Hollard Looks To Ride The Dragon

19 May 2014 Frans Prinsloo, Hollard

HOLLARD Insurance has cleverly grasped a market gap by capitalising on the growing business links between China and southern Africa and establishing a desk exclusively servicing the insurance needs of Chinese companies working in the region.

The move follows Hollard’s first Chinese partnership with D Phone China in 2010. This partnership engineered the launch of China's first mobile handset insurance product. While China ranks among the world's largest cellular telephone market in terms of number of handsets sold, the insurance product broke new ground.
Hollard International MD, Frans Prinsloo, says the initial foray had come as South Africa's largest privately-owned insurance company sought to explore opportunities in the rapidly growing Chinese market. China and South Africa, alongside Brazil, India and Russia, form the so-called BRICS trading bloc, which includes nearly 4-billion consumers if South Africa is taken to represent Africa’s 1-billion consumers.
Prinsloo says the company subsequently finalised comprehensive co-operation agreements with China's largest non-life insurer People's Insurance Company of China (PICC) and with the China Pacific Insurance Company (CIPC). These agreements have enabled Hollard to identify potential product development and micro-insurance opportunities in China and develop risk solutions for the Chinese investor in Africa.
The representative office was established in 2007/8 and played a key role in providing risk management and insurance services to Chinese businesses in Africa. The move also broke new ground in that it was the first time a South African insurance company had opened offices in China.
Hollard’s China desk manager, Yike Shen, says China represents a significant investor into Africa and, while there are direct insurance opportunities in China, there is a major opportunity in facilitating cover for Chinese companies working in southern Africa. The initial focus of the China desk will be to support the Hollard insurance operations based in Botswana, Mozambique, Namibia and Zambia.
Figures released by Chinese customs and the United Nations Economic Commission for Africa (UNECA) show China's trade with Africa ballooned from $10 billion in 2000 to an estimated $210.2 billion last year - four years after the country overtook the US as Africa's largest trading partner. China's outward foreign direct investment bulletin reflected there were more than 2000 Chinese companies invested in Africa with the cumulative investment stock on the continent reaching $21.2 billion by 2012.
During the African Investment Summit 2013 held in Hong Kong last November, the China Import-Export Bank committed to investing $1 trillion over the next 12 years in a series of transnational projects including railways, highways and airports in Angola, Mozambique and other African countries.
"The development of China would be an unprecedented opportunity for Africa and Africa's development will be the same for my country," Chinese president Xi Jinping said during last year's African tour.
Shen says that this environment supports Hollard’s idea of operating a China desk from South Africa as a means to service the African market. The desk provides Chinese clients in Africa with the benefit of communicating in their own language. The fact that the office is in Johannesburg also means that these clients do not face the difficulties incurred when dealing with the huge time zone differences between Africa and China.
"The bulk of insurance business for Chinese firms operating in Africa comes from southern Africa and specifically from construction and infrastructural development projects. The ability to offer clients insurance products specifically tailored towards their needs in southern Africa, while also understanding the Chinese culture and business ethic, makes this a niche worthy of exploration," she says.

Considering the medium-term, Prinsloo says that through the Beijing-based Hollard China office and the Johannesburg-based China desk, Hollard was steadily building awareness of the brand and its capabilities. Encouraging interactions with Chinese insurers and brokers seeking support in managing corporate risk for their clients with interests in Africa suggests that there is strong support for the move.
"Our plan is to focus on specific business lines in the future – these include mining, alternative energy and infrastructure development.”

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