New life

Sony has been a household name in China for years for its electronic products, but very few Chinese know Sony Financial Holdings well, the financial arm of Sony Corporation, also a listed company on the Tokyo Stock Exchange.

Now, Sony Financial has turned its eye to the Chinese mainland and Sony Life, a key subsidiary under Sony Financial, just opened its representative office in Beijing, China is Sony Life's second overseas market after it entered the Philippines.

To better understand Sony Life's business strategy in China, China Business Weekly's reporter Hu Yuanyuan spoke to Kunitake Ando, who started Sony Life Insurance in 1979 and is now the chairman of the company. He also engineered Sony's successful re-entry into the personal computer market with the VAIO series of personal computers, which led him to the position of president of Sony Corporation from 2000 to 2005.

Q: Can we consider Sony Life's presence in China as a symbol for Sony Financial Holdings' future entry into the Chinese market?

A: From a long-term point of view, that's correct. Our operations are truly integrated. In Japan, almost 40 percent of residential mortgages of Sony Bank come from life finance, which is part of Sony Life's service. In the long run, that's definitely our plan. However, we still don't have a concrete plan about when they will enter the Chinese market. Sony Life has to be successful here first.

Q: According to regulations in China, you have to join hands with a local partner to run a life insurance business here. What kind of business mode do you think you will take? A 50-50 joint venture or a strategic investment into a local insurer?

A: We haven't really decided on our business mode yet. However, one huge advantage we have is that Sony China has operated in this country for almost over 30 years. The Sony brand is well known all over the country and has been recognized as one of the prestigious brands in China. They have already set up strong business connections with various local partners, and they will help us to find a perfect match.

We will rely on Sony China's successful experience. That also distinguishes us from other Japanese companies in China.

Q: What is your expectation for your business in China? It seems that Sony Life has been a latecomer to the market.

A: The life insurance business usually takes a long time to be successful. Initially, you have to set up a strong foundation for long-term success. We're not expecting instant success in China. Instead, we're going to bring a business model that has been very successful in Japan. It's called Life Planner service, which is designed to offer each individual customized packages according to their needs.

Consumers in China are still not ready to accept high value packages that are being offered to Japanese customers. We're just trying to bring diversified service to our potential customers in China.

As for the timing, to be late is not always bad. For instance, we could learn from the experience of the forerunners.

Q: By the end of 2007, there were 43 foreign insurers from 15 countries and regions that had established 134 operations in China. How could Sony Life stand out among the increasingly fierce competition? Who would be your major target customers?

A: We're part of Sony, which is a well-known global corporation. Sony has accumulated much know-how from its global operations, especially in localized management. We're very good at utilizing local talent as much as possible for our business.

Sony Life mainly targets high-end customers in Japan. But for China, we haven't decided yet.

Q: What about your market share in Japan?

A: There're many ways to measure a company's market share. In terms of new business, our net increase was number one in Japan last year. We had a lot of new policies enforced, while business for old companies like Nippon Life was decreasing. We are one of the few insurance companies that had a positive growth last year. And in the first half of this year, we held about 6 to 7 percent of Japanese life insurance market, which ranked us at number five.

Q: How much impact the global financial tsunami will have on your business in China? Is Sony Financial Holdings also hurt by the financial crisis?

A: Not in the real business. But in terms of stock price, until mid-October this year, our stock remained firm. Then all of a sudden, it started to fall. It's unfortunate that we're affected by the outside world rather than our real business. It's more like a psychological impact.

On the other hand, however, the correction also provides us a good opportunity. When enterprises hardly hit by the global turmoil slow down, those that remain sound could take the chance to quicken their expansion.

Q: We noticed that you have served Sony for nearly 40 years and most recently as the president of Sony Corporation. Why did you finally choose to return to Sony Life, the company you founded about 30 years ago?

A: I have involved in all kinds of business throughout my career with Sony. It was all very interesting. When I was in my mid 30s, I was assigned to a very important task, which was to start a life insurance company from scratch. This company started as a joint venture between Sony and the Prudential Insurance Company of America. I was still stationed in New York when my founder Morita asked me to come back to lead this project. It took us almost two years to start operations. All together I was involved for almost 10 years before I went back to the US to lead Sony's electronics business. Now, I'm so glad to be back.

Q: However, there are huge differences between different types of business. How were you able to run all of them successfully?

A: It's true that there are huge differences. But as far as the DNA of "Sony Spirit" is concerned, I basically feel the same way.

When this company started out, I was very young and aggressive. I wanted to revolutionize the industry. At that time, most Japanese life insurance companies had a bad and negative image. People were not aware of the true value of life insurance. That's why I was so eager to change the image of this industry in Japan. We tried to introduce highly educated professionals who can offer need-based selling, which we call consulting sales, instead of hiring housewives or amateurs. After we started our operation, many companies tried to imitate us, but they were never successful.

(China Daily 12/22/2008 page6)