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tencent news "periscope"

author: liu peng

editor｜shi ding

slimming down and strengthening the body, embracing the light and the heavy, balancing offense and defense - fosun, which focuses on the 12-word strategy, has submitted its report card for the first half of 2024.

during the reporting period,fosun internationaltotal revenue reached rmb 97.84 billion, industrial operating profit continued to grow, reaching rmb 3.47 billion, and net profit attributable to the parent company was rmb 720 million. among them, the four core subsidiaries:yuyuan group、fosun pharma, fosun portugal insurance and fosun tourism group, with total revenue reaching rmb 72.17 billion, maintaining year-on-year growth and accounting for 74% of the group’s total revenue.

as a global enterprise with nearly half of its revenue coming from overseas, how can a global organization integrate and build competitiveness? in the new economic cycle, has the core of the "happy" business changed? how should it be dealt with?

in response to these issues, on august 29, after the 2024 mid-year results conference, tencent news' "qianwang" had an exclusive interview with fosun international co-ceo xu xiaoliang.

in early 2020, xu xiaoliang was promoted to co-ceo of fosun international. fosun's "big happiness" business segment was hit hardest by the three-year pandemic, but thanks to its global layout, the cultural and tourism business has seen a significant recovery after the pandemic ended. in 2023 and the first half of 2024, it will continue to be an important source of profit for fosun international.

according to the financial report for the first half of 2024, the two core listed companies, yuyuan group and fosun tourism group, had revenues of 27.57 billion yuan and 10.65 billion yuan respectively, and net profits attributable to shareholders of 1.14 billion yuan and 320 million yuan respectively.

xu xiaoliang recalled to tencent news' "qianwang" that in the more than four years since he became co-ceo, the adversity brought about by the epidemic has put the business to the test and also allowed fosun's management to resonate more quickly in strategic evolution.

specifically, through the test of the epidemic, fosun's determination to adjust and upgrade its strategy has become even greater. xu xiaoliang described that the pressure from internal and external markets has accelerated the adjustments that fosun was already making, and the management has reached a full consensus on the focus of strategy, that is, what fosun should look like in the future. "the conclusion is that our customers remain unchanged, focusing on families and four core areas, but we must focus on industries where we have advantages." xu xiaoliang said that the consensus reached by the management's discussion was ultimately condensed into 12 words at the strategic level, "slimming down and strengthening the body, embracing light and heavy, and balancing offense and defense."

at the 2024 mid-year results conference, fosun international chairman guo guangchang summarized the future of fosun international as follows: fosun hopes to build a family consumption industry group focusing on core industries, with more predictable industry development and profit growth.

this also means that fosun, which previously expanded its territory through investment, will pay more attention to operational capabilities and innovation-driven development, and continue to release predictable growth and profits around the four major industrial sectors of health, happiness, wealth, and smart manufacturing, rather than one-time gains generated by investment.

taking fosun tourism group as an example, from the perspective of revenue and profit structure, 98% of its profits come from operating profits, which is different from the industry characteristics of heavy asset investment and long payback period in the cultural and tourism industry. xu xiaoliang commented that this data means that the tourism and culture industry has completely adjusted from a "heavy" structure to a "light" one.

"lightness" is the core capability that fosun strives to build. the heavy assets accumulated through investment over the past 30 years have given fosun enough time to build up its industrial operation capabilities.

today, this light-asset operation capability has also been recognized by local governments with real money.

xu xiaoliang cited the example of the taicang alps international resort phase ii project, which was officially signed in june this year, with a total investment of over rmb 5 billion. it was funded by the taicang municipal government platform and handed over to fosun tourism group for operation and management.

detailed explanation of the 12-word strategic focus

tencent news "periscope":lose weight and keep fit, balance the heavy and the light, and balance offense and defense - guided by these twelve words, how do you evaluate fosun international's performance in the first half of the year?

xu xiaoliang:the business expansion of each sector in the first half of the year was based on these twelve words. first of all, there are standards for "slimming down and strengthening the body". we have set standards for industries and assets.

we have four dimensions for the industry. the first is strategy, to see if it is a concentric circle, that is, whether your customers are families. the second is to have sufficient cash flow; the third is particularly important, to have operating profits. the fourth is to be able to pay dividends sustainably.

the industries that meet the four requirements are our class a industries; class b industries are those that cannot distribute dividends for the time being, but meet other requirements; class c industries have their own funds that can circulate, but currently have no profits and cannot "lay eggs", and need to clarify the timetable for "laying eggs". class d industries cannot even meet the requirements for cash flow, and need continuous blood transfusions from other industries at the headquarters. we are determined to withdraw from such industries. of course, there is another category, which has cash flow and makes money, but does not fit our strategy, such as nangang, and we are also determined to slim down.

the same goes for assets. for the first type, we give priority to selling assets that have a market, cash flow, and profits. for the second type, we will not hesitate to exit even if there may be a slight loss during disposal, such as less than 10%. for the third type, we will also exit even if there may be a loss of more than 10%, but we will discuss each case individually based on market conditions. for the fourth type, for assets that have no cash flow and are suffering from large losses, exit is not the priority, but we must first improve operations.

let's talk about "holding light and combining heavy". the underlying logic is that it is not suitable for private enterprises to hold "heavy" assets. fosun tourism group is a microcosm. tourism group has completely adjusted from a "heavy" structure to a "light" structure. in its current income structure, 98% already comes from operating profits. club med, a subsidiary of tourism group, has a leasing and management model of 85% of its resorts, and will continue to expand in a light asset model in the future.

the second phase of the taicang alps international resort is a good example. the first phase was invested by fosun, and the operating results were remarkable, which fully reflected the economic effect of the government in driving the surrounding areas. therefore, the second phase was invested by the government and handed over to us for management, using light to leverage heavy, and the structure is very different.

finally, let’s talk about “offense and defense balance”. where there is defense, there is offense. in terms of offense, we have invested 10 billion yuan in the greater yu garden area in shanghai, because connecting the bund and yu garden is of great value to the future development of shanghai, and there is huge room for operation. we are also optimistic about the value of hainan as a first-tier resort city. fosun has the advantages of atlantis and long-term mutual trust with the hainan government, so we started to invest in the super mediterranean project.

light asset operation solves the "mismatch" problem

tencent news "periscope":how did you work with the local government to advance the phase ii project of taicang alps international resort?

xu xiaoliang:essentially, it is about solving the problem of mismatch and matching. for private enterprises, the most difficult thing now is capital. the cost of borrowing money is very high and the debt duration is short. for state-owned enterprises, their difficulty is not capital, but the fact that the capital cannot find matching assets. the combination of the two forms a complementary advantage. the 5 billion investment in the taicang project is based on this logic.

at the same time, the signing of the second phase is also based on the success of the first phase. the alps international resort, which opened last year, can be said to be a "king bomb when it came out." the pre-sale gmv of the white ark hotel exceeded 80 million yuan, and it was hard to find a room on weekends and holidays; alps snow world received a total of 290,000 tourists in the first half of this year, with a turnover of 110 million yuan and a maximum daily passenger flow of 5,000 people. celebrities such as winter olympic champion xu mengtao and actor wu zun came to experience it, and it has become a popular check-in spot in the yangtze river delta region.

in addition, fosun has a deep accumulation in the ice and snow industry: club med, as the world's leading ice and snow resort operator, operates 24 mountain ice and snow resorts in various ski resorts around the world. in the first half of this year, the turnover of club med's global snow villages increased by 22% year-on-year. in china, there are three outdoor ski resorts and indoor ski resorts such as taicang; there are both professional skiing and snow entertainment for all ages, and the number of participants in skiing and snow entertainment is on par. in addition to fosun's long-term good reputation and successful cases, it finally led to the "two-way rush" between fosun and the taicang government.

how to “coordinate” the global ecosystem after going overseas

tencent news "periscope":fosun's overseas business is being operated in depth, looking for space and benefits from operations. there is still huge room for business synergy between fosun's overseas companies and business formats. how do you do it? can you give some examples?

xu xiaoliang:the top management of fosun has always emphasized a concept, operating profit. the same thing, whether done by industry or insurance, has different definitions of profit. operating profit is the profit generated through industrial operation, which is sustainable profit.

in terms of business synergy, fosun's portugal insurance (hereinafter referred to as "portuguese insurance") is a good example. first, it is in a leading position in portugal with the highest market share. but the portuguese market is not large, and it needs to match a larger global asset network. fosun has previously built overseas hives in japan, north america, europe and other places. these platforms used to manage third-party funds, and now they help portuguese insurance funds to quickly expand in related fields. this is a very big empowerment of fosun's ecosystem, and it is mutual empowerment. because these asset management companies are also very happy - i have more funds to manage, and i can better play my asset management capabilities.

second, picc has gone beyond the portuguese market and has entered many spanish-portuguese-speaking countries in latin america. its business has grown by leaps and bounds in recent years, and it has maintained a leading position in markets such as peru and bolivia. 40% of picc's revenue and profit in the first half of this year came from markets outside portugal. they found that there are "gap" operations in countries at different stages of development, that is, "what happens here will happen again there." after the economic development of latin american countries, the demand for insurance has become rigid. we made arrangements early, and the harvest in recent years has been very good. next, picc plans to expand to africa.

third, portugal invested in the largesthealthcare servicesthe group, the largest listed non-state-owned bank, has formed a very good business ecological synergy. local wealthy families bought insurance from picc, and picc has the best medical protection. originally, the three companies had no relationship, but because of the introduction of fosun's ecological strategy, picc has helped picc to make such an ecological layout in china, forming a very good ecological integration and mutual empowerment, expanding the profit space.

supported by global organizational mechanisms

tencent news "periscope":since fosun was founded 32 years ago, internationalization has always been one of the key words. in recent years, we have also seen a wave of chinese companies going overseas, which is backed by china's supply chain advantages accumulated over the years, as well as the advantages of refined operations and organizational capabilities. for fosun, the global layout has already begun. from the perspective of revenue structure, the proportion of overseas revenue in the overall revenue has also increased year by year. in the first half of the year, this figure was 47%. how is fosun's global operations and cross-cultural global organizations managed?

xu xiaoliang:the most difficult test of globalization is the construction and operation of organizational capabilities. fosun emphasized the concept of global partners relatively early on. among global partners, there is no distinction based on skin color, age, or gender. the essence of partnership is to share risks and achievements. fosun's ability to expand and operate overseas step by step has a lot to do with our overseas partners.

second, team echelon building is also very important. so for fosun’s overseas organizations and management of things, we only need to set directions and priorities and focus on budgets. but for people, we specifically manage team members. there should be echelons within the team, and there should be a dual structure of a and b corners.

third, globalization needs to be connected, and the core relies on mechanisms and culture. in terms of mechanisms, we advocate cooperation, which means that there is a battle, and everyone joins together to fight, rather than simply i help you today and you help me tomorrow. we have established a battle mechanism, which is also a very important point in the organization operation that fosun has grasped after the epidemic, because we have large and small battles, and we join forces to enter the battle. after the battle, we "reward according to merit". in this way, everyone's friendship has also developed from the original "classmates" to the current "comrades-in-arms".

you can’t escape the “volume” in the new cycle

tencent news "periscope":i saw a piece of data. this summer, the occupancy rate of fosun's sanya atlantis was 94%, but the average customer price fell year-on-year. the fluctuations in asset prices in the past two years have already had an impact on the balance sheets of individual families, which has further affected specific consumer behavior. how does fosun think about this at the strategic level? how will it respond?

xu xiaoliang:china does not lack consumption, but what it lacks is good products that truly match customers. if your content and services can make customers feel comfortable, consumers are willing to pay.

therefore, there is no way to avoid "rolling", it's just a matter of how to roll. fosun chose to "roll" upwards instead of "rolling" downwards, and to "roll" outwards instead of "rolling inwards" in a fixed place.

consumption has ups and downs, and is even more stratified; we do not choose to compete by downgrading, but by stratifying. for example, we will not touch the traditional hotel sector, but we will lead the development of resort hotels, just like atlantis sanya, which is a landmark resort hotel in hainan and even china.

"rolling up" instead of "rolling down" means taking the path of brand management, resolutely building the brand, focusing on the customers corresponding to the brand, and giving up nine. fosun's city resorts and ice and snow resorts are all based on this underlying logic, focusing on core customers to further strengthen brand power, product power, and ip operation capabilities.

"outward roll" instead of "inward roll" means going out, "if you don't go overseas, you'll be out." for example, for portugal insurance, leaving portugal means going overseas, and it is currently developing rapidly in the spanish and portuguese-speaking regions. don't just roll in the domestic market, there will be a very broad space in the world.