The Greater Bay Area may offer major growth prospects for insurers but it also contains greater complexities to the two other main regions – San Francisco and Tokyo – that the conurbation is sometimes compared with.
There have been a number of initiatives to integrate the financial services markets in the GBA, such as the Cross-Boundary Wealth Connect scheme, cross border car and health insurance, as well as data sharing.
The GBA has a population of 80 million and is spread across Hong Kong, Macao, and nine cities of Guangdong, and while there are similarities in terms of tech sector development and population size with Tokyo and San Fransico, China’s Pearl Delta region contains a number of additional complexities according to panellists at the EAIC in Hong Kong last week.
“There are relevancies between our Bay Area and those in other countries,” said Hannah Zhu, Strategy Head to SAAS firm OneConnect Smart Technology’s CTO.
“Our Bay Area definitely has the highest level of complexity, just because it’s very close to the China market. And then there’s the one country, two systems policy as well as the three different currencies. Additionally, there’s also the cross boundary data practices. Potential volume may be a key characteristic of the GBA, but so are complexities,” she said.
Thomas Poon, Lead Solutions Architect at Alibaba Cloud Hong Kong said that while the financial and tech industries were ahead of the GBA in Tokyo and San Francisco respectively, there was potential to deepen the Pearl Delta region’s tech sector, citing the example of the cross-border expansion of superapps such as WeChat.
High potential
“We also see that there is very high potential in our GBA area in terms of technology development, because they still have quite a lot of things they want to do such as he super apps and also with cloud technology. In terms of Alibaba – we have a lot of opportunities, we now have so many people going to the GBA every week,” Poon said.
Despite the complexities involved in the GBA project several panellists mentioned the potential volumes on offer to insurers from the region and moderator Joanna Wong Partner, Insurance Sector Leader for Deloitte China said she had recently advised several insurers about entering the market.
Chubb Life Hong Kong has been vocal about participation in the GBA and Jason Chou, Chief Agency Officer for the carrier’s Hong Kong & GBA arm, said that it wasn’t just the size of the region’s market that was attractive to carriers but also the relative lack of insurance penetration outside of Hong Kong and Macau.
“The first view from an insurer when it looks at the GBA is the big business opportunity, and it’s not just the potential number of clients it also that compared to Hong Kong the other areas have relatively low insurance penetration.
But I also see that the GBA could be a hub which serves the mainland China-Hong Kong-Macau market, that is definitely something that everyone in the industry is thinking about,” said Chou.
Chou also said that the GBA’s complexity could itself be an advantage as large resources of money, tech, and talent would be directed to the region.
China hub
“Because of the size of business opportunity in the GBA, a lot of resources will flow to this area to manage its high degree of complexity. A lot of digital resources are already in the GBA area, but I predict there will be an even higher concentration of talent, resources, and innovation there in the future.
I’m sure that every insurance company could tap on these resources to further develop their business across the barrier and expand into China, Macau or Hong Kong. This could then attract businesses from all over Asia as well,” Chou said.
Chou said that non-Mainland China companies would benefit from understanding how business works in the nine Guangdong cities which comprise the GBA, particularly the highly online nature of consumer commerce.
“As a consumer, if you rely on cash in the GBA then you probably can’t survive – you have to do everything online, using the corresponding apps and settle the purchase with digital payment. And it’s the same for insurers looking to sell products – they have to rely on the online way, the digital way,” Chou said.
The Chief Agency Officer echoed comments in an earlier presentation by AIA’s Hong Kong and Macau CEO that changing demographics also offered potential opportunities to insurers in the GBA.
“There are a lot of senior citizens that are considering staying on in the GBA and any insurance company can tap on this need by providing a holistic medical service across the GBA,” he said.
