Corporate Governance Asia’s CEOs Interview - Fosun’s Thirty Years of Establishment: Focusing on Core Businesses, Deepening Innovation and Globalization

Release time:2022-12-16 Content sourced from: Page View:

(16 December 2022) The most authoritative corporate governance magazine in the Asia Pacific region, Corporate Governance Asia, has recently conducted an interview with Chen Qiyu and Xu Xiaoliang, Executive Directors and Co-CEOs of Fosun International. The article was recently published with the headline of “Fosun’s Thirty Years of Establishment: Focusing on Core Businesses, Deepening Innovation and Globalization”.  The article pointed out the future development direction of Fosun: Fosun will reinforce its positioning as a global consumer group, focus on its core businesses centering around the consumption needs of global families, and strengthen its two core growth engines of globalization and innovation. Standing at the new starting point of 30 years of establishment, Fosun will continue to uphold its original aspiration of “Contribution to Society” to actively  promote the sustainable development of environmental, social, corporate governance (ESG) and continue to forge ahead to fulfil Fosun’s mission of “Creating Happier Lives for Families Worldwide”. The full text of the article is as follows:

Fosun’s Thirty Years of Establishment: Focusing on Core Businesses, Deepening Innovation and Globalization

The year of 2022 marks the 30th anniversary of Fosun’s establishment. Over the years, Fosun has always upheld its original aspiration of “Self-improvement, Teamwork, Performance, and Contribution to Society” and has been steadfastly fulfilling its mission of creating happier lives for families worldwide. Fosun has now developed into a global innovation-driven consumer group with a global presence in the Health, Happiness, Wealth, and Intelligent Manufacturing segments.

Despite the challenges posed by the COVID-19 pandemic, Fosun leveraged its globalization and technology and innovation capabilities, ecosystem, and talents to achieve sustainable growth. 

Fostering Resilience and Growth Momentum through Globalization

After three decades of development, Fosun has grown into one of the few domestic companies that is equipped with global operation and investment capabilities, and has accumulated profound technology and innovation capabilities. 

Xu Xiaoliang, Executive Director and Co-CEO of Fosun International, said, “Fosun is a practitioner and beneficiary of globalization. Firstly, globalization has allowed Fosun to introduce global products to domestic families and introduce domestic products to global consumers. Secondly, globalization has allowed Fosun to initiate the global deployment of anti-epidemic materials at the beginning of the pandemic, thereby providing strong support for China and overseas to fight against the pandemic. Thirdly, globalization enables Fosun to develop steadily in today’s world of uncertainty. ”
Fosun has now entered Globalization 3.0 and formed the core competency of “global organization + local operations”. Fosun’s globalization aims to take the world as a whole, through deepening its global business presence and building a diverse talent pool, use the most suitable resources to deeply cultivate key areas, and achieve mutual empowerment and rapid growth within the ecosystem. 

“Under the coordination of the Group’s Overseas Operation Committee and Overseas Sharing Centers, Fosun consolidates local operations, strengthens global collaboration, and leverages global resources and local teams to better serve customers and increase customer satisfaction. For example, overseas brands such as Club Med, AHAVA, and LANVIN have set up management teams in China for local operations to provide targeted products and services for domestic customers. ” Xu Xiaoliang added.

Currently, Fosun has established business presence in over 30 countries and regions and its globalization and ecosystem synergy capabilities are playing an important role in fostering resilience and growth momentum. In the first half of 2022, the Group’s overseas revenue reached RMB38.76 billion, representing a year-on-year increase of 30.7% and accounting for 46.8% of the total revenue.

Creating Multiplier Effect in its Ecosystem

FC2M (Fosun/Family Client-to-Maker) ecosystem is one of Fosun’s core competencies. The FC2M ecosystem can completely integrate all industries, scenarios and platforms. With the objectives of solving customer needs and achieving customer satisfaction, the FC2M ecosystem continuously provides products and services that satisfy customers, thereby promoting the quality and efficiency enhancement of the Group’s industry operations.

In this new era, all human behaviors are recorded in the form of data to form a data source, thereby generating new consumer demands. Xu Xiaoliang said, “No single enterprise can meet all consumer demands. Enterprises must build an ecosystem together to achieve win-win outcomes.” Focusing on customer needs, Fosun has always adhered to the twin-driver strategy of “Profound Industry Operations + Industrial Investment”, and introduced high-quality enterprises and products that meet Fosun’s development needs to the Fosun ecosystem. Through the FC2M ecosystem, Fosun can efficiently link resources and all parties in its ecosystem to create synergy, thereby realizing the multiplier effect. 

Outstanding Technology Innovation is Fosun’s Another Key to Success

Fosun’s excellent innovation capability enables its businesses to develop sustainably, especially in the field of biopharmaceuticals. For instance, Shanghai Henlius’ self-developed PD-1 inhibitor, Han Si Zhuang (serplulimab injection), was conditionally approved by the National Medical Products Administration (NMPA) for the treatment of advanced solid tumors in adult patients. Fosun Pharma entered into an agreement with Genuine Biotech in relation to the strategic cooperation on the joint development and exclusive commercialization of Azvudine, the first approved small molecular oral medication for COVID-19 independently developed by China, and entered into a strategic cooperation agreement with Sinopharm to accelerate the national channel network coverage. Since July this year, Azvudine, China’s first oral medication for COVID-19 jointly developed by Fosun Pharma and Genuine Biotech, has been widely used in the prevention and control of the epidemic in various places. Recently, Fosun Pharma approached a number of online medical platforms for cooperation to improve the accessibility of Azvudine through multiple channels, so as to further meet the needs of home treatment of patients infected with COVID-19. 

Chen Qiyu, Executive Director and Co-CEO of Fosun International, believes that, “With the rapid development of science and technology, we should explore ways to make good use of new technologies to promote innovative development. Fosun has set up a ‘Technological Innovation Committee’ to promote the development of innovation and technology and attract research talents with innovative thinking and entrepreneurial spirit through innovation funds. The Group has adopted this model to promote the development of technology and innovation in various fields such as biopharmaceuticals, automobiles, and intelligent travel, and has achieved very good results. ”

Talents, One of the Greatest Assets of Fosun

Fosun, which started as a small company in Shanghai, has now become a global enterprise as it believes that talents are the soul of an organization and one of its greatest assets. Fosun’s global partners remain fundamental to its resilience. Fosun continues to optimize its global partner system and expand its team to form a multi-level and multi-dimensional partner system. 

At present, Fosun has more than 140 global partners, more than 450 industry partners, more than 350 functional line partners and more than 60 innovation partners. Xu Xiaoliang said, “Fosun’s global partners are elite talents, leaders in their respective fields, globalization pioneers and guardians of Fosun’s corporate values. However, they must not only be excellent ‘players’ on the ground, they must also be excellent ‘coaches’ to set goals as leaders, and excellent ‘directors’ to guide holistically from the Group’s perspective so as to maximize their role as global partners, helping Fosun to navigate through uncertain times and build a better future.” 

Fosun Strives to Continuously Improve ESG Performance

While developing its business, Fosun spares no effort in making contributions to ESG. In August 2014, Fosun joined the United Nations Global Compact (UNGC) and is devoted to the global commitment to sustainable development, promoting the achievement of the United Nations (UN) Sustainable Development Goals (SDGs) through participating in related activities globally and locally. As a participant in the UNGC, Fosun relentlessly promotes the SDGs to closely integrate with Fosun’s ESG strategies and actively engages its member companies in the implementation of ESG strategies.

In recent years, Fosun has received strong external recognition for its excellence in ESG. Its MSCI ESG rating was AA and it was selected as a constituent of the MSCI CHINA ESG LEADERS 10-40 Index. Fosun International’s Hang Seng Sustainability rating was A and it has been selected as a constituent stock of Hang Seng ESG 50 Index (top 50 large-to-mid cap) for two consecutive years and it has been included as a constituent stock of the Hang Seng Corporate Sustainability Benchmark (HSSUSB) Index for three consecutive years. Besides, its FTSE Russell ESG rating improved significantly, outperforming the industry average, and it has been included in the FTSE4Good Index Series for the first time this year. Its S&P CSA ESG score ranked ahead of 90% of its global peers and significantly ahead of the industry average. 

Chen Qiyu said, “In order to establish a top-down and long-term mechanism for ESG improvement and continuously promote Fosun’s sustainable development, Fosun has included ESG management performance as an evaluation factor in the Executive Directors’ performance assessment and remuneration assessment.” In an effort to optimize ESG management, Fosun has set performance requirements for Executive Directors in optimizing ESG work, improving the quality of ESG reports and promoting ESG ratings.

Moreover, Fosun has established a standardized ESG governance structure and management system. In March 2019, Fosun set up an ESG Committee under the Board of Directors to assist the Board in guiding and overseeing the Group’s ESG development and implementation. 

With a top-down and long-term mechanism for ESG improvement, “Fosun aims to further improve the ESG performance of the Group and its member companies, benchmark its performance against top rated ESG companies in various industries, and maintain timely and transparent communication with rating agencies,” Chen Qiyu said.

Developing Business for Good 

As a global enterprise, Fosun pays increasing attention to and successively implements sustainable development while developing its business. 

In terms of environmental protection, Fosun strives “to achieve carbon emissions peak by 2028 and carbon neutrality by 2050” and has formulated effective strategies for climate change mitigation and adaptation to align with 1.5°C temperature control target set in the Paris Agreement.

Fosun has launched the Rural Doctors Program at end-2017,
empowering rural doctors to provide better healthcare services for villagers
In terms of social responsibility, Fosun actively gives back to the society by supporting public welfare activities such as the combat against the pandemic, assisting in the fight against malaria in Africa, Rural Doctors program, fostering education, culture promotion, and entrepreneurial support. 

Among them, the Rural Doctors Program, which has been running for many years, empowers rural doctors who serve grassroot villagers, enhances their professional skills, and improves their working environment to provide better healthcare services for villagers. Since the launch at the end of 2017, the Rural Doctors Program has supported 23,956 rural doctors and benefited 3 million grassroot families, covering 73 counties in 16 provinces, municipalities, and autonomous regions.

Since the outbreak of the COVID-19 pandemic in early 2020, Fosun has urgently deployed protective materials to assist many countries and regions affected by the pandemic amid escalating overseas outbreaks. In addition, Fosun partnered with BioNTech, a German biotechnology company, to jointly develop the mRNA COVID-19 vaccine (COMIRNATY®), providing a strong support for defeating the pandemic.

Fosun continues to supply COMIRNATY® (mRNA COVID-19 vaccine) to Hong Kong SAR, Macau SAR and 
the Taiwan region, building an immune barrier for the region

As of June 2022, a total of more than 30 million doses of COMIRNATY® have been sold in Hong Kong SAR, Macao SAR and Taiwan region. During the year, the paediatric formulation of the mRNA COVID-19 vaccine (COMIRNATY®) for children aged 5 to 11 and the toddler formulation of the mRNA COVID-19 vaccine (COMIRNATY®) for young children aged 6 months to 4 years were approved for vaccination in Hong Kong SAR, Macao SAR and Taiwan region. In November 2022, Hong Kong and Macao introduced the COMIRNATY® bivalent vaccine, which can protect against the Omicron variant, and vaccination became available on 1 December.

In response to the Macao SAR government’s epidemic prevention and control work and measures to expedite economic and tourism recovery, COMIRNATY® COVID-19 mRNA vaccine indicated for active immunization of people aged 12 or above, was approved by the Pharmaceutical Administration Bureau of Macao SAR as a regular imported vaccine in May 2022. The University Hospital of Macao announced that the self-paid COVID-19 vaccination service of the COMIRNATY® COVID-19 mRNA vaccine has been officially rolled out as of 1 November 2022. It is hoped that the relevant measure will facilitate more tourists in need to receive the COVID-19 mRNA vaccine, thereby strengthening the overall immunity of the society and boosting local consumption with inbound tourism.

Fosun actively assists in the fight against malaria in Africa to build a malaria-free world

Fosun has participated in the joint construction of a “malaria-free world” for more than 15 years. As an official member of the Roll Back Malaria, a global cooperative initiative advocated by the World Health Organization (WHO), Fosun Pharma is committed to raising awareness of malaria prevention among African people, reducing the morbidity and ultimately achieving the target of a “malaria-free world”.

As the first Chinese brand pharmaceutical product well recognized in Africa, Artesun® (artesunate for injection), self-developed and manufactured by Fosun Pharma, has been used to treat over 48 million severe malaria patients worldwide by the end of 2021, which turned to be a symbol of China’s self-developed innovative medicines to the world.

Fosun Pharma has been constantly innovating, with an aim to provide more innovative anti-malaria solutions, assisting in “Building A Malaria-free World”. At present, Fosun Pharma’s SPAQ-CO®Disp, which indicated for the prevention of malaria in children was pre-qualified by WHO, and around 175 million children in high malaria transmission African countries had benefited from the “Seasonal Malaria Chemoprevention (SMC) Program”, for which SPAQ-CO®Disp is used as the core drug. SMC with SPAQ-CO®Disp effectively reduced the morbidity of malaria in children under five years old in Africa.

Recently, the market is concerned about Fosun’s exit plan, yet the market has viewed Fosun’s recent divestment action favorably. A number of investment banks including Morgan Stanley, Citi, and Goldman Sachs, which all reiterated their “buy” ratings on the company. It is expected that Fosun’s recent divestment action is to focus on its core business centering the needs of family consumption, and redeploy its resources for better use in innovation and globalization development.

“Looking ahead, Fosun will adhere to its strategic leadership and leverage the advantages brought by its long-term accumulation of core competencies to promote faster and better development of the Group, and join hands with customers, partners, investors, and all parties in the society to create a happy ecosystem and share happiness and the value of Fosun, endeavoring to extend human's life expectancy to 121 years. ” Chen Qiyu concluded.

(Source of the article: Corporate Governance Asia)