At 10:00a.m. on March 28,

Fosun announced its 2017 results at Four Seasons Hotel in Hong Kong.

Ushering in the 26^th year, Fosun’s net profit attributable to the parent company was RMB 13.16 billion, a year-on-year increase of nearly 30%. The board of directors proposed a dividend of HK$ 0.35 per share, a year-on-year increase of nearly 70%. With total assets of more than RMB 530 billion, Fosun ranks higher than Sony, Adidas and Standard Chartered Bank on the Forbes, and earns more than Carrefour and Panasonic.

How did Fosun achieve this performance?

In the future, Fosun will focus more on biotechnology and AI,

and youlè will string together the industrial pearls in health, happiness and wealth sectors. How to realize the grand vision?

Wang Qunbin, CEO of Fosun International, said: “Our vision and strategy have further evolved in 2017. Fosun will create a C2M happiness ecosystem centering around the needs of “health, happiness and wealth” of family customers, and carry out in-depth global industrial operations. The number of family customers of Fosun’s C2M ecosystem has reached 35 million. By stringing together the products and services of health, happiness and wealth sectors through the youlè customer loyalty program, Fosun hopes to provide solutions of a happy life to billions of family customers around the world and become a creator of a better life. Fosun’s confidence to achieve this vision and goal is based on the six major changes in the world today. The first is the increasingly rapid technological progress.

The second is the growing globalization. The world is flat. I went to Africa recently and felt the surging popularity of smart phones in Africa.

The third is that consumers’ time is more and more valuable nowadays, and they want to buy products that are high-quality, more fashionable and more agile.

The fourth is the more flexible organizational capabilities of production, including the logistics supply capability. These flexible technologies can better meet the needs of consumers.

The fifth is that, in the process of meeting consumer demand, products, technologies and talents are more and more interconnected.

Finally, strategic partners and stakeholders inside and outside the company are becoming more and more agile in the organizational form on the whole. These six major changes have provided a good environment for Fosun to create a C2M ecosystem around family customers, achieve rapid product iterations and continuously innovate products featuring “health, happiness and wealth” in this era.

Wang Can, CFO of Fosun International, said: “As CFO of Fosun International, I focus on both the profitability and the structure of balance sheet. The market has always been closely watching our financial leverage. Today, you can see that our net gearing ratio has been continuously optimized from 86% at the end of 2013 to 49.7% at the end of 2017. At the same time, the net debt-to-EBITDA multiple has gradually decreased to 2.2, and the unused bank line of credit has reached RMB 161.7 billion. In the light of the business development of Fosun, and considering the security, stability and capital efficiency, we believe that maintaining a net gearing ratio of around 60% is relatively reasonable and healthy. We will seek a good balance between business development and leverage optimization to achieve sustained and steady growth.”

Chen Qiyu, Co-President of Fosun International, said: “In the past two decades, Fosun has accumulated a set of models in entering various industries, from the first one or two industries to multiple industries nowadays, and in the management and operation of different segments of an industry. Generally, it has gone through several stages: the first was the stage of industry cultivation and entry, and then the stage of operation and integration. After these two stages, it accumulated advantages in operational capabilities, talents as well as product innovation and R&D. After building up its own corporate financing capabilities, the company reached the industry-leading level, achieved large-scale profits, worked both on profitability and technological innovation, and developed a leading operation and management team in the industry. What we are more interested in now is how many excellent seeds are sowed and budding; in fact, the future of Fosun lies not only in the leading established companies, but also in the startups with huge potential. Now we have made a series of quality industrial layouts in technology, happiness, wealth and health, among which there will be Fosun’s unicorns and the core contributors of Fosun’s future C2M strategy.”

The highlight of the meeting was, of course, the speech of Guo Guangchang, Chairman of Fosun International.

Guo said: “Since 2017, everyone has become more and more clear that Fosun has a great mission and vision, and that is, Fosun has made the word different. What kind of difference is it? We hope to serve billions of families in the world and help them live a happier life. How to make this happen? Our technology leadership, global presence and provision of M-end products focusing on the happiness and wealth of families. In particular, we will connect all of our different M-end products through the C2M strategy.

Every day, Fosun makes progress step by step. Every step is very solid. This step-by-step approach includes two aspects. Firstly, all companies that focus on the family customer industry chain are very important. Each of our investment and asset input is good in itself and has been ultimately profitable through our industrial operations. We will never be strategic for strategy’s sake. Recently, you have seen our investment in Tsingtao Brewery. Tsingtao Brewery is very much aligned with the entire strategy of Fosun, and is also appropriate in terms of timing and value.

Secondly, in every step of our development from start-up to growth, Fosun has never relied on burning money. Every step we take is based on profitability and for the purpose of creating value for shareholders. Fosun has already had a lot of super species, which thrived in Fosun’s ecosystem and can now bring value to Fosun, and they are becoming increasingly interconnected. First of all, we will allow them to form a series of closed loops of services, such as the one for young families or for family travel. Afterwards, we will connect these closed loops one by one and incorporate them into the youlè customer loyalty program. Each step will produce more value like a chemical reaction. So I would say that everything Fosun has done and every step Fosun has taken is very solid. Instead of burning money or daydreaming, we go ahead slowly but steadily.

We have a grand vision, which is to make the world different because of us. We must truly start from love and bring happiness to more families. This is the path that Fosun will take in the next three to five years. At the same time, as a business organization, we must operate in a steady manner and also adapt to the changing world swiftly; we must work harder and act 0.01 seconds faster than our competitors; we must always do the right things, difficult things, and things that need a long period of time to be successful. My team and I will pursue this vision and do everything well.”

The above is how Fosun’s directors review the 2017 results from respective point of view. Next, let’s proceed to the Q&A session to see if your question will be answered.

Q: First of all, congratulations on Fosun’s investment in Tsingtao Brewery. So what will you do to improve Tsingtao’s performance and what about the post-investment management?

Xu Xiaoliang: Thank you. We have just closed the deal. As we know, several brands have stood out and are leading the beer industry after years of full competition. We’re very glad to become a major shareholder of Tsingtao, a century-old national brand with good reputation at home and abroad. We are optimistic about its performance in the upcoming market development, industry integration and product upgrade. Based on Fosun’s scenarios in the sports and happiness sector, we can empower Tsingtao and will support it in all respects. Fosun’s investment can be regarded as a combination of state-owned capital and private capital. Fosun has accumulated rich experience in mixed ownership economy over the past years, and we will definitely bring such experience to Tsingtao as the second largest shareholder.

Q: How will you invest in technology innovation, and what goals are you going to achieve?

Chen Qiyu: Investing in technology innovation is what Fosun has been doing and will continue to do. At present, this is the Group’s strategic priority. Since Fosun Pharma was listed in 1998, Fosun has positioned itself as a technology-based enterprise. Now we are exploring and learning new technologies and embedding them into Fosun’s industrial operation scenarios. Currently, we have the following approaches: Firstly, we seek to cooperate with world-class technology investment teams. We may participate in and invest in some investment funds and institutions, and become their strategic partners.

Secondly, we are increasing investment in our own operations. Our board of directors also requires each of our portfolio company to invest in technology according to its sales revenue ratio or profit ratio.

Thirdly, we have our own VC investment team.

Fourthly, we will launch some incubator programs. Incubator is different from VC, as VC is dominated by others and we only take a small stake in it, but as to incubator, we can dominate the development direction of technologies. We find the best technology talents across the world who will be given equity and grow in our integrated ecosystem. We will use all of these approaches. In a word, we are determined to use global cutting-edge technologies to support Fosun’s industrial evolution and the C2M strategy.

Q: Why is the customer loyalty program named youlè (有叻)? Is it possible that the rarely-used character “叻” may not be helpful to promote the brand? What considerations does the management have on this issue?

Wang Can: That’s an interesting question. We name it youlè for two reasons. First, we position youlè as a membership system dedicated to creating ultimate consumption experience for global families, and a platform where families can earn points, integrate benefits and customize consumption. Let’s take a look at the character “叻”, which is supposed to be favored by people from south China. There’s a “口” (mouth) and a “力” (power) in it, implying wonderful, capable and happy. This name is created by our own team. It’s easy to read and represents our best wishes.

Second, there is indeed a rarely-used character, but once you know how to pronounce it, you will never forget. In fact, what name it is or how it is pronounced matters, and doesn’t matter either. We think what really matters are what experience we can bring to our customers and what value we can create for them. Our team pays more attention to how youlè can create the ultimate consumption experience and the best benefits for Fosun’s family customers. The brand awareness is fundamentally built on our premium products and customer experience, so it’s far more than just a name. Thank you! I’d like to do a little promotion here, everyone please follow the official account of youlè and become our member!

Q: The Administrative Measures on Overseas Investment of Chinese Enterprises has been effective since March 1, which requires penetrating regulation on Chinese investment in overseas real estate. We know that Fosun is operating some real estate projects overseas, and Fosun completed a successful exit from an Australian property in 2017. How will Fosun deal with the new regulatory environment?

Gong Ping: In Fosun’s overall ecosystem, real estate serves as a cornerstone that provides underlying assets, and investment in overseas real estate is one of our fundamental operations as well. Fosun’s overseas real estate business is mainly supported by two pillars: First, we have massive insurance portfolio worldwide. Insurance premiums are used for real estate allocation in a reasonable manner, representing one of the fundamental features and basic requirements of insurance funds.

Second, based on the “investment, financing, management and exit” principle of Fosun’s asset management business, our overseas real estate business captures the opportunities of global development cycle to deploy those significantly undervalued projects, which is also one of our basic business activities. Therefore, Fosun’s investment in overseas real estate is based on full compliance and adequate filings. In this sense, we are subject to very limited policy impact. As the host just mentioned, we have withdrawn from an Australian property which was financed by our insurance funds. This deal generates quite impressive return and can be seen as a typical example.

Q: How about the operation of Fidelidade, Fosun’s insurance unit in Portugal?

Kang Lan: Fidelidade is the largest insurer in the local market of Portugal, with a market share of approximately 30%. Its performance is largely affected by the macro environment and its own operation and growth.

From the macro perspective, we are excited to see that the entire Portuguese economy is turning better. Last year, it recorded a year-on year GDP growth of 2.9%, higher than the European average, together with an unemployment rate below 10%. In addition, its national debt to GDP ratio was around 120%, lower than Italy’s 130%. The improved macro environment will greatly support our business growth.

Moreover, Fidelidade has mapped out several development priorities by itself. First of all, continue to optimize both the underwriting side and investment side. For the investment side, as Wang Can has said, the overall ROI of Fidelidade has reached 3.6%, much higher than the industry average, which is the result of our joint efforts. Meanwhile, the underwriting side is also being optimized. Second, it is important that the CEO of Fidelidade, also a Global Partner of Fosun, highly appreciate our strategy – to create a global ecosystem integrating all of our businesses to serve families across the world. Third, in Fosun’s strategy of tapping into the Portuguese-speaking region, Fidelidade itself serves as a role model demonstrating that expansion and internationalization can be achieved through M&As.

Another important point is about technology. They have set up an office where a dedicated team is responsible for new technology application and business improvement, and works closely with other investees of ours in Fintech. We believe that investment in technology will significantly boost its operation. As an important member of our insurance segment, Fidelidade will not only enhance collaboration with its fellow insurers, but also provide insurance services for companies from other segments, such as Club Med and Thomas Cook. This is a very good approach to deepen our ecosystem.