Last year, there were 450,254 road accidents on the mainland, and Chinese are buying 5 million cars a year. That is all good news for one of Australia's best known insurance companies, IAG. Last week, the company signed a memorandum of understanding to eventually acquire a 40 per cent stake in China Pacific Property Insurance, one of China's biggest insurers.
IAG is expected to cough up A$350 million to A$450 million ($2 billion to $2.57 billion) to acquire an initial 25 per cent stake in China Pacific.
It reflects IAG's eagerness to participate in China Pacific's car-insurance business, which makes up 60 per cent of its revenue, and is tapping the growth in car sales on the mainland.
But IAG's much-publicised move into China comes at a time when the Australian government agency responsible for negotiating a free-trade agreement between the two countries released a report with some sobering news for Australian financial service companies, law firms and education providers. Hamstrung by an ageing and declining domestic population, they see fast-growing China as an economic lifeline.
The Department of Foreign Affairs and Trade released a weighty report, entitled Unlocking China's Services Sector, last week.
While Australian service exports to China sit at a healthy A$2.3 billion, Australian Deputy Prime Minister and Minister for Trade Mark Vaile warned at the launch of the report that further reforms to China's services sector were still needed.
'There are still burdensome licensing and operating requirements in many areas; China's regulatory and legal processes are often opaque,' Mr Vaile observed.
