handle any situation that might arise.

Michael Barbalas of the American Chamber of Commerce in China stressed the need for any firm that plans to enter China to align with the government's economic objectives. "Get the alignment right, and things can move extremely quickly for you. Get it wrong, and you may find that you make very little real progress, without ever running into a formal refusal."

Those government objectives have shifted significantly in recent years. It's no longer just about encouraging overseas investment and the development of China's manufacturing base; now they combine longer-term economic development, building research capabilities, energy and resource conservation, and other environmental issues.

Drawing on personal experience, a panel of distinguished speakers discussed the different forms of overseas investment that are possible in China. From joint ventures to wholly owned foreign enterprises, each form has its benefits, with government authorities setting guidelines for particular industries.

A Matter of Culture

Cultural issues were a recurring theme, and Professor Charles Foley, principal associate, Aon Asia Ltd., set out to define the differences between Western attitudes and the prevailing culture in China. Many aspects of Western management convention—individual accountability, open and direct performance review, advancement based purely on merit, assumptions of equality—are challenged by Chinese culture. But that perspective is changing, at varying speeds in different regions and among different age groups.

The Chinese authorities are keen proponents of effective corporate governance and aim to establish a distinctive Chinese model. Their approach combines aspects from United States, European and U.K. governance models, blended to produce a system that combines the best of all of them.

Concerns about protecting intellectual property in China revealed that more legal recourse exists than many people realize. The legal system is increasingly recognizing the importance of patent protection, in line with the government's objective of moving the country toward becoming a leader in research and development as well as manufacturing.

Recent developments in risk management and insurance approaches

Against this background at Aon's Leadership Conference risk management and insurance approaches in China were covered at length. Recent developments have been swift, with new categories of insurance being introduced and new players emerging in the local market. The concept of public liability is still relatively new, but awareness is growing fast and the number of cases is expected to increase rapidly in the coming years.

At the end of the week, clients' heads were spinning with the information they had received. George Haitsch, vice president of corporate risk at SAP America Inc., summed it up: "This has really been a tremendous experience. You have to see China firsthand to get a feel for the pace of change—it's breathtaking and on a scale that you just couldn't imagine. I'm leaving with a much better understanding of the challenges and the opportunities of doing business here."