P I N G A N B R I N G S M O D E R N F I N A N C E TO C H I N A 189 From Market Share to Profitable Growth Between 2002 and 2005, China experienced tremendous growth, with GDP increasing by around 10 percent a year. The sustained economic growth stimulated household income and savings. Peter Ma continued with his efforts to build Ping An into a world-class organization capable of competing with leading domestic and international financial services providers by expanding into bank- ing, asset management, health insurance, and annuity businesses. Three major events occurred during this period. HSBC INVESTS In October 2002, HSBC purchased a 10 percent equity stake in Ping An for $600 million. The move doubled Ping An's capital base. Three years later, HSBC doubled its ownership stake to 19.9 percent by purchasing the 9.9 percent share owned by Goldman Sachs and Morgan Stanley for $1.1 billion. At the time, it was the largest for- eign investment made in a Chinese insurer. HBSC JOINS PING AN'S BOARD OF DIRECTORS In addition to capital, HSBC, as the largest shareholder, brought continual improvement to Ping An's corporate governance struc- ture. HSBC added three members to Ping An's board of directors, which helped ensure fairness in the decision-making process. The board members oversaw the newly created special management committees and supervisory committees, including the audit com- mittee, the compensation committee, and the nomination commit- tee. In addition, the KPI system was extended to the heads and executive directors of each subsidiary, ensuring full accountability. Ping An's reform efforts earned it the award for "Asia's Best Managed Companies 2005--Best at Insurance" from Euromoney magazine. Ping An's corporate restructuring had placed it in line with international standards, but it had been a steep learning curve. American Management Association / www.amanet.org