Media Coverage

Fosun Co-president Xu Xiaoliang uncovers what drives the company to grow and thrive

Source: HKUST Business School Biz Magazine 


Introduction: From Shanghai to beyond, how has Fosun evolved into today’s success from a small venture founded 26 years ago? How is Fosun’s philosophy of “combining China’s growth momentum with global resources” dynamically integrated with its mission to “create a happy life for 1 billion global families”? In its trans-regional cross-cultural management, how can Fosun make its globalization strategy and talent management system empower each other? A few days ago, Mr Xu Xiaoliang, Executive Director and Co-president of Fosun International, shared his insights in an interview with HKUST Business School Biz Magazine.


The following is the coverage


The results speak for themselves. Fosun International, a multinational company, with its roots in China, has a strong track record of making overseas acquisitions, accelerating the growth of subsidiaries and generating significant returns. What the world does not usually see is its philosophy to manage its rapid-growing business portfolio across five continents. We sat down with Mr Xu Xiaoliang, Executive Director and Co-president of Fosun International, to find out about its globalization strategy and talent management system behind the scenes.


A company that was formed in the early 1990s with RMB 38,000 (app. USD 6,100) in capital by Fudan University classmates is today one of the most diversified multinationals in China, with total assets that exceed RMB 530 billion (app. USD 85 billion). As a multinational company with its roots in China, the group’s business focuses on three ecosystems in health, happiness and wealth. Its business portfolio is closely related to family life which spans across pharmaceuticals & healthcare, tourism & culture, fashion & happiness, insurance & comprehensive financial services.


“GLocal” approach


Commenting on its globalization strategy, Xu Xiaoliang gives an example of how Fosun entered into the Japanese property market. Fosun acquired IDERA Capital Management Ltd in 2014, when it was previously not a major player in the property investment and management business.


Since then, backed by Fosun’s financial prowess, IDERA has become a top-tier player with 260 billion yen assets under management. IDERA’s property portfolio includes office buildings such as Harumi Island Triton Square Office Tower W and Y in the core area of Tokyo, as well as resort hotels such as Tomamu, a major vacation resort in Hokkaido, Hotel Karuizawa 1130, and Cosmo Square Hotel in Osaka.


Club Med Tomamu Hokkaido was opened on January 17, 2018. This is the second resort hotel introduced by Tomamu Hokkaido following Hoshino Tomamu resort.


The acquisition of IDERA is described by Xu as the first step of Fosun’s “GLocal” approach – find the right persons and the right team in the first place. Once a target is identified, Fosun will seek to take a majority stake in it, followed by empowering it with Fosun’s premium global resources within its ecosystem. Meanwhile, Fosun has developed a global partner system to share weal and woe with its stakeholders.


The senior management teams of the acquired business are given financial incentives and high performing executives will have the opportunities to join Fosun as global partners. Xu says IDERA, like many other acquisitions, benefits from Fosun’s flat decision-making mechanism.


“Once the overall direction is set, day-to-day operational decisions are made locally,” he says. “When it comes to important strategic decisions or investment decisions, they go to the board. We have a rule – decisions are made within 24 hours,” Xu says.


The board’s decision-making is supported by teams from headquarters that have regional specialties, such as in the Asia Pacific regions. These teams can be mobilized quickly to coordinate between the board and the local team or subsidiary.


“If you really want to be a global company, you have to blend into and work with local teams, and respect their own culture,” Xu believes. The best way to show respect is to engage local teams in operations. Meanwhile, there may also be cultural differences. In case of any different opinions, ONE Fosun is a great platform where its members can talk together and find a solution.


ONE Fosun is not only a platform for communication, but also a window to understand different cultures. In Xu’s view, everyone at Fosun, regardless of nationality, color and gender, shares the same name – Fosuner.


Localization played a part in its success, Xu says: “We always make sure there is a solid, experienced team in the country where we invest.”


Global roadmap


IDERA is one among many companies in Fosun’s global ecosystem. Fosun’s 26 years of growth started with outbound deals in Western Europe and North America, Xu says. The company then expanded its presence around the world at three levels, “a three-level strategy” as Xu described.


“Fosun expands its global presence at three levels: firstly, in core countries and cities, mainly in developed countries in Europe and the US; secondly, in key countries and cities, such as Japan, Korea and Singapore in Asia, west coast of the US, as well as northern and southern Europe; thirdly, in important countries and cities, including emerging markets like Brazil, Russia, India and Africa.”


“So far, we have almost done the first two,” said Xu. Fosun is now focusing on emerging countries and cities, especially India and Africa, with Southeast Asia and Indonesia on the agenda as well.


“The importance of the China market has been driven by its 1.3 billion population, as anything multiplied by 1.3 billion becomes unstoppable,” Xu says. Now China, India and Africa have a combined population of 4 billion, accounting for two-thirds of the world. There are opportunities in the Indian and African economies that can be readily tapped by Fosun.


Xu uses the example of property markets decades ago, when Hong Kong had a more mature business model for real estate than the mainland. “When you take a proven business model and apply it in China, there is an instant market for it. This is the type of opportunity we see in India and Africa,” he says. “They seem to be in a different era from us.”


Cross-cultural management


Fosun’s presence in diverse regions means that there is an emphasis on cross-cultural management. Xu highlights the importance of exploring a common ground in talent management, such as in performance evaluation. “A true achiever must have an entrepreneurial spirit and a good attitude. That we can all agree on,” he says. “With that common ground in place, we can integrate differences between cultures.”


In today’s technology driven economy, team structures and communications have been fundamentally changed, Xu notes. Earlier management concepts mandated one team leader could effectively manage a maximum of seven people, but today one person can have 60 to 70 people report to him or her simultaneously, he says. “This means one person can consolidate the wisdom of 60 to 70 people. This is all enabled by technology such as DingTalk [an enterprise messaging app] or video conference calls,” he says.


Apart from investing in businesses globally, Fosun is investing in the next generation through encouraging young entrepreneurs. For example, the Fosun Technopreneur Competition was held in association with HKUST last year. In early 2018, the startup accelerator program known as Protechting launched its third edition in Lisbon, Macau, Brussels, Frankfurt and London, focusing on startups developing technologies for the insurance, finance and healthcare sectors.


Xu believes the sky’s the limit for young people deploying new technologies to solve problems. He looks for simple qualities in potential Fosun team members – their drive, their capabilities and their attitude. When driven, young people show how much they really want to contribute, he explains.


“After all, an egg broken by an outside force is food. An egg broken by an inside force becomes life,” Xu says.


Promoting Entrepreneurship


Founded in 2012, Shanghai Fosun Foundation has been set up to inherit cultures, support education, encourage young people to start their own businesses, spread the concept of health, and engage in disaster relief and poverty relief. Since its establishment, the Foundation has launched different projects and initiatives to support the young generation to pursue their entrepreneurial dreams, including our HKUST students.


With the generous support from the Foundation, the first-ever HKUST MBA Technopreneur Competition was launched in December 2017. The competition aims to encourage MBA students to form teams of cross-disciplinary to employ their design thinking and business knowledge to solve business problems, and ultimately create more products and services that will wow global families.


Note: The article has been slightly edited.