Business Model of Fosun International Ltd V60.docx

1、Business Model of Fosun International Ltd V60 Business Model of Fosun International Ltd.Business English 11-2 Chen PengSupervisor Wu TiantianAbstractFosun International Limited, which ranked 37th and 229th in the list of top 500 private enterprises and top 500 enterprises respectively in China in 20

2、14, has been regarded as a legend by many people in the circle in the Chinese business atmosphere. It started out acting as a marketing consulting outfit which aimed to provide verdicts or suggestions for other businesses to carry out their operating activities in an appropriate way. But later on, i

3、t stepped into real estate, pharmaceuticals, retailing, mining, finance, steeling, media industries and other sectors. Now it mainly focuses on 4 areas, whose upsurging path and business models, quite similar to Warren Buffet company, Berkshire Hathaway Inc. is worth learning, especially for those C

4、hinas private enterprises which are floundering but possess great ambition. Key words: Fosun, Business Model, InvestmentAcknowledgementsMany thanks to my supervisor Mrs. Wu who got out of her way to give me valuable suggestions. Without her generous help, this essay wont be finished. Thanks also to

5、my teacher Mr. Liu, whose book guided me to draw charts and he also showed me lots of marvelous charts.ContentsAbstract iAcknowledgements iiChapter One Fosun: A Legend in Chinese Business Atmosphere 11.1The History of Fosun 11.1.1An Unfledged Bird (19921993) 11.1.2The Transformation of Guangxin(1994

6、1998) 21.1.3Diversified Development of Fosun (19992006) 21.1.4 A Would-be World-class Investment Group (2007now) 31.2The Current Siuation of Fosun 4Chapter Two The Analysis of Fosuns Business Model 52.1Twin Drivers Development Model 52.2Investment Model of Fosun 52.2.1 PE + Industrial Operations 52.

7、2.2 Cash Is the Key: Capital Investment Mothod 82.2.3 Counter-cyclical Investment Model 92.2.4 Process of Project Assessment for Investing in Fosun Group 102.3 Key Factors behind Fosuns Business Model 112.4 Advantages and Threats of Fosuns Business Model 132.4.1 Four Categories of Advantages 132.4.2

8、 Two Disadvantages 14Chapter Three What Can Other Private Enterprises Learn from Fosun 153.1 Adaptation to the Governments Policy 153.2 Using the Petty Capital to Control Large Asset 153.3 Benefiting other People as well as Oneself 16References 17Chapter One Fosun: A Legend in Chinese Business Atmos

9、phere1.1The History of Fosun The history of Fosun can be separated into 4 phases. Each of them has been marked by some characteristic events or conventions that Fosun has encountered on its way to become a cosmopolitan investment conglomerate.1.1.1An Unfledged Bird (19921993)In 1992, a young man fro

10、m Fudan University named Guo Guangchang who took with himself with 4000 dollars was in an extremely long queue to wait for the visa to be signed by the American ambassadors in Shanghai. As was probably true to many people, he was eagerly planning to study in the U.S in order to get a better educatio

11、n there which was considered to be a trend at that time. Suddenly, a new idea popped up in his mind, therefore, he made up his mind to give up studying abroad. Then, the 4000 dollars was converted into RMB 380,000. Together with some financial help from Mr. Guos friends, he and his academic brother

12、Liang Xinjun, erected a consulting firm named Guangxin Technologic Consulting Firm in November 1992, whose major business lied in market research because both of them had no money, no experience and no business background. Starting a business was not so easy for them. At the beginning of the busines

13、s, both of the founders had no choice but to make painstaking effort to ride a bike to carry out investigations in the market and persuade some potential clients to choose their service. Although they worked quite hard, they could only got 200 yuan of salary per month. At that time, there were less

14、than 10 consulting firms all over China and there were only 4 of them in Shanghai. Therefore, some companies like Apollo Group CO., Ltd, Lucky Film CO., Ltd, and TCBY became their clients because of their intelligence and hardworking. One of their clients, Ganso, was quite satisfied with its service

15、 and it gave Guangxin Technologic Consulting Firm a good reputation in this industry which in turn helped to gain the market share. On June 1993, the founders were very pleased to find that there were 1 million yuan in the firms account.1.1.2The Transformation of Guangxin(19941998)With the 1 million

16、 fund, the leader of Guangxin, Mr. Guo, determined to change the business scope of their firm, although it had become one of the most prominent firms in the consulting industry. Just as what Guo had said later in one of his speeches:” The depression of business shall be predicted by the time it has

17、been booming.” He realized that the booming of consulting industry was bound to reduce Guangxins market share in the fierce competition. Thus, with the participation of another 3 gradates from Fudan University, Fan Wei, Wang Qunbing and Tan Jian, Mr. Guo led his team to transform Guangxin into a pro

18、perty developer in 1994. Besides, the name of this company was changed into Shanghai Fosun Industrial Co. Ltd.Nearly all the property developers in Shanghai were waiting for their customers to ask for the details of their products in 1994. As soon as Guo observed this phenomenon, he decided to chang

19、e this model. Therefore, he divided the staff into 5 teams and each team sent distinctive brochures that were intended to introduce their commercial houses to their potential clients. Fosuns products were sold very well in this way and Fosun had earned about 10 million yuan by the end of that year.

20、Fosun invested in the area of bioengineering in 1995. A project that had been dealing with for 3 years was developed into products PCR diognotic reagent under the leadership of Fan Wei and Wang Qunbing. By the end of 1995, the revenue of this product had been 100 million yuan and a valuable sales sy

21、stem around China was established as well. At the same time, the focus of business was converted from sales marketing to the development of real estate and thus the first project was Fosun Garden. In 1998, Forte (Group) Co., Ltd which specialized in developing property was set up. In August 1998, Fo

22、sun Industrial Co. Ltd was listed at Shanghai Stock Exchange and its name was changed into Shanghai Fosun Pharmaceutical (group) Co., Ltd in December, 2002. So far, property and pharmaceutical have become two of the major businesses in Fosun.1.1.3Diversified Development of Fosun (19992006)The IPO of

23、 Fosun Pharmaceutical had helped Fosun finance 350 million yuan which rendered the leaders of Fosun consider capital operation. A typical instance was the acquisition of shares of Yuyuan Tourist Mart on November 11, 2001 made by a new subsidiary called Fosun Industrial Investment Co., Ltd. The new s

24、ubsidiary took up 13.25% of the general capital and had become one of the largest shareholders. After that, similar events occurred over and over again. 30% of share of Beijing Jianlong Group was bought by Fosun in 2002. Steeling industry has been playing the role of cash cow for Fosun since then an

25、d it had built a solid foundation for Fosun Merger and acquisition. Tebon Securities Co., Ltd was established by Fosun in 2003 and Fosun invested in Zhaojin Mining Co., Ltd in 2004. Fosuns business scope had ranged from property, pharmaceutical, retailing, steeling, mining to finance through merger

26、and acquisition by the end of 2006.1.1.4 A Would-be World-class Investment Group (2007now) Fosun Group was listed as a whole in the Main Board of Hong Kong Stock Exchange in 2007 which became the third largest IPO that year with the total market value of 64.6 billion HK dollars. Fosun stepped into i

27、nsurance industry in the same year by investing in Yongan P&C Insurance. As was probably known to many people, the financial crisis burst out in 2008 when the stock prices of many firms plummeted inevitably. So did Focus Media Network Limited which was resulted in the investment from Fosun Group by

28、the occupation 26.14% of the total shares. People were stunned by the Fosuns prompt buying as the price of the stock tripled after two years. Cooperated with Carlyle Group in an all round way in 2010, Mr. Guo reached an agreement with David Robenstein, co-founder of Carlyle Group, to carry out priva

29、te equity in China with 100 million dollars. The year 2010 also marked the internationalization of Fosun Group because 7.1% shares of Club Med were bought by Fosun. Then, there was acquisition of Folli Follie in 2011, Peak Reinsurance in 2012, St. John in 2013 and Caixa Seguros in 2014. So far, Fosu

30、n Group has become a world-class investment group after nearly 23 years hard work whose business scope has ranged from property, pharmaceuticals, insurance, steeling, mining, finance, asset management and media. 1.2The Current Siuation of FosunFosun Group is now a large-scale comprehensive investmen

31、t corporation which mainly focuses on the growth momentum of China with the operating activities such as industrial operations, investment, insurance and asset management. It has more than 100 subsidiaries or jointly running businesses resulting from hundreds of mergers and acquisitions. And the str

32、ucture of Fosun at the end of 2014 can be seen as follows:Figure 1 The Structure of Fosun Group by 2015according to the revenues of the latest nine years that Fosun has earned, we could judge its unparalled speed of development:Figure 2 The Latest Nine Years Revenue and Net Profit of Fosun GroupMillion YuanThe aim of Fosun is to become a world-leading investment group that will concentrate on Chinas growth momentum, manage asset worth trillions of dollars, combine the growth momentum of China with resources around the globe, invest in the industr