Fosun Investment Philosophy

Guo Guangchang: What investment philosophy does Fosun place a significant emphasis on?

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Many critics currently say that Chinese enterprises are making overseas investments very swiftly, and say that companies are focused only “buying this and buying that”.

 

However, if we think about it rationally, China has now become the world’s second largest economy, and our Chinese enterprises still have a very low ratio of overseas investments as compared to those investments made byglobal enterprises in China. Therefore, in order to realize the global integration of China’s economy and to forge better connections between the global economy and that of China, it is necessary for more Chinese enterprises to make overseas investments and for globalized enterprises from China to emerge. In such a pursuit, Fosun has indeed been making gradual advancements.

 

I would like to share with all of you a few aspects that Fosun has found to be most important during its endeavors:

 

First of all, it is necessary to have one’s own strategies. For Fosun, there are three vital points to our globalization strategy.

 

Fosun has indeed drawn on Warren Buffett’s expertise regarding its strategies underpinned by the twin drivers of “insurance + investment”. One of those drivers is insurance.

 

Fosun is now already in possession of six insurance companies around the world, while the other driver places emphasis on our investment capabilities. In addition to this, I feel that there must be some synergy between these two.

 

In other words, the assets under management must be matched up with investment capabilities.

Secondly, Fosun has been pursuing its investment model of “Combining China’s Growth Momentum with Global Resources”. If an investment has nothing to do with China, Fosun in principle will not pursue such opportunity,as we would rather invest in enterprises that are associated with China’sdevelopment and growth.

 

Upon making each of the investments, Fosun will assist with its development in China. The Chinese economy is growing at an annual rate of 6% to 7%, so what does that imply? That implies China’s gross economic volume represents around 12% of the world, while China’s contribution to global economic growth being around 25%. This is the essence of China’s growth momentum.

 

Thirdly, many people say that Fosun invests haphazardly without any apparent relationship between each of its investments. In fact, we refer to this approach as being “loose in form but rigid in spirit”.

 

The “spirit” here refers to the fact that Fosun needs to invest globally in those enterprises that are able to offer “wealth, health and happiness” solutions for family. Each of the enterprises in which Fosun has invested are those that are most worthy of investment and that have the strongest product strength in the three areas of “wealth, health and happiness”.

 

I feel that as an investment group, we must be sure to refrain from placing emphasis solely on money or the investments. Instead, it is essential for us to concern about the products that the investees can provide, as well as whether the people served by these products are satisfied. What we care about more is the products themselves and those who refine them, and under no circumstance would we merely look at the financial indicators.

These three points are vital for Fosun, and comprise the strategies of Fosun Group. But then the word “strategy” is somewhat troublesome, since what’s the best excuse for most people to give when they have made a poor investment? That was a “strategy”.

 

Therefore, I feel that although Fosun is indeed oriented by these three strategies, we do strongly emphasize the importance of disciplined investing.