Media Coverage

Learning on the job


SCMP l By Peggy Sito and Eugene Tang l 2017-09-09


From tai chi to philosophy, Fosun chairman Guo Guangchang is drawing lessons from successes of businesses around the world to further develop his company


When Guo Guangchang, the chairman of Fosun International, bought his first asset in the United States, 28 Liberty Building (formerly known as One Chase Manhattan Plaza) in the financial heart of New York in 2013, he envisaged American camaraderie, backslapping and good nature throughout his US business.


He wanted his new employees to call him George, recalling the personal way chief executives such as Citigroup's Sandy Weill had dealt with employees.


However, the employees at the New York office called him Guo zong (Director Guo), a language copied from Chinese officialdom.


"I then started sending out office memos addressing everybody as tongxue (fellow classmates), and signing off myself as Guo tongxue," Guo said. "That did the trick."


Learning is a serious business for Guo. An ardent tai chi student, he sets aside significant space in every office worldwide for a tai chi studio for himself and employees.

"Life in general is an endless process of learning," Guo said. "We draw our inspiration from a number of successful businesses around the world: Warren Buffett's Berkshire Hathaway for its long-term investing, Li Ka-shing's Hutchison Whampoa for managing a successful empire in Asia, and General Electric for its diversity of businesses."


Starting with real estate developments and pharmaceuticals in 1992, Fosun has become one of the mainland's largest private conglomerates.


From Buffett and Berkshire, Guo saw how cash-rich insurers could fund long-term equity investments. Fosun owns two insurers - Pramerica Fosun Life Insurance, a venture with Prudential Financial; and Fidelidade Cia de Seguros, Portugal's largest insurer acquired in 2014 for € 1.04 billion - and Peak Reinsurance.


From Hutchison, Guo learned the kind of entrepreneurial thinking that allowed a Hong Kong company to become a global firm with investments in more than 50 countries. And from GE, the world's largest and most diversified corporate entity, he learned about handling business diversity.


Guo grew up in Dongyang, a city with fewer than a million people, south of Hangzhou, and later studied philosophy at Shanghai's Fudan University. It is a discipline that he says opened his mind to a range of possibilities in life.


"Philosophy gives you the intellectual discipline to be open-minded, which is really important and helpful in the business world," he said.


His desire to learn is coupled to his mighty ambitions and his drive, highlighted as he delivers his "to-do" list in rapid sequence.


"We are not trying to copy any company's business models," Guo said. "We have not set any time frame to be the top company globally.


"We have our own business philosophy. We try to do everything right. We aim to adopt the right strategy.


"We react to fast-changing global markets faster than our counterparts, even if just by 0.01 second. We recruit the right talent. We provide the right service to customers.


"When we get everything right, we will see good results in revenues and profit, and we'll see the growth of the company."


Fosun went on overseas expansion and investment campaign from 2010. It now owns Club Méditerranée (Club Med), Folli Follie, Thomas Cook and Cirque du Soleil, among other things.


For the next 10 years, Guo sees the company's growth largely taking place in the mainland, as he banks on the world's biggest middle-class consumer market, brought about by growing wealth, a huge (albeit ageing) population, and a longer average life expectancy.


"That forms the company's future strategy on a mission to pursue industries related to health, happiness and wealth - the key demands of the country's middle-class families," he said.


Guo also wants Fosun to turn from an acquisition mode to operational mode, as it finds value in its numerous acquisitions. He wants to achieve this with his "C2M" (customer to maker) ecosystem.


"It is not good enough if we just develop a big online platform that has millions of customers and sells them low-cost products," he said. "We need to have manufacturers understand their needs and provide them personalised products."


For example, last year Fosun invested in Babytree, a mobile application for young mothers, which has attracted more than 200 million monthly unique active users since its establishment in 2007. On Babytree, parents can share tips and knowledge.


Offline, Fosun has invested in Sanyuan Foods, a dairy product company and also invested in US-based Chindex International, which runs high-end hospitals in Beijing, Shanghai and Guangzhou.


In June, Fosun formed a joint venture with Mattel, the world's largest toymaker, to tap into the country's early childhood education market.


An estimated 18.46 million babies were born in the mainland last year, the country's biggest baby boom since 2000, as the one-child policy officially ended in January. With at least 20 million babies added to the population every year, Fosun's ecosystem of baby-related businesses stands ready to benefit.


As China's average life expectancy will increase to more than 77 years by 2020, health-related industries are a big investment target for Fosun.


"We have invested a lot in the research and development of drugs to relieve patients' pain and cure serious diseases such as cancers or long-term illness like diabetes," Guo said.


Fosun United Health Insurance and Star Healthcare are now in operation. Together, these offshoots let customers of the insurance unit enjoy health management plans at lower cost, and also buy medication at below-market prices, said Chen Qiyu, executive director & co-president of Fosun Group and the chairman of Shanghai Fosun Pharmaceutical (Group).


Another major area of investment for Fosun is in the mainland's tourism and leisure industries. The group now has four Club Med resorts in the country, including one in Hainan.


Those resorts are just the beginning of a Club Med explosion in the country.


"We aim to have 20 Club Med resorts in China by 2020," said Xu Xiaoliang, an executive director and co-president of Fosun.


In 2013, Fosun announced it would develop the RMB 10 billion yuan Atlantis Sanya resort in Hainan, along with Kerzner International, which operates branded luxury resorts worldwide. The Atlantis resorts are ocean-themed and suited for families from the mid to top-end markets.


Fosun was also planning to bring the famed Cirque du Soleil of Canada (invested in 2015) to the mainland and establish more cultural parks such as the Yuyuan Garden, said Xu, adding that the company would look at other acquisitions around the world in the happiness sector, with the aim of bringing more shows to the mainland.


Meanwhile, Guo said he was mindful of applying big data, artificial intelligence and related technologies to his businesses.


Guo is 50 years old, and with Fosun's new China-market orientation, has little time for talk of succession. During the company's 20th anniversary celebrations five years ago, he said he would work another 20 years to help further develop the business.


"Now five years have passed, and I still have 15 years to go," he said.


With Fosun's growing China-market businesses, success is becoming a very personal thing for Guo Guangchang.


"It has taken us 25 years to move one kilometre from where we began," muses Guo Guangchang from Fosun International's new head office at the Bund Finance Center - a new financial quarter built near the waterfront of Shanghai's old town.


The development consists of two 180-metre tall landmark towers containing offices, a boutique hotel and retail spaces.


Guo spends a week in a month in Shanghai, where his office offers a panoramic view of the Huangpu River. It is important he does so, for when you are the chairman of a major Chinese listed company, there is a value in being visible.


Remark: This is an excerpt of an article published in the September edition of The Peak magazine, available by invitation and at selected bookstores.