Guo Guangchang & Fosun International: A biography of one of China's greatest entrepreneurs

By Guo Hongwen

China's economic rise and influence has been one of the most significant developments in the global economy of recent times. A driving force behind this expansion has been the private entrepreneurs and companies of China, some of which have literally redefined the economic and business landscape, both inside and outside of China.

Born in a small fishing village in 1967 to a poor family, Guo Guangchang's break came when the Chinese government began to encourage business enterprise. He and four university friends set up their own company in 1992 to advise foreign companies that were entering into China. Fosun International eventually became the largest private enterprise in China by expanding into insurance, pharmaceuticals, property, mining, retail and finance. Today, Guo is the Chairman of Fosun International and this book provides a unique, inside examination of Guo and his company's remarkable global expansion.

• Language: English
• Publisher: LID Publishing
• Release date: Nov 4, 2021
• ISBN: 9781911671770

Book preview

INTRODUCTION

Guo Guangchang and his Fosun Group are highly regarded by almost everyone in Chinese business circles, as well as many in the global business world. Guo has become an adventurous legend, an enterprising and classic role model, a leading giant, and a guiding star in the business journey.

Guo was born into a poor family in the rural area of Dongyang city, Zhejiang Province. After graduating from Dongyang High School in 1985, he entered the Department of Philosophy at Fudan University. Upon graduation from Fudan in 1989, he remained there to teach thanks to his remarkable academic achievements. In 1992, he collaborated with Liang Xuanjing, his Fudan colleague and another Fudan alumnus, and resolutely quit his teaching job. With a loan of ¥38,000, he embarked on a new journey of entrepreneurship and never wavered.

Guo and Liang established Fosun Group, starting with market research and consultation before gradually entering the businesses of real estate, retail, steel and finance, and eventually becoming a large international private enterprise. In 2018, Fosun reached ¥109.4 billion in total revenue with year-on-year growth of 24.4%, and ¥638.88 billion in total assets with year-on-year growth of 20%. In 2018, Guo’s personal net worth reached ¥61.7 billion, and Fosun’s direct or indirect company holdings amounted to over 1,000.

Many view Guo’s life and business experience as amazingly similar to Jack Ma’s. Both of them are from Zhejiang Province, except that Guo is from Jinhua and Ma from Hangzhou. They both became outstanding models of Zhejiang entrepreneurs, as well as Chinese entrepreneurs. They both started teaching after their graduation, except Guo both graduated from and taught at Fudan University, while Ma graduated from Hangzhou Teachers College and taught at Hangzhou Electronic Industrial College. They both left their teaching jobs, started their business careers and saw huge success. Guo founded Fosun Group, which is renowned today, while Ma established the now celebrated Alibaba.

Looking at Guo’s personal profile, we can see that he made several major decisions at critical moments and turning points in his life.

The first major decision was made when in 1982, after graduation from middle school, Guo resolutely gave up going to a teachers’ school and instead turned to the senior high school. This decision became the first turning point in his life. Guo was born into a poor farming family. Like most parents from rural areas, his parents hoped that their son could change his farmer’s status as soon as possible through his own effort. Hence, upon his graduation from middle school, his parents urged him to apply for the teachers’ school so that he could be a teacher with a secure salary from the state. He conformed to his parents’ expectations and gained admittance to the teachers’ school with flying colours. However, when he received the admission notice, he felt as if he had received a life sentence. He did not feel that he should just be a village teacher all his life in Dongyang; he felt that he should realize his dream of going to college. Then he decided to give up the teachers’ school and go to the senior high school. He finally finished his three years’ senior high school education and successfully entered the Department of Philosophy, Fudan University. Undoubtedly, his university life laid a solid intellectual and ideological foundation for his future success and glory.

The second major decision was made when, influenced by a talk Deng Xiaoping gave on his Southern Tour in 1992, Guo gave up going overseas for further study, resolutely quit his job and ventured into the business sector. After entering Fudan University, moving from Dongyang to Shanghai, Guo discovered a vast world incomparable to his home. During his university days, he spent more time and energy gaining social experiences. Meanwhile, he did two things that surprised his classmates. In the summer of 1987, he went alone by bike on an investigation tour along the canal all the way to Beijing. In the summer of 1988, he organized a bike tour for a group of over ten students along the coast all the way from Shanghai to Hainan. These two events somewhat helped him to understand society and himself, which also led to his employment by the Fudan University Youth League Committee upon graduation. After working at the university, with a youthful heart, he was eager to see a wider world. Thus, he planned to study overseas, for which he actively prepared, passing the Test of English as a Foreign Language (TOEFL) and Graduate Record Examination (GRE), and borrowing money to cover the expense. However, Deng Xiaoping’s Southern Tour talk in 1992 changed Guo. He believed that after Deng’s talk, Shanghai would surely become a hot destination for investment and entrepreneurship. With huge business potential in one’s homeland, why did one have to go abroad? Thus, Guo not only gave up going abroad but also decided to resign from his university post so that he could try business ventures and open up his ideal new world in Shanghai. In exactly the same year, 25-year-old Guo started his business venture in Shanghai and made his first fortune.

The third major decision was made in 1995 when Guo officially changed his company’s name from Guangxin to Fosun. By then he had abandoned the family personnel management mode of traditional private enterprises and implemented the modern personnel strategy of recruiting talents, in partnership with his Fudan alumni. In fact, during the early stage of his business venture, Guo had already become fully aware that the core of the competition between enterprises ultimately lay in the competition between talents. He said: What the young people need most is not individual heroism but collective heroism. In terms of our individual abilities, each of us may only be graded 70 to 80 points, but we must add to and multiply our abilities. In Fosun, our utmost wish is to cultivate groups of young entrepreneurs with common goals and young, vibrant, innovative teams. In the course of introducing and cultivating talents, Guo continued the personnel concept of attracting talents with promotion, gathering talents with enterprise, cultivating talents with work and testing talents with accomplishment. He insisted on each individual having the spirit of enterprise teamwork and each Fosun staff member taking Fosun as their second home and being a member of a big family. The operation of the company was like a ball game. If any player failed in their role, the game would not be won, so only when each one tried their best could the company develop well.

It took Guo and Fosun only three years to reach more than ¥100 million in assets (in 1995) from their initial ¥38,000 of assets in 1992.

In August 1998, Fosun Pharma (under Fosun Group) was listed on the Shanghai Stock Exchange. It raised funds of ¥350 million, succeeded in connecting the industry with the capital market, and opened up further business expansion through networks of capital.

On 28 November 2001, Fosun Investment, newly established less than a month ago, signed a holding transfer trust agreement with Shanghai Yuyuan Tourist Mart (SYTM). It became the largest shareholder of SYTM. SYTM was one of the earliest A-share listed companies, incorporating national gold and jewellery retail brands such as Laomiao Gold Store and First Asia Jewelry. In 2002, SYTM, then already an enterprise under Fosun Group, reached a net business revenue of ¥500 million, becoming extremely lucrative for Fosun.

In 2003, SYTM, Fosun Investment and two other companies established the joint venture of Tebon Securities, suggesting that Fosun had obtained the controlling interest of Tebon Securities. Afterwards, SYTM and Fosun Industrial Investment once again collaborated and invested in Zhaojin Mining Industry Co Ltd, together with Shandong Zhaojin Group. Early in 2006, Zhaojin Mining Industry was listed on the main board of the Hong Kong Stock Exchange. In the same year, the four enterprises of Fosun Group, Nanjing Iron and Steel Group, Fosun Industrial Investment and Shanghai Guangxin Technology Development Co Ltd established the joint venture of Nanjing Iron and Steel United Co Ltd (NISU). Then NISU acquired Nanjing Iron & Steel Co Ltd, the largest steel enterprise in Jiangsu Province, taking 60% of its stock shares and indirectly almost controlling the shares of Nanjing Iron & Steel Co Ltd.

In July 2007, Fosun International was listed on the main board of Hong Kong Stock Exchange with 58% of its shares held by Guo. It had financing of up to HK$12.8 billion and turned out to be the third largest initial public offering (IPO) at the exchange in that year, as well as the sixth largest IPO in the history of the exchange. Soon afterwards, Fosun declared that it would become the world’s first-class investment group. Thus, it started its steady process toward globalization.

In July 2010, Fosun invested €25 million in Club Med, a long-standing French tourist resort business operator, taking up 7.1% of its shares. In March 2015, Fosun offered €958 million and completed the full acquisition of Club Med, holding 98% of its shares. In September 2012, Fosun established the joint venture Pramerica Fosun with Prudential Financial Inc.

In December 2013, Fosun acquired One Chase Manhattan Plaza at the price of US$725 million. This building was one of the two landmarks of the Rockefeller family. The acquisition of the building was aimed at expanding Fosun’s business in the world’s major financial centres. In the same month, Fosun, together with the international financial company under the World Bank Group, established the joint venture Peak Reinsurance Company Ltd in Hong Kong.

In January 2014, Fosun offered €1.38 billion for 80% of the stock rights of the Portuguese insurance company Fidelidade, beating a strong rival (Apollo Global Management) at the competitive tender stage. By early 2015, Fosun’s holding of Fidelidade’s shares had increased to 85%. In the same year, through Fidelidade, Fosun succeeded in acquiring Luz Saúde, the largest private medical group in Portugal.

In June 2014, Fosun acquired 3.9% of the state shares of REN, a Portuguese grid company, at a price of €56.8 million. Then, in August 2014, at a price of US$464 million, Fosun acquired the casualty insurance and property insurance businesses of Ironshore, an American specialnature insurance enterprise, amounting to 20% of Ironshore’s stock shares. In October 2014, after two consecutively increasing acquisition offers, Fosun finally defeated UnitedHealth Group, a global top-500 enterprise, paying €460 million to acquire 96.07% of the stock rights of ESS, a Portuguese medical and health services provider.

In November 2014, Transcendent Resources, a wholly owned subsidiary of Fosun, offered $439 million to acquire 92.6% of the stock shares of the Australian business Roc Oil Co Ltd, becoming the largest shareholder of the company. In July 2015, Fosun declared its acquisition of Meadowbrook, an American labour insurance company. In October 2017, Fosun Pharma offered US$1.91 billion and acquired Gland Pharma, an Indian generic pharmaceutical company.

In February 2018, Fosun signed a strategic and cooperative agreement with Arix Bioscience, a British biomedical investment company. In the same month, in Paris, Fosun declared that it had acquired Lanvin, the oldest French fashion brand of haute couture and had become its controlling shareholder while its present shareholders only retained a small number of share rights.

Guo Guangchang led Fosun with the core value of combining Chinese power with global resources, to accelerate the globalization of Fosun and promote integrated and harmonious world economic development. An outstanding entrepreneur with a great enterprise is forever a promising prospect.

CHAPTER1

BORN POOR BUT

AMBITIOUS IN

HIS GOALS AND

OUTSTANDING

IN HIS STUDY

Born into a farming family, he aspired to achieve success at a young age

The town of Hengdian – located in the south-central part of Dongyang city, Zhejiang Province – is a national sustainable development pilot zone, a national film and television industry pilot zone, and a Zhejiang high-tech pilot zone. With a population of less than 90,000, this small town on the south of the Yangtze River has won more than 20 honorary national titles, such as ‘National Sanitary Town,’ ‘National Model Town’ and ‘First Batch of Towns with Chinese Characteristics.’ In 2010, Hengdian became one of the first batches of small cities to be pilot cities in Zhejiang Province. In May 2018, it was selected as one of the ‘Top 50 Most Beautiful Towns.’ In October, Hengdian ranked 29th among the ‘Top 100 Towns of Overall Strength.’

But it was a poverty-stricken place 40 years ago. Surrounding mountains and scarce farmland left the remote town in poverty and lagging behind. The annual per capita income of Hengdian in 1975 was ¥75. A folk song from the local areas goes as follows: High above are mountains alone, nothing feeds the stomach but porridge, and no girls are to marry Hengdian men. This song was a real reflection of Hengdian at that time.

Today, Hengdian is no longer a stark village. In 2015, the annual per capita income of farmers in Hengdian reached ¥30,020 (US$5,000) – 400.26 times higher than that 40 years ago. In other words, a Hengdian farmer’s income in 2015 was the same as that of 400 farmers in 1975. Through persistent toil, practical experience and ingenious hard work, these farmers grasped the great chance of reform and opening-up, and achieved a magnificent transformation in Hengdian. In the process of achieving such glorious success, many extraordinary firms and entrepreneurs attracted people’s attention. There were companies such as Hengdian Group and entrepreneurs such as Xu Wenrong (chairman of Hengdian Group), Xu Yong’an (president of Hengdian Group Holding Co Ltd) and Xu Yong’an’s son. Hengdian Group was a local enterprise in Hengdian. In 2018, under Hengdian Group there were five listed companies, over 200 enterprises focusing on production and service businesses, and more than 50,000 staff members. It became an influential brand in the new era. And out of Hengdian came the outstanding and remarkable entrepreneur Guo Guangchang, founder and chairman of Fosun Group.

Guo was born into an ordinary rural family in Hengdian, Dongyang, in 1967. In his blood flow the simple but tough, low-profile and pragmatic personality traits of his predecessors. These traits motivated him to leave the countryside to explore his dreams and realize his life’s work.

In his childhood, Guo’s family was poor. It would be an exaggeration to describe his family as poor as church mice, but they had nothing spare. However, poverty did not make Guo feel inferior and depressed. In contrast, he became more self-reliant and indomitable. As a child, Guo was very sensible and knew how to solve problems for his parents. He often told his mother, I am a man now, and I have to be responsible for this family. When there is a problem, I will solve it for you.

Although the family was not affluent, his parents were hard-working and good at housekeeping. Thus, the three children in the family never starved. His father was a stonemason who often followed the collective engineering team in the village to go out to do some construction work, in order to earn some money to support his family. His mother was a vegetable farmer in the production team and planted many kinds of vegetables. When recalling his childhood, Guo remembered clearly: My mother occasionally went out to borrow food in spring when there was a famine. But she was very capable and planted many sweet potatoes. We could always feed ourselves with those vegetables she planted. Maybe I ate too many sweet potatoes as a kid, as even today I still feel nauseous whenever I smell sweet potatoes. With two older sisters, Guo was the only boy in the