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International Sociology

http://iss.sagepub.com/ Divorcing localization from the divergence paradigm: Localization of Chinese life insurance practice and its implications
Cheris Shun-ching Chan International Sociology 2011 26: 346 DOI: 10.1177/0268580910392261 The online version of this article can be found at: http://iss.sagepub.com/content/26/3/346

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Article

Divorcing localization from the divergence paradigm: Localization of Chinese life insurance practice and its implications
Cheris Shun-ching Chan
University of Hong Kong

International Sociology 26(3) 346363 The Author(s) 2011 Reprints and permission: sagepub. co.uk/journalsPermissions.nav DOI: 10.1177/0268580910392261 iss.sagepub.com

Abstract
This article challenges conventional assumptions associating localization with cultural divergence. Based on ethnographic research of the life insurance business in China, it explores how localization may intertwine with homogenization, and why it may not subvert cultural hegemony. The data illustrate how transnational life insurers disseminated new practices and new ideas to the Chinese population; how they localized their practices according to local conditions; and how the newly emerged domestic insurers imitated and deviated from the organizational practices of the transnational firms. Borrowing insights from institutional theories, the article analyses why an initial divergence of product lines and marketing strategies between transnational and domestic life insurers soon disappeared, and why homogenizing dynamics took place.The article argues that localization is by no means a guarantee, nor an indicator, of divergence, and the so-called two-way street of cultural flows between the global and the local are far from balanced.

Keywords
China, convergence, divergence, globalization, institutional isomorphism, localization, world culture

Introduction
Over the past two decades, descriptions of the cultural implications of globalization have shifted from imperialism, hegemony, synchronization and homogenization, to hybridization, planetarization, creolization and heterogenization. Despite variations in exact meanings, the former cluster of terms can be categorized under the rubric of a

Corresponding author: Cheris Shun-ching Chan, Rm 1217, KK Leung Building, Department of Sociology, University of Hong Kong, Pokfulam Road, Hong Kong. Email: cherisch@hku.hk

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convergence paradigm, and the latter under a divergence paradigm. The divergence paradigm has been gaining popularity in communication studies, journalism, anthropology and sociology. However, proliferating arguments for this paradigm are often based on the premise that localization is evidence of cultural divergence: journalists describe the operation of fast-food chains in China and Mexico the glocalization of cuisine,1 and anthropologists use indigenized practices and local resistance as indicators of antihomogenization and anti-imperialism (Anderson-Levitt, 2003; Robbins, 2001; Watson, 1997). This article raises two questions: To what extent can localization of global business challenge the cultural convergence hypothesis about globalization? Furthermore, to what extent can localization de-centre cultural power and dissolve cultural domination? These questions are addressed through an ethnographic study of the global diffusion of life insurance into the Peoples Republic of China (PRC). I conducted 14 months of research on four different life insurance companies in Shanghai between 2000 and 2004. They included a wholly foreign insurer, American International Assurance Company, Ltd (AIA); a rapidly growing domestic private insurer, Ping An Insurance Company, Ltd (Ping An); a highly localized Sino-American joint-venture, Pacific-Aetna Life Insurance Company, Ltd (Pacific-Aetna), and the least localized, a Sino-German joint-venture, Allianz-Dazhong Life Insurance Company, Ltd (Allianz-Dazhong). To capture the localization dynamics on the ground, I participated in each companys activities on a routine basis and interviewed a number of people in the field. From 2000 to 2004, I participated in a total of 46 morning assemblies, 48 group meetings and 28 training sessions for sales agents. I also observed 43 occasions of agentclient or agentprospect interactions, and interviewed a total of 99 sales agents, 44 managerial staff, 96 clients and 35 prospects. The findings suggest that the transnational life insurers brought a number of new practices and ideas to the local context. However, as the topic of premature death is a taboo subject to the Chinese, localizing insurance products and marketing strategies to avert this cultural taboo is crucial for creating a market. The Chinese life insurance market, consequently, emerged first as a money-management market and displayed characteristics markedly distinct from that in Euro-America (Chan, 2009a). This localized market, however, has been simultaneously accompanied by converging organizational practices of life insurers through isomorphism at the local level. Meanwhile, a concurrent process of acculturation towards perceived superior western cultures was evident in the everyday practices of the life insurance practitioners. Based on these findings, I argue that it is problematic to take localization as an indicator of cultural divergence. Furthermore, localization does not necessarily subvert global cultural hierarchy, nor does it soften cultural hegemony. The problem with taking localization as an indicator of cultural divergence stems from a lack of analytical definitions of localization, heterogenization and homogenization. In the sections that follow, I first provide analytical definitions of these key concepts. Borrowing insights from institutional isomorphism (DiMaggio and Powell, 1983), theories of institutional logics (Friedland and Alford, 1991) and world culture theories (Meyer et al., 1997), I conceptualize possible relations between localization and heterogenization or homogenization. After describing the development of commercial life insurance in China, I present empirical data about the organizational practices of both transnational and domestic life insurance firms, illustrating why localization does

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not necessarily result in cultural heterogenization. Finally, I explain why localization does not secure two-way street cultural flows, even in a context with a strong local cultural heritage.

Definitions of localization, heterogenization and homogenization


Localization, by definition, is a way of modifying practices according to the specific conditions of a locale. Modifications may be initiated by transnational entities as part of their strategies to disseminate their practices, or alternatively, they may occur due to local resistance or constraints. Measuring the extent of localization requires a comparison of the transnational entitys practices in the host region with those in its home region. The greater the differences, the more it is localized. Heterogenization, on the other hand, is defined as a process by which either (1) the practices of a sphere of life in a locale become more diverse over time; or (2) the practices of a sphere of life in two or more locales become more distinct over time. The first process refers to heterogenization at a local level. An increase in types of entertainment in a specific locale is an example. The second process refers to heterogenization at a trans-local, or global, level. An example would be the types of entertainment in two different locales becoming increasingly different. Following the same logic, homogenization is defined as the opposite of heterogenization (i.e. a process by which the practices of a sphere of life in a locale become more similar over time; or the practices of a sphere of life in two or more locales become more similar over time). To determine whether a sphere of life is experiencing a process of heterogenization or homogenization requires a comparison of the degree of diversity of that sphere over time. Different practices in different locales cannot be used as evidence of heterogenization without temporal comparisons. Likewise, similar practices in different locales cannot be taken as evidence of homogenization without comparisons. Heterogenization and homogenization both refer to processes. The crux of the matter is the direction of changes (Anderson-Levitt, 2003).2 It is also important to distinguish between homogenization and cultural imperialism. Homogenization is supposed to be a neutral concept that describes a process by which actions, ideas, or commodities become more similar. It does not necessarily imply domination. It is best described as a melting pot, with no particular element being identifiable as dominant. Cultural imperialism, on the other hand, refers to hegemonic domination of a particular form of culture. Rooted in Wallersteins world system theory, cultural imperialism portends a presence of the universal in the particular. The mechanisms by which the universal claims legitimacy and supremacy over the particular are well theorized by the world culture perspective (Boli and Elliott, 2008; Meyer and Hannan, 1992; Meyer et al., 1997). This perspective hypothesizes that a set of world culture principles, conforming to rationalized models of societal order originating from the power centre of the occidental countries, are increasingly assuming authority over the construction of local realities. Although world culture theorists avoid using the term imperialism, their analyses imply cultural domination and hegemony.

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Possible relations of localization to heterogenization and homogenization


According to the above definitions, localization and heterogenization do not directly correlate with each other: they are two independent processes. At a local level, a transnational enterprise might have brought something new to a local community. If this adds to the diversity of a sphere of life in that community, it represents heterogenization. However, if it replaces a number of existing practices, then it does not contribute to an increase in diversity, but rather may result in homogenization. On a global scale, whether a corporations diverse practices in different locales contribute to heterogenizing a particular sphere of life depends on whether the practices have increased variety from a global perspective. Again, if the practices of a transnational entity in different locales have undermined existing practices, and the overall variety has been diminished, this transnational entity has homogenized the practices of a particular sphere of life at the global level. Therefore, localization cannot be taken as an indicator of heterogenization. Transnational corporations can be highly localized, and yet they can elicit homogenizing dynamics at the targeted locales or at the global level. Institutionalist theories provide two sets of theoretical grounds for this hypothesis. First, institutional isomorphism highlights the possibilities of highly localized and, yet, homogenized organizational strategies within an industry at a locale. Isomorphism, by definition, is a constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions (DiMaggio and Powell, 1983: 149). Transnational corporations with different origins may have diverse organizational practices initially. However, they are expected to resemble each other over time when they face the same local conditions. Apart from market competition, three institutional mechanisms of isomorphism are identified by DiMaggio and Powell (1983: 1503): mimetic processes encourage imitation among firms in response to uncertainties; normative pressures facilitate normative and structural homogenization through professionalization and education; and coercive pressures homogenize organizational behaviours through laws and regulations. As these isomorphic mechanisms are all constituted by the institutional specificities of a locale, the homogenized outcomes naturally bear certain localized characteristics. Second, Friedland and Alfords (1991) insights about the institutional logic of capitalism, namely the accumulation of capital and the commodification of human activities, hypothesize homogenization at the trans-local level. As institutional logic is constituted by both material practices and symbolic meanings, the globalization of modern capitalism and the institutional logic that makes it work are likely to result in a global diffusion of certain material practices and symbolic meanings. Third, world culture theories further hypothesize parallel processes of localization and homogenization at the trans-local level. They hypothesize that a trans-local world level of social reality is being constructed as culturally transcendent and causally important (Meyer et al., 1997). The legitimacy of the constructed models rests on claims to universality. These models, which derived from instrumental rationality principles and assumptions, through the work of ideologies, are taken as the way things work (Meyer et al., 1997: 149). Explicit, rationalized, differentiated organizational forms are expected to spread worldwide, and alternative models are

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expected to have difficulty competing with their legitimacy. Nonetheless, as the world society models bear numerous external elements that are incompatible with local practices, decoupling formal models and observable practices is inevitable. Decoupling enables organizations to maintain their standardized structures to claim legitimacy and yet modify their activities in response to practical considerations (Meyer and Rowan, 1991). As a result, localized practices at different locales are expected, but they all share the same source of legitimacy and the same set of principles (Ramirez, 2003). Based on the theoretical propositions above, we would expect to observe homogenization between insurance firms in China, largely due to institutional isomorphism. Furthermore, we expect to see formal, rationalized organizational forms gain legitimacy and be taken as the ideal model by Chinese insurance practitioners, despite their deviations from the ideal in actual practices.

Background on commercial life insurance in China


Commercial insurance is an imported concept on Chinese soil. Two distinctive waves of importation can be identified. The first one was brought by the British during their imperialist reign in China in the 19th century. The second wave was brought by transnational insurance corporations, led by American International Group, Inc. (AIG), during the globalization era starting in the last two decades of the 20th century. Insurance companies first appeared in China in the 1800s, and the development of the insurance industry reached its climax in the late 1920s1930s. During this period, the market was dominated by foreign players, who controlled over 80 percent of the business (Wu and Zheng, 1993). By 1935, there were over 160 foreign insurers coming from 16 countries (Xu et al., 2001). However, life insurance was far less developed than property insurance. Only one-fifth of the companies carried life insurance policies, and life insurance premium income accounted for only a small proportion of the business (Huebner, 1930). With the outbreak of the Sino-Japanese War, followed by the Second World War, many insurers shut down their operations in China. When the Chinese Communist Party (CCP) took over in 1949, it founded the Peoples Insurance Company of China (PICC), Chinas first national insurance company. The operation of the PICC was based on a state-owned enterprise (SOE) model, instead of a commercial or profit-oriented model. The growth of the PICC ceased in 1958 with the beginning of a number of political campaigns. During the Chinese Cultural Revolution (196676), insurance all but disappeared (Xu et al., 2001). As part of Deng Xiaopings economic reforms, the state-run PICC resumed operations in 1979, using its same SOE organizational practices. Two private insurance companies, including Ping An, were subsequently founded, with their operations comparable to PICC. Beginning in 1992, an entirely new scenario emerged. New ideas and practices were first brought in by AIGs subsidiary, AIA. Between 1993 and 2000, another six foreign life insurers arrived to operate as joint-ventures with domestic partners. At the same time, four domestic private life insurance companies were founded. By the end of 2004, the number of life insurance firms reached 34, of which 20 were foreign-owned or jointventures. (As all the joint-ventures were headed and operated by the foreign partners, they were categorized as foreign companies in official publications and by the general

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public.) In this second wave of insurance development in China at the turn of the 21st century, life insurance became the dominant business. The average annual real growth of life premium income from 1995 to 2004 reached 30.7 percent, compared to 9.1 percent growth for property insurance. Industry-wide, the proportion of revenue coming from life insurance sales increased from 34 percent in 1995 to 75 percent in 2004 (Chan, 2009a).

Globalization and localization of life insurance in China: An ethnographic account


Upon AIAs entrance, it introduced an operation model entirely different from the one adopted by PICC. This model embraces a differentiated organizational structure, a riskmanagement concept of life insurance, actuarial-based product development, an agencydriven sales system and risk-related sales discourses. AIAs operation was largely adopted by other insurers, including locally founded ones. Nonetheless, transnational insurers in China also localized their practices, some of which were active strategies to achieve effective management; whereas others were the result of pressure from local competitors.

Organizational structure and practice


Chinese locals labelled AIAs operation a western model. This model was based on a legal-rational archetype. Before the appearance of AIA, the division of labour at domestic insurance firms was less distinct. A unit often served a number of different functions, carrying out a number of different tasks. The organizational structure of AIA, on the other hand, rested on a highly specialized, systematic division of units and labour. The organizational management was divided into internal and external affairs. Product development, investment management, agency training and advertising all belonged to internal affairs (so-called in-house management). In-house management was divided into 24 highly specialized departments and functional units. The management of the sales force and sales activities belonged to external affairs. The sales force was divided into a number of sales teams, distributed over different agency sites. A hierarchical system of sales agents with multi-rank was established. Criteria for promotion, measured in terms of sales volumes and recruitment of new members, was set unambiguously. Placing expatriate Chinese in top managerial positions was the most obvious localized strategy of AIA. Taiwanese and Hong Kong natives sat at the top levels while mainland Chinese, mostly Shanghainese, occupied middle and lower level managerial positions. Only a few Caucasian expatriates were found at the upper-middle level of management. The management strategy of AIA is using the Chinese to manage the Chinese , a senior agent of AIA said.3 Taiwanese managers were mainly in charge of the agency system and sales; whereas Hong Kong managers were in charge of in-house management. According to senior agents of AIA, this division of labour between the Taiwanese and Hong Kong teams was well justified because of their cultural differences. In their words, the Taiwanese know better the local [mainland Chinese] cultures and, so, they are better [than the Hong Kong people] at sales and marketing. On the other hand, Hong Kong people are very rule-abiding and, so, they are good at setting up the administrative body of the company.4

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Despite the localized personnel of AIA, its rational, formal organizational form served as a model for domestic insurers to follow. The Chinese insurers all attempted to shed their SOE characteristics and take on AIAs legal-rational standards. Ping An has been most proactive in modernizing its organizational structure. In 1995, its director hired a number of experienced life insurance managers from Taiwan to advise on how to restructure the organization and professionalize the functions of various units. The organizational image of Ping An, nonetheless, was still far less institutionalized and systematic than that of the transnational insurers. Then, in 1997, it hired a global business consultancy, McKinsey & Company, to evaluate its organizational operation. McKinsey pointed out that Ping Ans organizational structure was too rudimentary and ambiguous. They advised the top management on how to build a more specialized and regulated model of organizational management. Open to this advice, Ping An refined its organizational structure accordingly. Between 1999 and 2001, it sought Caucasian and Chinese expatriates from all over the world. The expatriates then headed various departments, including strategic planning, actuarial and investments, human resources, advertising and technology. By the end of 2001, there were 27 expatriates occupying half the top managerial positions at Ping An. A local magazine ironically described the managerial body of Ping An as Eight-Power Allied Armies.5 With the emergence of domestic private insurers and the advent of foreign insurers, PICC was under pressure to revolutionize its organization. In 1996, it was restructured into three independent share-holding companies, each specializing in life, property, or reinsurance business. The life insurance business was named China Life Insurance Company, Ltd (China Life). Both AIA and Ping An became the model for China Life to follow in establishing its organizational structure. Ping An and other Chinese insurers valiantly attempted to live up to the legal-rational organizational template, because such a template lent them legitimacy and earned them the publics confidence. However, given their unique historical and cultural origins, it was often easier for them to mimic the form than adopt the substance of the world culture (Meyer and Rowan, 1991). As a result, decoupling practices from the formal organizational form was more conspicuous in domestic insurance firms than in foreign firms. In spite of this, the rational appearance of local insurance firms made them appear comparable to the transnational corporations.

Concept and product development


Before AIAs arrival, PICC concentrated on property and group life insurance, though it also carried an individual life policy called Simple Life. Without actuaries or underwriters, the premiums and insured amounts of PICCs products were derived by convenience. For example, Simple Life cost 1 yuan (US$0.12) a month for a return of 1 yuan a day at the end of a 20-year term. This policy was sold to employees in state-owned or collective enterprises as a kind of savings plan. It was not until AIAs entrance that life insurance took on a risk management definition. Facing a population with no concept of life insurance, AIA aimed to educate the public. It defined life insurance as a protection against misfortunes, and offered two personal accident policies. To sell these products, the agents were given sales scripts

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much like those documented by Zelizer (1979) in America. These scripts imbued the meanings of life insurance with moral obligations for the family, emphasizing protection, love, respect, self-reliance, family responsibility and human values. As an inexperienced domestic insurer, Ping An modelled its first product on AIAs, but set a much lower premium. However, Ping An soon found that accident insurance was not well received by the public, due to the Chinese taboo on talking about premature death and fatal misfortunes (Chan, 2009a). It stopped imitating AIAs product development and, instead, launched three policies that served primarily a savings function. They included a whole life endowment policy, a whole life annuity policy and a child endowmentannuity policy. The first two policies, called retirement insurance, were designed to appeal to the local penchant for savings and concern about life during retirement. The child policy, on the other hand, was offered to capitalize on the emerging child-centred way of life. Between 1995 and 1997, these three products boosted Ping Ans market share from 14 percent to 35 percent.6 In response to the popularity of Ping Ans products, China Life (the former PICC) and other domestic insurers quickly launched a few similar products. AIA, on the other hand, refused to offer comparable savings policies. Consequently, it suffered a severe setback, with market share dropping from 23 percent in 1995 to a mere 8 percent in 1997.7 It was not until 1998 that AIA finally yielded to the pressure of competition by localizing its products to cater to the local preference for money management. It launched a retirement insurance policy, and its sales began to slowly revive. All other foreign insurers likewise refused to simply adopt the local definition of life insurance at first. Even when they later (reluctantly) offered savings products, they still insisted on the risk management concept of insurance. Why? An actuary of Pacific-Aetna explained:
The most profitable product for an insurance company is the traditional type that reflects closely the meaning of insurance, mainly, risk management. For this kind of product, insurers can calculate the risks involved and set reasonable profit margins. Normally, protective products have higher profit margins than savings or investment products.8

Thus, it was the profit structure of life insurance that deterred transnational firms fullfledged localization of their product line. Their reluctance to offer competitive savings products made them lose market share to domestic players, but it saved them from financial losses. To capture the market, the domestic insurers sold a large volume of products bearing high interest returns. With a series of reductions in interest rates starting in 1996, these sales consequently induced severe financial losses for the domestic insurers. By June 2000, Ping An lost 10 billion yuan (US$1.2 billion) from sales of unprofitable products. China Life suffered from the same problem.9 Capitalizing on the stock performance and the popularity of stock exchanges in Shanghai (Hertz, 1998), Ping An continued to present life insurance as money management. It introduced unit-link as a profitable investment policy. In unit-link, each unit of the premium paid is linked to an investment return and, so, the amount payable may fluctuate during the term of the policy. This new concept of insurance as a means of investment received a feverish response from the public. The unit-link brought another surge in Ping Ans sales, bringing its market share to a peak of 49 percent at the end of 2001.10

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Foreign insurers response to the unit-link fad was rather ambivalent. On one hand, they introduced a para-investment policy called dividend insurance (with a dividend rate dependent upon the profitability of the insurers investment) to compete with the domestic players. On the other hand, these foreign insurers were frustrated by the unitlink fad, and blamed Ping An for misleading the public and distorting the concept of insurance. Insurance is supposed to reduce risk, not to add risk to our clients, the general managers of the foreign insurers reiterated.11 They consolidated training for their sales agents, emphasizing the risk management functions of insurance. Salient disparities between transnational and domestic insurers were observed before 2001, as they fought over definitions of life insurance and sales discourses. However, an intensified homogenization of products and sales discourses soon took place. In 2001, the popularity of the investment product unit-link began to sink, as the stock index fell and unit-link clients found themselves losing. Because the Chinese clients were not fully aware of the risk involved in this product, they blamed Ping Ans sales agents for misleading them. A number of policyholders filed complaints with the China Insurance Regulatory Commission (CIRC), accusing Ping An of cheating them. This resulted in a unit-link crisis. Consequently, Ping An and other domestic insurers began to follow more closely the product lines of their foreign counterparts. Starting in 2002, they switched to selling critical diseases products that served mainly a risk management function.

Agency management and marketing strategies


Making a living based on commissions was new to the people in the PRC. PICCs Simple Life was sold by staff who received salaries rather than commissions. AIA replaced PICCs passive sales method with a progressive, door-to-door marketing strategy. The sales agents were structured in a pyramid, and their income depended entirely on the volume of their own sales and of their down line agents. This agency-driven, commissionbased, pyramidal structured sales system then became the primary model on which the domestic insurers developed their sales teams. At the same time, AIA strove to establish a professional image of the company and its sales agents. It targeted young university graduates as in-house staff and sales agents, making them look professional. Their sales agents were among the tiny number of locals wearing western suits and ties in the early 1990s. They were taught the importance of physical appearance and a professional demeanour. Meanwhile, they were instructed to follow a standardized sales process that included seven steps. The multiphased sales process was almost exactly the same as what Oakes (1990) and Leidner (1993) found in the marketing of life insurance in the United States. AIAs sales manuals contained detailed instructions teaching the agents what to do at each step, including how to debate with prospects, what to say, what not to say, and how to catch prospects impulses to close a sale. To manage the Chinese agents emotions and ways of thinking, a desired psychological attitude was first introduced by AIA to its agents (Chan, 2007). Such an attitude embodies a set of specific framing and feeling rules (Hochschild, 1979): a belief in the value of life insurance, an indomitable work ethic, a proactive character, a habit of

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reaching out, a desire to win and an ability to maintain positive thoughts in the face of rejection and meagre income. Although some modifications are made according to the local context, these rules are comparable to the positive mental attitude, the selftransformation agenda and the vocation of sales that Leidner (1993) and Oakes (1990) described in America. During my research in Shanghai, advice on how to maintain a desired psychological attitude was part of everyday conversations among sales agents from all the different insurers. While AIA brought in its agency sales system and various sociopsychological techniques to manage the sales agents, its marketing strategies were, to a large extent, under the influence of Ping An. Ping An deployed a marketing strategy called human-sea strategy by recruiting a large number of sales agents, mostly women in their mid-thirties to forties, to approach as many people as possible. The agents were encouraged to mobilize their guanxi (interpersonal relationship) network to sell life insurance to friends and relatives. Due to the high level of trust and the etiquette of renqing (interpersonal obligation) that governs pre-existing guanxi, Ping Ans marketing strategy proved to be effective. Many people were willing to buy an insurance policy in order to maintain their relationships with the sales agents. To compete for business, AIA soon followed Ping Ans model by quickly expanding its sales force. As a result, all sales agents in the period of 19958 intensively and extensively exploited their guanxi and renqing to achieve insurance sales (Chan, 2009b). When it comes to the sales scripts, however, the sales agents from foreign insurers differed from those from domestic firms. Their divergence was especially obvious in the beginning when foreign and domestic firms offered dissimilar products. In order to sell risk management products, the agents from the foreign camp talked about risk, protection, dignity and responsibility. In contrast, the agents from the domestic camp talked about savings, returns, dividends and investment. The divergence in sales discourse, however, subsided when the product lines of both foreign and domestic insurers later became more alike.

Why no divergence?
As Hefner (1998: 30) puts it, there is no capitalism without local articulation. Even for an artefact as commodified as life insurance that puts human life into a statistical formula, creating a market must be localized. Localization, however, does not guarantee a divergence of economic practices or cultural heterogenization at either the local or global level. Why not? I shed light on this question by borrowing some theoretical tools from institutional theories. Before the arrival of AIA in the early 1990s, insurance practices in China exhibited a high degree of homogeneity. The state-run PICC monopolized the market in the 1980s, and the newly emergent domestic private insurers more or less followed the model of the PICC. AIAs promotion of individual life insurance did bring about heterogenization of insurance practices in the early phases of market development, and it brought in a new operation model substantially different from the PICC model. The domestic insurers eagerly imitated AIAs model, but they invented their own products and sales discourses based on local preferences. A high degree of diversity was found in product lines and

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selling practices between the foreign and domestic insurance firms, particularly from 1995 to 1997. However, the diversification process did not last long. By 1998, isomorphic dynamics had set in. The products of the transnational and domestic insurers, as well as their marketing strategies, were moving closer to each other, due to market competition, mimesis, normative pressure, legal enforcement and the profit-oriented institutional logic of insurance. Mimesis was the most salient process of isomorphism in the life insurance field in China, as three waves were observed. First, the inexperienced domestic insurers imitated their experienced foreign counterparts in organizational structure and practice, though decoupling was inevitable. Subsequently, when domestic players deviation from their foreign counterparts in product designs and marketing strategies proved effective, they led the mimetic process. Foreign insurers followed the domestic players retirement insurance product lines and strategies of capitalizing on guanxi to market these products. Finally, when the products sold by the domestic insurers suffered from financial losses and Ping Ans unit-link ran into a crisis, all insurers concentrated on promoting risk management products. Another isomorphic dynamic was driven by normative practices in the field, namely, through formal education and the transfers of employees. Upon its entry, AIA immediately sponsored a professional actuarial training programme for local candidates. Subsequently, a number of degree programmes in insurance and related majors were launched in several universities. The programmes included finance and insurance, insurance actuarial studies, insurance law and insurance company management. In 2000, over 2000 students were enrolled in these programmes. Except for insurance law, which may vary from place to place, the general and technical knowledge of insurance based on an instrumental, statistical model of rationality is disseminated rather universally across different locales and cultures. Furthermore, transfers of employees among insurance firms were common, as the newcomers recruited managers and sales agents from existing insurers. For instance, the Sino-American John Hancock-Tianan life insurer recruited personnel from AIA and Ping An to start its operation in 2001. A number of Ping An top managers were hired by the newly formed domestic insurer, New China Life Insurance Co. Ltd, and by an existing competitor, China Life. AIA and Ping An have become two big pools of experienced personnel from which new insurers draw to form their own staff. As a result, an increase in the number of insurers did not bring an increase in variations among firms practices and cultures. Increasing legal enforcement, at the same time, contributed to homogenizing product development and organizational practices. Prior to 1998, the Chinese life insurance market was described as anarchy. Without many legal and regulatory constraints, insurers could fully utilize their imaginations to compete with each other. Since 1998, however, with the establishment of CIRC to formulate and enforce insurance law and regulations, insurers have faced limitations on diversifying their products. For instance, in 1999, an upper and a lower limit on interest rates (4 percent to 2.5) was set for all life insurance products, which eventually limited the range of variations in product designs. The initial disparity between the transnational and domestic insurers, I suggest, stems from the fact that the transnational players quite rigorously followed the profit-oriented institutional logic of life insurance; whereas the domestic players tended to yield to the

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local resistance in order to capture a large market share (Chan, 2009a). However, the market-share approach later proved to be unsustainable, and the domestic players were left with little choice but to converge with the transnational players model. This convergence was driven by an underlying driving force, namely the profit-oriented institutional logic of life insurance. Insurance belongs to a category of commodities requiring a specific logic of operation to make profits and capital accumulation possible. The basic principle on which insurance operates is a probabilistic calculation of risk. For traditional risk management insurance products (typically, term life, whole life, accident insurance, health insurance and critical disease insurance), profits mainly derive from the profit margins that are calculated upon death and casualty rates. For money management products (typically, endowment or annuity insurance, participating policy and variable life), profits principally come from the investment returns of premiums. Thus, the profitability of money management products relies more on the investment environment, which is often less predictable. According to the profit-oriented principle, it is in the best interest of the insurers to define life insurance primarily as risk management for a specific market niche, and secondarily as money management for diversification purposes. In China, it was even more important for insurers profitability to sell risk management products, because the state imposed a number of restrictions on the investment options of life insurers, making their investment returns highly susceptible to local interest rates. From the second half of 2002, when the products of the domestic insurers were no longer different from those of the transnational insurers, their battle over the concept of life insurance became unnecessary. Instead, insurers from both camps collaborated with each other, in an attempt to raise the sense of risk in the general public to sell protective products. By the end of 2002, the total number of products available in Shanghai was over 100. Nonetheless, the products became more similar across different providers. In a review article on market society, Fourcade and Healy (2007: 27) allude to the limits of heterodoxies by highlighting the fact that market societys formulation, transposition and implementation are constrained by existing institutions and rules of the game. In this case study, despite the domestic insurers daring heterodox practice in the early phase of market development, they finally more closely followed the foreign, conventional, profit-making model, in order to stay in the game. The limits of heterodoxies hint at a possible convergence at the global level, when modern capitalism is increasingly taken on as the most legitimate game.

The uneven cultural flows


For more than a decade, anthropologists have unanimously advocated replacing the concept of cultural domination with the concept of cultural flows, specifically two-way street cultural flows (Watson, 1997) or fluid, irregular shapes of flows (Appadurai, 1996). Intriguingly, this unidirectional movement seems to be a compromise within the disciplinary conventions of anthropology. As Tsing (2000: 339) bluntly puts it, no anthropologist I know argues that the global future will be culturally homogeneous. The unanimous position of the second generation of social and cultural anthropologists against the homogenization hypothesis, ironically, expresses homogeneity in itself. The

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result, Tsing (2000: 340) comments, is a freeing up variety of globalism, celebrating the subversive power and innovative imaginations of the locals. The empirical evidence they have provided for this intellectual movement, however, is chiefly resistance and tension when the local meets the global. In this section, I analyse the flows between the global and the local, and ask if the convergence of life insurance practices in China signifies the domination of a particular form of modern capitalist culture. We do see that the local actors in China were not passive receivers of transnational practices and ideas. Instead, they resisted accepting the transnational players intentions. To a certain extent, they forced the transnational players to localize their practices and products. Nonetheless, a concurrent process of acculturation towards western cultures is evident. Such an acculturation process rests on the legitimacy of certain universal claims hypothesized by the world culture perspective, such as instrumental rationality, individualism, and occidental superiority. First, corporate models and insurance markets in the West, particularly in the United States, were always used as the ideal standards for Chinese corporations and markets. The inferiority of the SOE model and the higher social authority of AIAs legal-rational model were obvious, when the domestic insurers all strove to imitate AIA or western organizational forms. Meanwhile, the premium income, the penetration rate and the density of insurance in the United States were often cited to illustrate how far the Chinese market was lagging behind.12 The financial assets of the European and American insurance corporations were set as the goals that the domestic insurers should pursue.13 More importantly, the promotion of certain cultural values and the condemnation of others demonstrate that cultural elements have been flowing in a certain direction, and those elements are not confined to form, but include content as well. Transnational insurers in China strove to get rid of what they called the locals SOE mentalities and habits, which were considered unfavourable to the development of the life insurance industry. Those mentalities and habits, bred by Communism in the Maoist regime, were said to show a lazy, dependent and non-competitive attitude in both the sales agents and the prospects. As a result, agents did not work as hard and aggressively as insurers wanted; and instead of buying life insurance, prospects expected the state or someone to take care of them. To eradicate these mentalities and habits, the agents who were neither aggressive nor competitive enough were denounced. People who expected help from relatives or the state were condemned. Only certain attitudes were acceptable and respectable. These attitudes seem to be the normative standards in America, such as being aggressive, competitive, independent, self-reliant and even workaholic. To quote a senior sales agent of AIA who spoke in a sales team meeting:
Ten years ago, I wore grey clothes and a pair of shabby sandals. I earned 36 yuan per month. My neighbours wore the same and earned the same. Today, I am wearing a western suit and tie. I am earning thousands a month. I am confident every day when I walk out the door of my home. When my neighbours are back home and rest in the evenings, I am still working. But now my pocket has a different amount of money from theirs. My value as a person is different from theirs!14

Hence, the new labour logic of unequal payment, based on differential labour values and working around the clock to prove ones worth, was endorsed by many of the

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sales agents who stayed in the industry (Chan, 2007). A moral classification, in this case, was working through celebrating a particular order and condemning alternatives (Bourdieu, 1977). Indeed, certain values became institutionalized in the sales agents routines and companies ritualized activities. In my observation, the trainers and the sales agents often used stories and metaphors to demonstrate the desirability of being American, or the superiority of western civilization. For instance, the agents of AIA described their own insurance policy as similar to a green card, while an insurance policy from a domestic insurer was a Chinese identity card. The use of these metaphors was intended to show the difference between products from an internationally recognized firm vs those from a locally recognized company.15 Even domestic companies used morality tales to attribute superior signification to western civilization. For example, a trainer at Ping An told a story of how civilized people taught tribal people of the need to wear shoes, as a metaphor to show that the insurance agents bore the mission of teaching local Chinese the need to buy life insurance. Insurers and their agents who understood the importance of life insurance were the civilized people, whereas the general public which had not recognized the need for insurance were the tribal people, ignorant of basic civilized needs.16 Thus, it is obvious that there exists a repertoire of cultural hierarchy. The western prototype was not imposed through physical or psychological coercion, but through the receiving partys active perception of western supremacy. Tomlinson (1991) rebuts the cultural imperialism thesis by arguing that indigenous peoples adoption of some foreign practices watching television, for example cannot be deemed as being imposed, nor is their intention to accept western values and habits. Of course, local peoples practices are not imposed upon them, and it would be amusing to hear someone saying that I watch television, or I do X, in order to accept western cultures and to abandon my own. My contention is that subjectivity is produced and reproduced through a wide range of (localized) practices, and cultural domination is exercised through local peoples active glorification of a set of foreign cultural genres, and disparagement of the native ones. Tomlinson (1991) qualifies cultural domination as cultural imposition through coercion. I argue that it is precisely the lack of a feeling of cultural imposition, as there is no need to impose a foreign culture through coercion, that, borrowing Herzfelds (1997: 157) phrase, hegemony appears to have done its work too well.

Concluding remarks
The divergence hypothesis first emerged when a group of scholars became critical of the modernization paradigm. Its merits include the proposal that alternative models and multiple paths to modernities are not only possible but culturally preferred. However, in the discussion of the cultural impacts of globalization today, the divergence paradigm tends to ignore, undermine, or neutralize power dynamics in globallocal interactions. Terms like intercultural osmosis, global mlange and cultural hybridity represent all cultures as sharing the same degree of power in shaping the global culture, as if there were no cultural hierarchy. The risk of such a celebratory depiction of the globallocal dynamics, in Shohats (1992: 109) words, is to sanctify the fait accompli of colonial violence, and more recently according to Tsing (2000: 339), to naturalize[d] globalist ideologies

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of the global. Thus, even Pieterse (1994: 180) remarks that the hybridization perspective remains meaningful only as a critique of essentialism (emphasis added). Based on an empirical case study, this article presents two major arguments. First, it is problematic to use localization as an indicator of divergence. Selective localization, I argue, is a necessary step to reconcile local cultures and global imperatives, and it can be intertwined intimately with the process of homogenization. Second, it is too early to abandon the concept of cultural domination by assuming a hundred flowers blooming dynamic of the globallocal interactions. Given the history and the size of China, its local culture can hardly be classified as periphery. Nonetheless, when it encounters modern capitalism and the culture associated with it, Chinas resistance has its limits. As a case in point, the Chinese insurers have been moving more towards the foreign models than vice versa. Furthermore, a hierarchy of meanings shaping and reshaping local actors subjectivities, with varying degrees of success, has been operating at the ideological level for the life insurance industrys development in China. These arguments, however, do not preclude the possibility of divergence. If we recognize localization as a constitutive force of globalization, then the questions of our research are not whether localization takes place, but how, by whom and based on what metrics.17 Funding
This article is derived from a larger project funded by the Social Science Research Council, the Center for International and Comparative Studies at Northwestern University, the University Center for International Studies and the Asian Studies Center at the University of Pittsburgh.

Notes
1. When eat meets west, Time, 28 January 2008, pp. 446. For the concept of glocalization, see Robertson (1995). 2. Exemplars of divergence arguments based on temporal and spatial comparisons can be found in Mills et al.s (2008) comparative studies of the impact of globalization on industrial relations and employment, and Frank and Stollbergs (2004) studies of the globalization of Asian medical practices in Europe. 3. Interview, Shanghai, February 2002. 4. Interview, Shanghai, January 2002. 5. Nanfeng Chuang [The Window of Southern Wind], February 2002, p. 43. The term EightPower Allied Armies (Baguo Lianjun) refers to the aggressive troops sent by Britain, the United States, Germany, France, Russia, Japan, Italy and Austria to suppress the anti-imperialist movement (Yihetuan) in China in 1900. The eight powers were considered imperialists and the attack was considered a humiliation to the nation of China. 6. Twenty-First Century Economic News [Ershiyi Shiji Jingji Baodao], 7 January 2002. 7. Twenty-First Century Economic News [Ershiyi Shiji Jingji Baodao], 7 January 2002. 8. Interview, Shanghai, August 2002. 9. Insurers lose on rate cuts, South China Morning Post, Hong Kong, 13 September 2000. 10. Almanac of Shanghai Insurance 2002. Shanghai: Editorial Board of Almanac of Shanghai Insurance, China Insurance Regulatory Commission Shanghai Office. 11. Interviews, Shanghai, August 2002. 12. For example, see Kan yangbaoxian yingxiao zhaoshu [Looking at the selling strategies of western insurance], Zhongguo Jingying Bao [China Business Management Press], 19 June

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13. 14. 15. 16. 17.

2001; Shanghai baoxianye chaju zai nali [How far the insurance industry in Shanghai is behind], Shanghai Baoxian [Shanghai Insurance], December 2001. Waizi baoxian jiasu jinru yiwei zhe shenme [What are the implications of the increasing pace of foreign insurers entrance?], Zhongguo Baoxian Bao [China Insurance], November 2001. Participant observation at the meeting, Shanghai, May 2002. Participant observation at AIAs training and group meetings, Shanghai, February 2002. Participant observation at the training session, Shanghai, April 2002. Thanks to a reviewers suggestion for this concluding remark.

References
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Meyer J and Rowan B (1991) Institutionalized organizations: Formal structure as myth and ceremony. In: Powell W and DiMaggio P (eds) The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press, 4162. Meyer J, Boli J, Thomas G and Ramirez F (1997) World society and the nation-state. American Journal of Sociology 103(1): 144181. Mills M, Blossfeld HP, Buchholz S, Hofacker D, Bernardi F and Hofmeister H (2008) Converging divergences? An international comparison of the impact of globalization on industrial relations and employment careers. International Sociology 23(4): 561595. Oakes G (1990) The Soul of the Salesman: The Moral Ethos of Personal Sales. Atlantic Highlands, NJ: Humanities Press. Pieterse JN (1994) Globalization as hybridisation. International Sociology 9(2): 161184. Ramirez F (2003) Toward a cultural anthropology of the world? In: Anderson-Levitt K (ed.) Local Meanings, Global Schooling: Anthropology and World Culture Theory. New York: Palgrave Macmillan, 239254. Robbins J (2001) God is nothing but talk: Modernity, language, and prayer in a Papua New Guinea society. American Anthropologist 103(4): 901912. Robertson R (1995) Glocalization: Timespace and homogeneityheterogeneity. In: Featherstone M, Lash S and Robertson R (eds) Global Modernities. Thousand Oaks, CA: Sage, 2544. Shohat E (1992) Notes on the post-colonial. Social Text 31/32: 99113. Tomlinson J (1991) Cultural Imperialism: A Critical Introduction. London: Pinter. Tsing A (2000) The global situation. Cultural Anthropology 15(3): 327360. Watson J (1997) Introduction: Transnationalism, localization, and fast foods in East Asia. In: Watson J (ed.) Golden Arches East: McDonalds in East Asia. Stanford, CA: Stanford University Press, 138. Wu SY and Zheng WY (1993) Zhongguo Baoxian Shihua [Talking about the History of Insurance in China]. Beijing: Economics Management Publisher. Xu W, Cao H and Zhou J (2001) Baoxian Xue [Insurance]. Shanghai: Peoples Publisher. Zelizer V (1979) Morals and Markets: The Development of Life Insurance in the United States. New York: Columbia University Press.

Biographical note
Cheris Shun-ching Chan is an Assistant Professor of Sociology at the University of Hong Kong. She received her PhD in sociology from Northwestern University and held a postdoctoral fellowship at UCLAs International Institute. Her primary research interests include culture, economic practices, Chinese medicine, globalization and Chinas sociocultural changes. She is the author of Marketing Death: Culture and the Making of a Life Insurance Market in China (forthcoming, Oxford University Press), and has published in American Journal of Sociology, Theory and Society and China Quarterly.

Rsum
Le prsent article vise interroger le lien habituellement tabli entre la localisation et la divergence culturelle. Bas sur une enqute ethnographique auprs dentreprises dassurance vie en Chine, il explore la manire dont la localisation et lhomognisation culturelle sarticulent, de manire expliquer pourquoi la localisation ne correspond pas ncessairement une subversion de lhgmonie culturelle. Les donnes permettent de voir comment les entreprises internationales dassurance vie ont dissmin de nouvelles ides auprs de la population chinoise ; comment elles ont localis leurs agences en fonction des conditions locales et comment les entreprises nationales ont simultanment imit et dtourn les pratiques organisationnelles des entreprises

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transnationales. A lappui des thories institutionnalistes, larticle analyse la disparition progressive dune divergence initiale en matire de produits et de stratgies de marketing entre les entreprises nationales et transnationales, en expliquant la raison de ces dynamiques dhomognisation. Il sagit de montrer que la localisation ne garantie pas la divergence et ne peut nullement en constituer un indicateur fiable. La soi-disant route double flux des circulations culturelles entre le niveau global et le niveau local nest nullement frquente de manire quilibre dans les deux sens. Mots cls: Mondialisation, convergence, divergence, localisation, culture globalise

Resmen
Este artculo analiza la relacin entre el comportamiento ambiental de un individuo y su contexto social. Tomando como punto de partida la literatura sobre movimientos sociales y sociedad global, se parte del supuesto de que el medio ambiente tiene a la vez una dimensin nacional y global. Usamos la encuesta del ISSP de 2000-2001 sobre medio ambiente para testar nuestras hiptesis y distinguimos dos tipos de comportamiento: pblicos y privados. Los comportamientos pblicos incluyen acciones como participar en manifestaciones. Los comportamientos privados consisten en actividades como la separacin de basuras. A nivel contextual consideramos los vnculos con la sociedad mundial, la estructura nacional de las oportunidades polticas y los recursos. Un modelo de regresin jerrquica que incluye 23 pases y alrededor de 24.000 entrevistados muestra que los comportamientos pblicos son bastante similares entre pases, mientras que los comportamientos privados estn ms influidos por los contextos locales. Por lo que se refiere a los factores contextuales, la estructura de las oportunidades polticas tiene el mayor impacto tanto sobre los comportamientos pblicos como sobre los comportamientos privados. Los factores de la sociedad global tambin ofrecen explicaciones adicionales. Palabras clave: Globalizacin, movimientos ecologistas, sociedad mundial, oportunidad poltica, comportamiento ambiental

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