Fosun International (00656) announced its 2021 annual results on March 23, 2022, the total revenue for the year was RMB161.29 billion, representing a year-on-year increase of 18%, and the net profit attributable to owners of the parent reached RMB10.09 billion, representing a year-on-year increase of 26%, in which the profit of industrial operations reached RMB10.59 billion, representing a year-on-year increase of 30%.

Despite the ongoing global COVID-19 outbreak that began in 2020, Fosun saw a 30% profit growth, which is relevant to the operation of various industrial segments.

According to the annual report, during the reporting period, the revenue of Fosun’s Health segment was RMB43.98 billion, representing a year-on-year increase of 27.1%; the revenue of the Wealth segment was RMB43.7 billion, representing a year-on-year increase of 2.8%; the net profit of the Wealth segment was RMB5.16 billion, representing a year-on-year increase of 13.5%; the total revenue of the Intelligent Manufacturing segment was RMB7.74 billion, representing a year-on-year increase of 56.3%, net profit attributable to owners of the parent was RMB3.58 billion, representing a year-on-year increase of 70.1%; the revenue of the Happiness segment was RMB66.9 billion, representing a year-on-year increase of 19.4%.

 
Established four major committees as top priority

“In 2022, due to the ongoing epidemic, we believe that it will be more challenging for many companies in the short term.” Xu Xiaoliang, Executive Director and Co-CEO of Fosun International, pointed out during an exclusive interview with Yicai, “Now is the time to put corporate resilience to the test, especially organizational resilience.”

In the past year, Fosun made another major change in its organizational structure, that is, the establishment of four committees: ecosystem, overseas operations, technology and innovation, and FES, which correspond to the four core competencies that Fosun has built in nearly 30 years, FC2M ecosystem, globalization 3.0, innovation-driven, and FES system.

Xu Xiaoliang pointed out that the four committees are a side extension of the leadership of Fosun Headquarters and they directly address the pain points that Fosun faces during its development. "Through various investment deployment, we have already individually managed the business lines of industrial group vertically, but in order to create an ecosystem focusing on family customers, we need to make corresponding adjustments in the organization and mechanism settings, and open up business and customers in various segments horizontally.”

For instance, the Overseas Operation Committee established at the end of last year upgraded the relevant overseas offices of Fosun to headquarters in each country to solve the needs of cooperation between different local industries. Each country’s headquarters has a local Fosun global partner to set specific goals. In the future, we will set up regional headquarters according to business development.

"The establishment of the four committees is a very important strategic upgrade for Fosun in 2021. As a global diversified enterprise with businesses across many sectors, the key to good management is the organizational support." Xu Xiaoliang said, in the past 30 years, Fosun has basically completed the global deployment and industrial deployment. In the next 30 years, it will leverage on the organizational system, R&D innovation and talents to ensure steady and sustainable development based on the accumulation of past development.

At present, Fosun has more than 140 global partners, more than 450 industry partners, more than 350 functional line partners and more than 30 innovative partners of different dimensions. Xu Xiaoliang revealed that in the future, Fosun hopes to build a partner array of more than 3,000 people, create a talent team with entrepreneurial spirit, and build a team of more than 100 top scientists in Fosun's ecosystem.

Investment performance and profit metrics are no longer the only target

It is worth noting that, in the past 30 years since its establishment, Fosun initially took global investment deployment as its main strategy. At that time, Fosun also proposed the concepts of “Combining China's growth momentum with global resources” and “Mutual connection between China and the world”, and formed the four major segments of Health, Wealth, Happiness, and Intelligent Manufacturing through global investment and mergers and acquisitions.

Today's Fosun no longer defines itself as an “investment enterprise”, but it places more emphasis on the deepening of industry operations.

“At present, the advantages of Internet platforms are gradually fading amid the increasing online customer acquisition costs. Traditional offline commercial operators tend to fall into the “sub-leasing” dilemma, compromising between rental cost and operating performance. To break out of this dilemma, we must consider the online, offline and the upstream industries together holistically, which is why Fosun built an FC2M ecosystem.” Guo Guangchang, Chairman of Fosun International, addressed in the letter to shareholders, “On the basis of this cognition, investment performance and profit indicators are no longer our only target and guidance. We have already onboarded our customers to a membership system across different businesses, and in the future, we aim to create an integrated membership system for our customers across different industries.”

During today's online results briefing, Gong Ping, Executive Director, Executive President and CFO of Fosun International also revealed that by actively exiting from “non-strategic, non-core” assets, Fosun's investment-exit ratio has been less than 1 for two consecutive years. For two consecutive years, it has exited from investments of more than RMB10 billion, and on the premise of balanced investment and exit at the Group level, subsidiaries mainly focus on controlling-stake strategic mergers and acquisitions.

For example, in 2021, Lanvin Group, a subsidiary of Fosun, acquired Italian luxury footwear brand, Sergio Rossi to further improve the strategic brand matrix; German private bank H&A acquired German private bank Bankhaus Lampe KG to further increase market scale; Fosun Pharma acquired a 73.01% stake in Antejin to further deepen the vaccine-related business.

“This year, overseas markets may recover much quicker. Our investment team is also exploring opportunities in overseas, such as emerging markets, such as assets that can empower existing industry operations in terms of products, supply chains or technology.” Xu Xiaoliang said, “Although the country still adheres to the previous epidemic prevention and control measures, the domestic market itself is large enough, all we need to do is to deploy. For example, the targets set by Fosun Tourism are not lower than last year, it will improve its operating capability to enhance efficiency, and seize China's ice and snow strategy to step up its deployment.”