"The Chinese Warren Buffett" is making a move again

Author | Cao Anxun

Editor | Zhou Zhiyu

Although rarely seen in recent years, Guo Guangchang, the former richest man in Shanghai and the controlling shareholder of Fosun Group (hereinafter referred to as Fosun), has been quietly strategizing behind the scenes, silently advancing the company's transformation.

On July 12, Fosun reached a strategic cooperation with Chongqing City Construction Investment Group, and the two parties will deeply cooperate in various fields such as culture, tourism, and health.

Behind this is Fosun's strategic focus in recent years on pharmaceuticals, culture and tourism, asset management, and technological innovation, promoting "lightening the load by reducing weight," selling off heavy assets, and strengthening the operational capabilities of light assets.

In the past month, Fosun's subsidiary, Yuyuan Group, has successively sold off the ski resort in Tomamu, Hokkaido, and the ownership of Building 1 and some parking spaces in Phase 2 of Shanghai Starlight Yoho Plaza.

In fact, since 2022, major companies under Fosun have intensively reduced their holdings of assets dozens of times, involving not only shares of domestic companies such as Hainan Mining, Zhaojin Mining, Tsingtao Brewery, Zhongshan Public Utilities, and Taikang Insurance, but also overseas financial assets such as the German private bank HAL and Belgian Fugger Insurance.

According to incomplete statistics from Wall Street News, in the past two years, there have been 8 transactions involving the sale of financial assets by Fosun, with funds of approximately 20 billion yuan being retrieved.

Fosun's real estate platform, Fosun Group, has been shrinking its real estate footprint since delisting from the Hong Kong stock market in 2011.

In the first half of the year, Fosun's total sales revenue was only 3.92 billion yuan, ranking 97th on the CRIC sales list, no longer the glorious appearance of being in the top ten in national sales.

At the Fosun International 2023 annual performance meeting, Guo Guangchang stated that expansion is no longer the main development direction, and more focus will be placed on development, with stable profit growth as the core goal of future operations. The company will continue to focus on core industries, pay more attention to the operational capabilities of light assets, and firmly promote "streamlining and strengthening" to prepare for the next round of growth.

"Fosun will also sell off some heavy assets in the future, and will rely on 'skills' to make money, not on money to make money. This is unwavering," Guo Guangchang said.

His efforts have paid off. Influenced by the accelerated "streamlining" and fund retrieval, the financial report shows that in 2023, Fosun International achieved total revenue of 198.2 billion yuan, an 8.6% year-on-year increase; net profit attributable to shareholders turned losses into gains, reaching 1.38 billion yuan.

As a large private group in China with legendary colors, Fosun's huge transformation in just a few years has sparked exploration and admiration in the market.

Fosun's legend began in the late 1990s when Guo Guangchang borrowed 38,000 yuan as initial capital, and together with several Fudan University alumni, founded a consulting company.

With his sharp business acumen and flexible capital skills, Guo Guangchang successively seized opportunities in industries such as real estate, steel, and pharmaceuticals.

He also rose with the tide, building a diversified business empire with total assets of 300 billion yuan in just twenty years, with Fosun International already entering the Forbes Global 500 list as early as 2016, hailed as a pioneer for Chinese companies going global.

At its peak, Guo Guangchang controlled about forty listed companies through Fosun, involving real estate, mining, medical care, steel, finance, culture, media, and other fields, once being the private enterprise in China with the most listed companies Guo Guangchang, who also transformed from a humble background to a prominent figure, has embarked on a grand life as a top business tycoon in China. He is known as the "Chinese Buffett" in the industry and has close relationships with big shots like Jack Ma and Wang Jianlin.

As the controlling shareholder, Guo Guangchang's wealth has been rapidly growing.

In 2007, when Fosun International went public, Guo Guangchang's net worth soared to 36 billion yuan, ranking 10th on the Hurun Mainland Rich List and becoming the richest man in Shanghai for the first time. His wealth continued to grow to 64 billion yuan by 2020.

However, things change. Due to changes in the business landscape, Guo Guangchang's wealth gradually shrank to 31.5 billion yuan, losing the position of the richest man in Shanghai. According to Qichacha, the number of listed companies under Fosun Holdings has also decreased to 11.

Some investors pointed out that Fosun has learned from the development model of large Western conglomerates like Berkshire Hathaway, seizing the tide of era development, and pursuing a path of integrating production and finance to expand continuously. However, under the dual test of the pandemic and economic cycles, Fosun also needs to adjust its business structure to retain its foundation during a downturn or at the bottom of the cycle.

At a mid-year report meeting last year, Guo Guangchang sighed, stating that this was the biggest cycle Fosun has experienced in its 31 years of entrepreneurship, with challenges coming one after another. The recovery of Fosun's confidence requires time and patience.

For Guo Guangchang, although his wealth has shrunk, choosing to "slim down and stay healthy" is not a bad thing.

After years of expansion, the leverage level of the Fosun Group is not low. Under pressure from the macro economy and changing industry cycles, rather than facing the risk of the company's downfall like Xu Jiayin and Lin Tengjiao, it is better to make a bold decision, streamline operations, and navigate the cycles more effectively.

At least, as long as one is alive, there is still a chance for a comeback. Being an entrepreneur who earns long-term profits through operational skills may not be a bad strategy in the end.

However, as a multinational enterprise with diverse and flexible financing channels spanning multiple industries, Fosun's transformation journey cannot be replicated by ordinary private enterprises. It can only provide some enlightenment to them to varying degrees